Editor’s note: This article originally appeared in Forbes magazine on November 21, 2011.
If the United States is really serious about competing with the work-centered countries of Asia, the key lies not in more government programs, but in restoring America’s own work-centered culture. The first step toward accomplishing this is to end the over-subsidization of higher education, which creates incentives for many to postpone work.
As the Occupy Wall Street protests have exposed, the United States already has vast numbers of underemployed, indebted young people who have college degrees, but few marketable skills. If we want to correct this problem we need to make the period after high school more focused on work and not an unnecessary extension of adolescence.
That’s not to say that we don’t need higher education—the current system works well for many young people. But the relentless push for more graduates, with all the attendant over-selling and over-subsidizing, needs to end. We can no longer afford it.
Since World War II, higher education has steadily drawn people away from the workforce. One consequence of this is that we are fast approaching the time when we will have too few workers to support the non-working population. For example, in 1950 there were 16 people in the workforce for every retiree drawing Social Security; in 2005, there were just 3.3 workers for each retiree. Certainly productivity increases have softened the ill effects of this trend, but with some 77 million Baby Boomers at or approaching retirement age, the ratio will drop even more, to an estimated 2.1 workers for each retiree.
We already are at the tipping point: In 2010, Social Security ran a deficit for the first time since the system was overhauled in the 1980s. The problem gets even worse; according to the Social Security and Medicare Board of Trustees’ 2011 annual report, all trust fund reserves – to the extent that such a trust fund actually exists – will be exhausted by 2036.
Given this troubling trend, it’s hard to see how we benefit by encouraging increasing numbers of high school graduates to postpone entry into the full-time workforce.
In addition to the effect it would have on Social Security revenues, encouraging more teenagers to work, rather than attend (and in many cases waste their time in) college would benefit the economy in three other important ways.
First, full-time workers in the 18-23 age group generally earn several times more than full-time students in that age group, who work part-time or during vacations. If the percentage of high school graduates going to college shortly after graduation dropped from the current 70 percent to the 50 percent who went from high school to college in the early 1960s, as many as 3.5 million additional young people could be contributing to the economy. This would not only add to our GDP, it would also broaden the tax base, softening the burden on those currently shouldering the load.
The second way the economy would benefit is by reducing higher education’s burden on taxpayers. For example, the average state subsidy per student is $12,000 per year at the University of North Carolina’s 16 campuses. If 50 percent, rather than 70 percent, of North Carolina’s high school graduates attended college, North Carolina taxpayers would save as much as $800 million per year. That’s real economic stimulus.
The third benefit to the economy would be to increase the pool of investment capital. Most students now pay more than $12,000 annually for tuition, fees and room and board at public universities; private schools often cost $40,000 to $50,000 a year. While borrowing for education makes the headlines, many families still save and invest to pay for their children’s college education. If fewer families had to sell their investments to pay for college, more money would be available for investment purposes, leading to significant increases in future GDP. If even a modest percentage of the approximately 20 million students who are now enrolled in degree-granting postsecondary institutions went to work, rather than to college, billions of additional dollars could be available for investment or spending – either of which would boost economic growth.
For young people especially, rethinking the push to attend college offers real value. Roughly 60 percent of those who begin college either drop out permanently or end up in jobs for which no degree is required, and therefore receive little return on their investment. At least some of these students would have preferred going to work, but were deterred from doing so by parent or peer pressure. Making work an acceptable first option for young adults would end this waste – and reduce the crushing debt burden many bear when starting their adult lives.
Making young adulthood work-oriented does not mean an absence of learning. Workers always have learned through on-the-job training and experience. For those who wish to go beyond on-the-job training, the emphasis should be on education that supplements and complements the job, rather than replaces it. Online education, night school, and apprenticeships should become the rule rather than the exception. And, of course, there is nothing to stop a machinist, an electrician, or any other worker from pursuing knowledge of other fields in their spare time. Generations of Americans have done so.
Becoming work-centered may not be a cure for our current economic malaise, since we have high unemployment and lots of capital sitting on the sideline.
It is instead a call for a major, long-term, cultural shift.
The United States has been throwing money at higher education for a long time, and, with our national debt at 94 percent of GDP and growing, our economic future appears to be getting bleaker, not better. Work created our national prosperity, and work can maintain it.