You are an average student attending high school in Middletown, U.S.A. You haven't a clue what to do with your life, but you don't want to keep working at the local record store earning minimum wage. So you turn to the school's guidance counselor for advice.
Should you take biology next semester, you ask? Should you move on to French III? What about calculus? Just what will it take, anyway, to succeed later in life?
The counselor gives you a weary glance. "All day I've been telling kids like you to study hard, take a full load of 'solid' subjects, and master skills like math and science that will be 'critical' in the twenty-first century. But I'm too tired to lie any longer." He points to a stack of journal articles. "Practically every one of those studies tells the same story. It doesn't matter how well you do on standardized tests, how good your grades are, or how many academic subjects you take if you don't plan to go to college. Your future standard of living will depend mostly on luck, family circumstances, and how many years you go to school. So if you enjoy biology or calculus, great, but otherwise don't sweat it."
How could your counselor be right when the conventional wisdom, repeated endlessly by national commissions, business organizations, and educators themselves, insists just the opposite? You've heard the crisis rhetoric about failing schools often enough. "Knowledge, learning, information, and skilled intelligence are the new raw materials of international commerce," the National Commission on Excellence in Education asserted in its influential 1983 call to arms, A Nation at Risk. "If only to keep and improve on the slim competitive edge we still retain in world markets, we must dedicate ourselves to the reform of our educational system." The National Education Association added its voice to the chorus in 1991, declaring, "America cannot afford to continue to underfund education. Shortages in skilled workers threaten our economic posture in a global economy."
Guided by such imperatives, an army of reformers demands more academic courses in high school, tougher graduation requirements, longer school days, and an extended school year to "catch up" with competitor nations. Such educational prescriptions for U.S. economic woes "have been so convincing that there has been little call for evidence," cautions Stanford University economist and education expert Henry M. Levin. "It is simply assumed that much of the economic challenge has education at its roots and that more education and higher test scores will solve the problem."
In fact, although education is one ingredient in national prosperity, your counselor's advice is hard to disprove. Nearly every expert who has studied the relationship of education to individual economic success finds it tenuous at best, at least through high school. More years of formal schooling certainly pay off for most people. But whether you actually learn anything in high school doesn't seem to matter to employers. And American students have been quick to catch on to this fact.
"Over and over we find the relationship between high school grades and unemployment, earnings, and job quality is practically zero," says James Rosenbaum, an education researcher at Northwestern University. "If you interview employers, they say they don't use anything in the high school transcript in hiring, with the possible exception of attendance records. We have set up a system with no incentives to do well in school."
If most American high school students socialize more than study, if they watch several hours of television for every one of homework, if their intellectual attainment makes even those who go to college fit only for remedial classes, don't just blame the schools. Blame employers, who broadcast loud and clear by their hiring practices that general academic skills matter little for the majority of workers.
Robert Crain at Columbia University analyzed a 1984 national survey of more than 1,900 personnel officers, and found that only 5 percent had problems finding qualified high school graduates. Only 12 percent said they cared about grades; a mere one in nine employers rated ability to "handle complex numerical calculations" as important. What really mattered to recruiters was that an applicant have a good attitude ("no back talk"), be dependable ("comes to work regularly"), and be moral ("doesn't steal the company equipment"). "We seem to have obtained rather firm evidence that quality of high school education is not relevant in today's business," Crain concluded bluntly.
Since then, numerous other surveys have confirmed these results. A 1990 study by the Commission on the Skills of the American Workforce, chaired by Bill Clinton's close friend Ira Magaziner, found that "while businesses everywhere complained about the quality of their applicants, few talked about the kinds of skills acquired in school. The primary concern of more than 80 percent of employers was finding workers with a good work ethic and appropriate social behavior."
The primary stated aim of schools, to impart intellectual skills, seems to matter least in the workplace, economic studies show. Northwestern University economist Joseph Altonji finds almost no relationship between solid academic courses taken by high school students who graduated in 1972 and their later wages. Attending high school an extra year (versus dropping out) bought students roughly 7 percent higher wages. But taking an extra year of science, math, English, social studies, and foreign language raised their future pay only 0.3 percent. "In other words," Altonji concludes, "the effect of a year equivalent of courses is much smaller than the value of one year in high school."
