The changing American landscape

October 14, 2010
By: Eric Lundin

I read Dan Davis’ blog “Rethinking the education-to-employment system,” and I figured I’d chime in with my two cents’ worth. Dan’s blog focused on the future of education, specifically in vocational areas; I’d like to shine the spotlight elsewhere to illuminate a few trends that are distinct but seem to be related, and taken together, beg for more vocational training.

Before going any further, I should mention that data doesn’t always come in neat little bundles, so forgive me if this isn’t quite as seamless as it should be.

First, let’s look at the degrees earned in the U.S. I found some data at the National Center for Education Statistics. As you’d expect, the longest, most difficult programs have the fewest graduates; just 61,000 people earned Ph.Ds in 2006 and 2007. Many more people earned master’s degrees—605,000 received them in 2006 and 2007. Bachelor’s degrees were next, at 1,524,000.

And then things get a little screwy. You’d think even more people would earn associate degrees than bachelor’s degrees, wouldn’t you? An associate degree takes half the time and costs a lot less than a bachelor’s degree, so they should be much more common, right? According to the information I dug up, just 728,000 people earned associate degrees in the same time frame.

Why? I’d guess it has a lot to do with perceptions. In many minds, anything less than a bachelor’s degree is vocational training, and vocational training leads to a manufacturing job; but many people want their children to pursue white-collar careers. My colleague Vicki Bell has written about this topic in “Fabricating Update” and its sister e-newsletters. This is one of the responses she received by e-mail: 

I taught vocational machine shop from 1973 to 1976 in Vermont. [The perception] was the same then: You were some kind of hood if you went to a vocational school. The kids in our programs learned a useful skill and we placed them directly into good-paying jobs. In a lot of cases, the four years of earning power that these kids had over their college-bound classmates made them such that only a few passed them in monetary status later on in life.

Moving along, let’s take a look at the high school graduation rate. It turns out that a large number of high school students don’t graduate. According to the National Center for Higher Education Management Systems, in 1990 nearly 29 percent of high school students didn’t receive diplomas. Think that’s bad? It gets worse. By 2006, the dropout rate increased by more than 2 percentage points.

In other words, the number of high school dropouts is too large, and the number of people with associate degrees is too small. How does this affect the manufacturing industry. Well, it’s grim.
More from Vicki’s mailbag:

  • As a small welding and mechanical shop owner, I just shake my head at our supposed "labor shortage." What I have seen is [a surplus of] people who want to make top dollar and refuse to learn skills or update what little skill they might have. I once had an applicant who had his girlfriend fill out his application as he could not read or write, but he said he was a "great welder" and was looking for $25 per hour—or more!—to start. Too bad he couldn't find the on-off switch.

    I love the business even after 44 years, but it’s getting harder and harder each year.

  • Years ago the powers that be in Kentucky made the decision to eliminate shop programs and substituted computer simulation in a non-hands-on program. Students learn from all phases of development. Seeing a picture in a book or computer will not show you how a machine works or how to program a machine. Working in McDonald’s will not give you the skills to run sheet metal or welding equipment. This will not give you the hands-on skills to work in assembly. 

    Not everyone can be a college grad nor should they be. High school and vocational school investment should be to give skills to tomorrow’s workers.

  • As technology moves forward the percentage of people who can perform the more advanced tasks required to interact with the technologies becomes less. In the manufacturing world there is becoming a greater difference between skill needs. As a manager hiring people since 1976 for a small manufacturing and repair shop, [I can tell you that] much of the low-skilled work is completely gone, and much of the new work requires many detailed steps with closer tolerances. Because of these changes there is, and will continue to be, a shortage of qualified people.

  • What I continue to hear in the Dallas area and Texas in general is the shortage of highly skilled manufacturing individuals. We have plants in Ohio and California that seem to be facing similar difficulties at times.

That brings us to the next topic: the dwindling number of manufacturing jobs in the U.S. The number of people in manufacturing varied between 16 million and 20 million for decades, while the service sector grew more or less continuously. In recent years the number of manufacturing jobs shrunk considerably, while the service sector grew more or less continuously.

  • In 1967 the ratio of jobs was 34 percent manufacturing to 66 percent services.

  • In 2009 the ratio was 14 percent to 86 percent.

It would be easy to blame these job losses entirely on imports, but productivity enhancements played a big role. Our output of durable goods more than doubled from 1995 to 2007 (from $511 billion to $1,200 billion), while the number of employees in durables fell by 16 percent (from 10.3 million to 8.7 million). U.S. manufacturing workers are among the most productive in the world.

What else contributes to the dwindling number of manufacturing jobs? The skills mismatch, of course. It’s hard to measure, but it’s certainly a factor.

What’s the outcome? The middle class, which is arguably a source of economic power, isn’t doing too well. The number of good-paying manufacturing jobs has been shrinking, and they are replaced by jobs that don’t pay as much, so the middle classes have been sliding down the economic ladder.

The Census Bureau divides the U.S. population into five segments according to their income. Each group has 20 percent of the population. Nobody would expect the total U.S. income to be divided evenly among these five groups (that would be communism), but then again, the trend in income distribution isn’t exactly encouraging. Since 1967 or so, the wealthiest 20 percent of households have gotten a larger slice of the pie; all others have gotten a smaller slice. Between 1967 and 1998:

  • The lowest 20 percent’s earnings fell from 4.0 to 3.6.

  • The next 20 percent fell from 10.8 to 9.0.

  • The middle group’s earnings decreased from 17.3 to 15.0.

  • The fourth group’s share fell from 24.2 to 23.2.

  • The highest bracket’s income grew from 43.8 to 49.2.

So, to tie it all together: The U.S. has too few people with high school diplomas and associate degrees. This is leading to a widening gap between manufacturers’ needs and the labor pool’s skills. The role of CNC this and automated that has grown, and manufacturers need skilled and motivated people more than ever. Many cannot find the right people, and if they can’t fill all the job openings, eventually some of those jobs leave the U.S.

It’s a big task to prove that these are linked, but it’s no secret that manufacturing jobs supported the middle class for decades. The U.S. economy has fewer manufacturing jobs than before, and the middle class is getting poorer because of it.

How much more evidence do we need to show that vocational programs are necessary to help turn these trends around?
Eric Lundin

Eric Lundin

FMA Communications Inc.
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Elgin, IL 60123
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