Tag Archives: education reform

College is still worth it (just not at Shaw University)

Since the year 2000, tuition at the University of Michigan has increased an average of 6.7% a year.  If the average starting salary of a graduate where to have kept up with that (40,000 in the year 2000) then it would be $76,507.53/yr currently!  While a college educations should allow a person to earn and save more over our lifetimes, at what cost?  With the cost of tuition raising every year, and the job market struggling to add jobs, the cost of college is starting to affect the payoffs.  The increasing cost of a college degree has reached a level where for some programs, student would have been better off putting all that college money under a mattress and joining the workforce.

While education is inherently good, some people may have been better off staying away if money is the metric.  There are those that bristle at using money, but it is not an unreasonable measure to use.  A method of valuing college attendance should be measured against not going.  This study considers adults who had not attended college, and asked about their attitudes about going to college presently.  The main them was the reason for going was the desire to make more money or advance their career.  Even though a well-rounded education is desirable, the benefits might not justify the costs.

An article in the economist emphasizes this tradeoff.  Pointing to a research firm called Payscale, highlights that the “return on 46 programs generated a return on investment worse then plunking the money in 20-year treasury bills.”  18 were negative, indicating a net loss on investment after 20 years!  Shaw University, mentioned in the title of this post, had the lowest ROI, an astonishing -10.6%.

Yet there are those that say a college degree has never been more valuable. As much as I hate to agree with the former president of that school down south, he has a point that a society is dependent on its educated citizens, and that the universities themselves provide a very important function in society.  And that is before you add in the ability to retire to the University’s retirement community!  Education has and should continue to be a foundation of our society.  We just have to figure out a way for everyone to afford a good foundation.

An increase in college tuition has contributed the most to the return on investment a college degree produces.   Tuition prices have almost doubled, while salaries and benefits have remained the same.  Something has to give; Tuition can’t keep rising.  I think the key driver of decreasing tuition expenses will be the invention that leverages technology to create a virtual classroom as engaging as the real thing.  An environment that permits interaction with the professor, yet on a scale that we see in todays online classrooms of hundreds of students.

 

(Revised) Our Government Must Take Action

We are in a time where a current tech revolution is taking place. With this being said, the U.S. economy has a technology problem and could use a government intervention. There is a lot going on that many Americans are not very aware of.

Let’s take it back in time a little. Every time new technology has entered our economy, it has always put millions of people at risk of permanent unemployment; but this truly does not have to be the case. In the past, many believe that the government has intervened to help in all of the technology waves we have gone through, except the one we are in now.

Back during the industrial revolution, the government saw that our education system needed a boost. Reforming the way the “system” worked by teaching young adults to learn how to follow instructions, just like one would do in a factory, was the “name of the game…” until now.

This day in age the new game is the race to further advance technology; there’s no denying that. Whether or not you develop your own “big idea,” the future of many jobs will be needed on the Internet and using advanced technology. Companies like Domino’s Pizza already show signs of this need. Domino’s CEO J.Patrick Doyle “noted that 40 percent of all U.S. sales for Ann Arbor-based Domino’s are online, and nearly one-third of its employees use advanced technology in their jobs.” He went on to say, “If it’s affecting a pizza place, then I can tell you the same thing is happening at the automotive companies, and at furniture companies, and all the other employers in Michigan.”

How can our government help with this trend we will continue to encounter? A major policy change needs to take place; and it starts with our U.S. education.

Today, we are in the same “system.” I put system in quotations because it signifies our education system of forcing kids to follow instructions and continue to work under a boss and still “follow instructions.” Students from Pre-K to College are forced to learn certain traits and skills that are 1) outdated and 2) not helping the current generations that are entering the job market. Even though it does help one’s chances today in the job market by furthering your education and going to graduate school, our system is very flawed. Today, we are beginning to see a separation gap between those who are sticking to the “system” and learning how to follow instructions, between those that are taking it further by following their own passions to help increase their “creative” aspect. I believe this is one of the most underestimated factors that will affect our economy in the future; and the government is our only help. Technology will continue to grow and expand in the future, and if the government does not come up with a creative plan to fix our education system, we are going to have a major problem.

The government cannot keep funding for the traditional school system and forcing kids down a certain path. Our government needs to support schools’ programs like entrepreneurship and ways to increase students’ work with advanced technology.

“The capacity for creating jobs is obviously there. The question is: Is this going to happen on its own?” said John Schmitt, a senior economist at the left-learning Center for Economic and Policy Research. “It has to be part of a larger political process.”

While this “change” cannot happen all at once, especially in the K-12 education system, small steps need to be made. Chris Dede and John Richards are Harvard University professors who propose a digital teaching platform called ‘Time to Know’ that allows teachers to formulate large and small group learning, as well as individual education. Dede and Richards “envision a classroom where each student has a computer, but the teacher can press a button to make all devices freeze, capturing a large group’s attention. Beyond that, the teachers would use the broader big-group lessons to let each child find an individual understanding of how that lesson impacts them, personally.” This in turn would encourage students to follow their true passions in life; they should not be forced down a skillset they don’t want to learn or just have to “follow the instructions” to accomplish.

