Making Your Education Work for You
A Proven System for Success in School and for Getting the Job of Your Dreams
By Gordon W. Green Jr.
Tom Doherty Associates Copyright © 2010 Gordon W. Green, Jr., Ph.D.
All rights reserved.
How a Good Education and Good Job Translate into a Good Life
(It's the only life you have, and you are the one who will have to live it)
The ancient Greek philosopher Plato said, "The direction in which education starts a man will determine his future life." Truer words have never been spoken.
Students often have difficulty understanding the crucial importance of education in determining their future lives because they have not lived long enough to understand how the world really works. Reading books in various subjects in school is a good primer that increases understanding, but there is no substitute for living life and experiencing lessons personally, and this only comes with age. Parents already have been through many of the lessons in life, and they try to help their children get on the right track early and avoid many of the detours that lead in the wrong direction. In most cases, parents dispense their advice about the importance of education in an ongoing lecture, emphasizing different factors at different times on different occasions. All too often students are of the impression that they have heard this lecture before, and the advice is rarely heeded. A more useful approach is to have a thorough discussion about the importance of education at a single sitting, with additional reinforcement dispensed periodically to emphasize the validity of the lesson. One of my father's favorite sayings was, "You cannot put an old head on young shoulders," and that may very well be the case, but we are going to attempt to go a long way in that direction!
In this chapter I present a good, hard dose of reality about the importance of education in today's world that parents and students can discuss with each other. I start off by describing how life in the United States used to be, and then how it has changed through various demographic, social, and economic changes that have taken place during the past several decades. Next, I describe two possible scenarios, one that applies to people who do not obtain higher education and one that applies to people who do obtain it. Then I talk about the importance of where one lives, for both comfort and future success, and how a good education and good job provide the freedom that allows people to choose where they want to live. I present a strategy that parents can use to drive these points home to their students. Finally, I close with some statistics that show how earnings and wealth vary with different levels of education.
Changes that Have Occurred in the United States
The demographic, social, and economic changes in the United States that I will discuss encompass six areas: (1) changes in family structure, (2) changes in the age structure of the population, (3) changes in the racial and ethnic composition of the population, (4) changes in the return to education and skills, (5) changes in the structure of the economy, and (6) changes in the geographical location where goods and services are produced. As you will see, each of these changes has resulted in greater earnings and income inequality in the United States, and a more competitive world that students will face upon completing school.
Changes in Family Structure
When I was growing up in the 1950s and '60s, family types and living arrangements were quite standard. Most families were married couples with children, with a husband being the sole breadwinner and the wife staying home to take care of the home and family. Over the next couple of decades, many women entered the labor force and continued to work even with small children, dropping out of the workforce for only a short period of time to have their children. There were large increases in the incidence of divorce and separation, and the number of families headed by women and their children continued to grow. Many of these women had little prior work experience and thus were not able to command good salaries in the workforce. Many with young children and additional home responsibilities found it difficult to work at all and ended up in poverty.
At the same time, the families with a working husband and working wife now had two earners in the family, and their incomes grew significantly. These changes in family structure led to increased inequality of family income, with many families with working husbands and working wives clustering at the upper end of the income distribution, versus many female-headed families clustering at the lower end of the distribution.
Changes in the Age Structure of the Population
The basic demography of the population in terms of what is called the population profile began to change with the aging of the baby boom generation. The baby boomers are the roughly seventy-eight million people who were born in the United States during the two decades (1946 to 1964) following World War II, a phenomenon that took place in many other developed countries as well. The aging of the baby boomers has had an enormous influence on the job market and the types of goods demanded in our society. Just think about the adjustments that occurred as these people entered the labor market during the late 1960s through the early 1980s, demanded more housing and purchased more of the goods needed by children as they married and formed families during the latter quarter of the twentieth century, and what will happen during the twenty-first century as they age and demand more medical care and put a strain on retirement systems such as Social Security.
The relevant point for this discussion is the often-overlooked fact that inequality is higher among older generations than among younger ones, especially when wealth is taken into account, because the former have had a whole lifetime to practice behavior that leads to higher inequality. Some older person are barely scraping by on Social Security payments, while others have substantial income from pensions and sizeable asset holdings, such as a home that is fully owned. In addition, life expectancy increased at the same time that birth rates decreased, so more of baby boomers are still alive and will remain alive, and there will be fewer people to support them in their old age. As the baby boom generation ages and remains a large segment of the population, this will increase the overall level of inequality in our society.
Changes in the Racial and Ethnic Composition of the Population
The basic racial and ethnic composition of the American population has changed dramatically since the middle of the twentieth century. Groups that historically have had much higher birth rates but lower levels of income, such as blacks and Hispanics, have become a much larger percentage of the population. At the same time, minority groups that have incomes as high as or higher than whites, such as Asians, have also become a larger proportion of the population. These trends have been compounded by the increasing immigration of minority groups such as Hispanics into the United States, both those who are here legally and those who are here illegally. Many recent immigrants have low levels of education and skill, and thus cluster at the lower end of the earnings distribution. Many illegal immigrants have difficulties finding jobs because of laws that prohibit their hiring, and thus work in jobs that pay even lower wages.
Immigrants from all over the world migrate to the United States, making America what Ben Wattenberg, my good friend and colleague at the America Enterprise Institute for Public Policy Research, referred to in a recent book as The First Universal Nation. Changes in the racial and ethnic makeup of the United States population have also tended to increase income inequality.
Changes in the Return to Education and Skills
Another area that has seen significant change over the past several decades is the role of education. Higher education has always been an important consideration in getting a good job, but in the 1950s and '60s many jobs did not require a college education and it was possible to advance up the job ladder without one. Things changed over time as more and more people, men and women alike, began going to college and majoring in fields that required technical and scientific knowledge. This was in response to the creation of jobs in these areas, as science and computer technology became more important in our economy. Women began to major in fields that were previously dominated by men, and there are now more women than men in college.
