Most education is now disconnected from the needs of students and the labour market

November 11, 2018 4:46 pm by Rana Foroohar

I cannot think of a market that is more dysfunctional in America right now than education. Total student debt topped $1.5tn this year and a Brookings study found that nearly 40 per cent of those borrowers are likely to default on their loans by 2023. 

Some of the borrowers will have attended predatory for-profit colleges, for which the Trump administration recently loosened regulations

The imprimatur of a $75,000 Harvard degree is in such demand that the school is now being sued by a group of Asian-American students who say more of them should be allowed in on the basis of high test scores. But at the other end of the spectrum, several new studies show that a garden variety four-year degree isn’t paying off the way it used to. One recent survey found that 43 per cent of college grads are underemployed. 
This certainly mirrors what I hear from chief executives, many of whom tell me they cannot find the skills they need either at the top or the bottom of the socio-economic ladder. Ivy League colleges are great for those who can afford them but most education has become completely disconnected from the needs of both students and the labour market. 

There are plenty of MBAs who can read a balance sheet but have neither operational nor soft skills. Four-year business administration graduates are settling for low wage gigs, while $20-an-hour manufacturing jobs go unfilled because employers can’t find anyone with vocational training. 

Desperate companies are trying to plug the gap — telecoms group AT&T has set up an internal online course to train the 95 per cent of those in its own technology and services unit that have inadequate ability in Stem subjects — Science, Technology, Engineering and Maths. Walmart Academy has trained thousands of workers, including in basic skills they should have learnt in high schools.

There are myriad factors that have created this dysfunctional system, but one that hasn’t been talked about enough is the unfair bias towards schools rather than skills. According to a 2017 Harvard Business School report, more than 6m good paying jobs in the US are at risk of “degree inflation”, meaning that skilled labour is locked out of the market for lack of a degree, even if one is not needed for the job. 

For some middle-level positions in 2015, two-thirds of employers were asking for a college degree, even though only 16 per cent of people working successfully in similar positions had them. That cuts social mobility. But it also inflates the price of what may be a needless credential and costs employers, who pay more for people with fewer skills and a higher propensity to jump between companies. 

How to end this arms race? Some businesses and educators are working with non-profits that help them vet skills of workers with no credentials. One such programme is run with state governments in Colorado and Indiana, as well as companies such as LinkedIn and Microsoft. Skillful evaluates and ranks workers based on their hard and soft skills via online and in-person testing and training. It then pairs them with appropriate jobs. 

Others, like Year Up, provide something similar at a national level for young people, identifying and training the highly-motivated for six months, and matching them with major companies such as Salesforce or JPMorgan who can trial them for another six months without a full hiring commitment. “We think of it as supply chain management for talent,” says Gerald Chertavian, the CEO and founder of the programme. 

Perhaps the most successful and scalable bridging of the skills and credentials gap thus far has been the P-Tech high school, initially started by IBM as a way to create a middle-market talent pool and now said to run with 500 other industry partners in 110 schools in eight states. 

It graduates students with both a high school and associates’ degree, and they are guaranteed jobs paying $50,000-a-year. Corporate partners are willing to make this assurance since they have a hand in shaping the curriculum to their taste. The completion rates of the graduates are 500 per cent of the national average. The schools are non-selective, use unionised teachers, and serve a disproportionate number of lower-income students of colour.

Some worry about allowing business this sort of seat at the table in shaping education. I do not. Other countries — Germany, for instance — have shown it is possible to provide high-quality education and job-market skills at once. 

We are at a crisis point in education today, but it is also a good moment to change the trajectory of things. 

The Perkins Bill, which funds vocational education, was recently reauthorised by Congress. That means that there’s now a guaranteed pot of nearly $1.3bn over the next six years to be thrown at revamping secondary and tertiary education to meet the needs of employers and the labour market. 

States have a fair amount of leeway about how they use the funds. It would be great to see more of them talking to employers about what they need and putting money into programmes that foster skills rather than simply award credentials. 

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