These are some of the small steps that our government truly needs to take to help the future of our economy. Technology will only keep growing and the jobs should increase when technology advances; not decrease. We are in a time where serious action needs to take place involving the government and our old education system. The education reforms by the government in the past have “protected a bunch of people from becoming unemployed because they didn’t have the right skills anymore.” Today, our government needs to work through major policy changes with our education system during this technology revolution to prevent a larger separation gap in the future of advanced technology users and all other “follow the instruction” employees.

Our Government Must Take Action

We are in a time where a current tech revolution is taking place. With this being said, the U.S. economy has a technology problem and could use an intervention. There is a lot going on that many Americans are not very aware of.

Let’s take it back in time a little. Every time new technology has entered our economy it has always put millions of people at risk of permanent unemployment. Many believe that the government has intervened to help in all of the technology waves we have gone through, except the one we are in now.

Back during the industrial revolution, the government saw that our education system needed a boost. Reforming the way the “system” works by learning how to follow instructions: just like one would do in a factory. Then it got to the point where many people were pushed to go to college: to help those learn more to do more for our economy.

Today, we are in the same “system.” Although it does in fact help for the job market to further your education today by going to graduate school, our system is very flawed. Today there is a separation gap occurring between those who are sticking to the “system” and learning how to follow instructions, between those that are taking it further and on their own to be more “creative.” Technology will continue to grow and expand in the future, and if the government does not come up with a creative plan to fix our education system, we are going to have a major problem.

The government cannot keep funding for the traditional school system that is in place right now. Our government needs to support school’s programs like entrepreneurship and ways to increase students work with advanced technology.

“The capacity for creating jobs is obviously there. The question is: Is this going to happen on its own?” said John Schmitt, a senior economist at the left-learning Center for Economic and Policy Research. “It has to be part of a larger political process.”

While this “change” cannot happen all at once, especially in the K-12 education system, small steps need to be made. Chris Dede and John Richards are Harvard University professors who propose a digital teaching platform called Time to Know that allows teachers to formulate large and small group learning, as well as individual education. Dede and Richards “envision a classroom where each student has a computer, but the teacher can press a button to make all devices freeze, capturing a large group’s attention. Beyond that, the teachers would use the broader big-group lessons to let each child find an individual understanding of how that lesson impacts them, personally.”

These are some of the small steps that government truly needs to take to help the future of the economy. We are in a time where serious action needs to take place involving the government and our old education system. In turn, this will help the future of our economy allowing younger generations to become more involved and have a better grasp with our internet and technology in the future.

REVISED: “The Great Decoupling” in Itself is Not the Problem

In two recent Wall Street Journal opinion pieces – “The U.S. Needs a New Social Contract” and “Closing the Productivity and Pay Gap” – William Galston presented an in-depth analysis on the widening gap between productivity and wages. He calls the divergence between these two metrics the “Great Decoupling” and believes it is a defining phenomenon of our era. A significant share of income has shifted from labor to capital. According to Glaston, “In 1947, labor received 67% of nonfarm business output. At the end of 1973, that figure still stood at 66%. In 2012 (the latest year for which data have been released), labor received only 58% of total output, the lowest by far in the entire postwar period.” The chart below taken from FRED, shows the divergence visually – total factor productivity growth has outpaced wage growth considerably since the mid 1980s.

Screen shot 2014-02-22 at 6.28.20 PM

Galston’s concern on this topic is tied closely to the inequality issue that has been a recent hot topic. While he presents compelling ways to fix this problem, Galston fails to recognize the root causes and shows a general misunderstanding of economic principles.

The divergence in productivity and wages stems primarily from efficiency gains. As technology has improved, automation and computers have taken over many tasks once performed by hand and productivity has increased without the need for new workers. Galston fails to mention this point at all and it is very important. Technological progress drives long run growth in macroeconomic models and makes everyone better off. In the short-run technological advancements will shift income to owners of capital, but in the long run this should even out as new industries and jobs are created that did not exist previously. It is also important to think about this issue in absolute terms, rather than purely relative. While it is true that labor is receiving a smaller share of total income than it did through much of the post-war period, in absolute terms most workers are better off today.

A second issue that Galston fails to recognize is that in a competitive labor market the equilibrium wages should be equal to the marginal product of labor. If the marginal product of labor is higher than wages, firms could increase profits by hiring additional workers. Eventually the marginal product reaches a point where it is equal to the wage and it is not longer profitable for firms to hire additional employees. The point that Galston fails to realize is that, from a micro level, in order to increase wages we need to increase marginal product of labor.

The best way to increase marginal product of labor and therefore wages are to increase education so workers are able to utilize the advances in technology to increase their own productivity. Education reform should be a more pressing issue than it is in order to sustain economic growth. Many unskilled workers likely have a marginal product of labor that is below the current equilibrium wage level and so it does not make sense for firms to hire them. Focusing on providing education to the most unskilled workers could improve the plight of the poorest American’s, while unlocking productivity from a currently under-utilized labor source. Galston proposes some education reform in his piece and he is right about that – he just needs to realize that the “Great Decoupling” itself is not the problem, but rather a symptom of deeper economic forces in the economy.