For many jobs in which a bachelor's degree was previously considered to be adequate, the changing nature of work demanded more formal training and the best jobs went to people with specialized training or advanced graduate level work. There was a large increase in the return to education, as people with advanced education began to earn much higher salaries than did those without such training. There was also a phenomenon that economists referred to as the return to "skill-biased technological change," and salaries increased tremendously for people who had the sophisticated technical skills that employers demanded, especially when faced with a shortage of such workers. These developments tended to increase the degree of earnings inequality among workers in the economy.
Changes in the Structure of the Economy
At the same time, the structure of the economy was undergoing fundamental change, along with the types of jobs created to meet this new reality. Manufacturing and heavy industry shrank and the number of service jobs increased dramatically, and the United States was referred to as a "service-based" economy. Some of these service jobs were in lower-paying fields, such as fast-food restaurant workers as well as various forms of personal services, as working people had less and less time to devote to these activities on their own. But some of the service jobs were in very high-paying fields such as law and medicine, as the changing nature of the economy and basic demography of the population generated an increase in these types of jobs.
The manufacturing sector has long been considered to be the mainstay of the middle class in America, but it seems to have thinned out to some degree. As manufacturing jobs disappeared, many of the people working in this area who had little education were forced to go into the relatively lower-paying service jobs. At the same time, people who had higher levels of education went into many of the higher-paying service jobs. These trends have tended to increase the degree of earnings inequality as people with less education clustered at the lower end of the distribution, and people with higher education clustered at the upper end of the distribution.
Changes in the Geographical Location where Goods and Services Are Produced
In case you are wondering what happened to many of the higher-paying manufacturing jobs that no longer exist in the United States economy, many were exported to other countries that have lower wage structures. Whether one is talking about shoes, clothing, cars, or the production of industrial equipment, other countries with a workforce that will work for less can produce these products and ship them for less than it would cost to produce them in the United States, forcing companies to shift the location of production to remain competitive. And, more recently, it is not only the manufacturing jobs that have been exported. Many technical jobs, such as those involving computer science occupations, have been exported to countries such as India that have the technical expertise and can perform them more cost effectively.
The American worker must now be concerned not only with competition from other workers in his or her own city or nation, but from other nations around the world. The growth of huge multinational organizations has accelerated these trends, which will likely increase in the future. These trends toward globalization have also increased the degree of earnings inequality in our society.
The Bottom Line: More Inequality
The net result of all of these trends is to increase earnings and income inequality, and to make the world a more competitive place. The way economists generally measure the degree of income inequality is with the Gini index, named after Italian statistician Corrado Gini. The Gini index is a statistical measure that varies from zero (perfect equality) to one (perfect inequality). Thus, if everyone had the same income, the Gini index would be zero; and if one person had all of the income and no one else had any, the Gini index would be one. The higher the Gini index, the greater the degree of income inequality. According to the U.S. Census Bureau, between 1968 and 2007 the Gini index for household income increased from 0.386 to 0.463. This may not sound like a very large increase, but a trained economist would tell you that it is huge. Statistically speaking, there is no question that income inequality has increased dramatically in the United States over the past several decades.
It is important to understand that income inequality is increasing not because of some sinister or malevolent force, but because of the decisions that people make in a free society. For example, as more people decide to obtain higher education and move into higher-paying occupations, income inequality increases. The United States has always had a large middle class, which many say is the bastion of our stability, and probably it will always be. However, workers will increasingly face stiff competition from all quarters, and they will need to have high levels of education to compete effectively so they can maintain or enhance their standard of living in this country. Higher education was important before, but it has now become more important than ever before. As my landlord when I was a college student used to say, "It's every man for himself and the devil take the hindmost!"
Two Scenarios: Low Education and High Education
What I will do now is sketch out two scenarios, one that refers to what someone without much education can expect from the labor market and our society, and the other what someone with high levels of education and training can expect.
People who do not have much education in today's world will likely face a lifetime of struggle both in their jobs and their home life. Rather than being able to choose the occupation of their dreams, they will likely end up in a job that no one else wants. Jobs that require low education usually have low pay, unpleasant working conditions, irregular working hours, lack of intellectual stimulation, few fringe benefits, and poor opportunities for advancement. Because just about anyone can do these jobs, there is little likelihood that wages or working conditions will improve in the future. The longer people stay in such jobs, the smaller the chance they will ever escape, unless they obtain additional education and training. People who get involved in work that requires heavy physical labor often cannot work as long as others in more pleasant working conditions because of the stress and strain on their body. And when they collect their paycheck at the end of the week, they find that they cannot afford all of the things they would like to buy. They will not be able to buy the type of house they want in the neighborhood where they want to live, as well as the car they want or all of the other things that go along with it.
I do not want to sound too materialistic, but life is a continual struggle for people who do not have enough money, and they often have to forego basic necessities such as health care. Such people often go deeply into debt. If their credit worthiness deteriorates, they will have to pay higher interest rates for the money they borrow, and they will never be able to save and get ahead. The situation does not get any easier for children who grow up in such surroundings. Not only is there never enough money to buy the things they want, they will likely have to go into debt with a hefty education loan just to escape the situation. The situation often repeats generation after generation, unless someone has the good fortune to break out of it. (Continues...)
Excerpted from Making Your Education Work for You by Gordon W. Green Jr.. Copyright © 2010 Gordon W. Green, Jr., Ph.D.. Excerpted by permission of Tom Doherty Associates.
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