Several new studies of workers born in the 1950s and 1960s, furthermore, find no correlation at all between general measures of "school quality," such as class size and teacher education, and economic success. The University of California Santa Barbara's Jeff Grogger, author of one such paper, also finds that, holding years of schooling constant, earnings are not increased by attending a private or parochial high school, receiving computer training in high school, or being in a class with a high percentage of students enrolled in academic courses.
These facts hardly lend support to pundits who see educational reform as the prerequisite for economic well-being.
As for students who, by virtue of native intelligence or hard work, score far ahead of the pack on achievement tests for math, vocabulary, and other skills supposedly in demand by America's employers, they, too, enjoy only a small pay premium, according to a new study by economists at Harvard and MIT. Six years after graduating from high school in 1980, men who had scored at the eighty-fourth percentile in a test of basic math skills:
* earned on average only 60 cents an hour more than the average student, and
* earned less than 1972 graduates at the fiftieth percentile with comparable experience.
The impact of superior reading and vocabulary scores on wages was almost nil. "So the notion that only fixing up skills will solve our problems is wrong," says Harvard economist Richard Murnane, one of the study's coauthors. "It won't solve the productivity problem or the low-wage problem."
Investing more in higher education is no more likely to jump-start the economy. A huge surge of college graduates entered the labor market in the 1970s, thanks to the baby-boom bulge and the Vietnam War draft exemption. Yet productivity and wage growth plummeted after 1973 for reasons that remain mysterious. "[G]rowth involves more than simply improving school quality and letting the market take its course," observe Murnane and MIT economist Frank Levy. "The evidence, . . . as we read it, is that school reform by itself has little power to unravel national productivity problems."
While higher education does raise wages on average, the economy does not fully utilize even the minority of workers with college degrees. The Bureau of Labor Statistics estimates that fully a fifth of all college graduates who entered the job market from 1984 to 1990 ended up unemployed or in occupations not requiring a college education. It projects that that fraction may grow to 30 percent by the year 2005. The slacking demand for many educated workers drove the average wage of men with four years of college down by 12 percent between 1973 and 1991, and wages continue to fall.
"We have a lot of overeducation relative to the capacity of the economy," says Stanford's Levin. "This view is very unpopular. It doesn't win adherence from industry, which uses the excuse that kids aren't well-enough educated, or with educators who want to increase investment in schools. But I'm not sure sheer numbers of new credentials are called for."
What is called for--along with more traditional economic remedies, such as increasing investment in physical capital--is workplace reform. Employers need to remove layers of autocratic management, draw workers into the decision-making process, and expand training programs to cover employees who are now expected to function as little more than low-paid robots.
Even workers with limited academic ability can set new standards of excellence when creative employers transform labor-management relations, ensure greater job security, and invest in continuous training. At the famously successful joint venture of Toyota and General Motors at the NUMMI auto plant in Fremont, California, workers who had once been considered among the dregs of the GM workforce have been transformed by Japanese management methods into some of the finest and most quality-conscious auto assemblers in the world. New applicants are judged on the basis of a battery of tests and interviews that measure their team orientation, interpersonal skills, and mechanical aptitude more than their academic excellence. The plant does not even require a high school degree. Yet it is on the cutting edge of American manufacturing.
As forward-looking employers in higher-tech fields, such as Motorola and Xerox, begin shifting more authority for quality control and innovation down the line, teams of production workers may well need a greater grasp of mathematical reasoning and statistics to do their jobs. Such firms will get the skills they need the way employers always have: by paying for them. Just as college students have responded to market forces by studying engineering and business in record numbers, so there is every reason to believe that high school students will begin mastering the basics better if and when employers start rewarding their efforts.
The real challenge is how to hasten the transformation of American work to a higher-skill, higher-wage path. There are no easy answers. Perhaps the best course is to let the full force of international competition prod complacent American managers to try new ways of doing business. Faced with challenges from Japan and other countries, many of them are now experimenting with better ways of unlocking the creative and intellectual skills of their most valuable asset-- workers.
As more employers begin to reward lifetime learning on the job, they will simultaneously foster greater learning in America's schools. Until that lesson starts to drive national policy, educational reform movements will remain as uninformed as the students they seek to uplift.
Jonathan Marshall is the economics editor of the San Francisco Chronicle.