Tag Archives: Japan

How to Build a Strong Economy: Education or Unions?

On May 15, The Chronicle of Higher Education reported that

The American higher-education system has long been seen as a leader in the world, but confidence in its future and its enduring value may be beginning to crack along economic lines, according to two major surveys of the American public and college presidents conducted this spring.

The surveys, conducted by The Pew Research Center and The Chronicle, reveal few surprises to those of us who have been paying attention to the latest crisis of higher education, but several points underscore the different views of the purpose of higher education among education professionals and between those with degrees and those who have not gone to college . For example, of the 1,055 presidents of colleges and universities across a broad spectrum, including four-year, two-year, public, private, and for-profit institutions, respondents are split roughly in half on whether colleges should be about work force preparation or “intellectual growth,” and the responses fall along a predictable axis, with four-year institutions arguing for the latter, and two-year and for-profits advocating the former.

Equally interesting is the difference between college graduates and those who have not (or have not yet) attended college in their responses to the same question on the mission of higher education. According to Pew, those who attended college more often believe that the mission of college is intellectual growth, while those who have not feel it should be work-force preparation. As significant are the responses, across all educational levels, to the question of what a young person needs to succeed in the world: a college education comes in third, behind a “strong work ethic” and the ability to get along with people..

The Chronicle survey addresses President Obama’s statement in last year’s State of the Union address of a national goal that the U.S would lead the world in degree attainment by 2020, so that we can lead the global workplace. The assumption that America will regain its competitive edge simply by awarding more college  degrees seems naïve, , particularly when the same respondents to the Chronicle survey report overall “lower quality” of preparation on the part of incoming students. Indeed, few of the college presidents surveyed think the goal is attainable: only three percent believe it is “likely” that the U.S. will achieve this benchmark, while 50 percent say it’s not likely.

Compounding the problem is that, even if this goal were achieved, a college degree is not a guarantee of gainful employment, though university marketers often suggest it is. Just last week, Catherine Rampell of the New York Times cited a study by Andrew Sum of Northeastern University that shows that only 55.6 percent of 2009 college graduates are working in jobs that require a college degree, while the other 44.4 percent are almost evenly split between working in jobs that require no degree and not working at all.  In the current economy, and as Sherry Linkon and Jack Metzgar have suggested in their analyses of predictions about job growth in the service sector, in the long run, college degrees are clearly not the answer for everyone.

Indeed, in his response to Obama’s aspiration, Brookings Institute fellow Grover J. ‘Russ” Whitehurst noted:

Germany has a stronger economy than France but half the percentage of young adults with a college degree.  Further, France has increased its percentage of young adults with college degrees by 13 percentage points in the last 10 years whereas Germany’s output of college graduates has hardly budged, yet the economic growth rate of Germany has exceeded that of France over this same period.  Obviously increasing educational attainment is not a magic bullet for economic growth.  Education credentials operate within boundaries and possibilities that are set by other characteristics of national economies.  We must attend to these if more education is to translate into more jobs.

And what are those “other characteristics” that might generate a stronger national economy? The answer is ironic, especially as governors in Ohio and Wisconsin are pushing anti-union bills through state legislatures. According to several studies, one of the conditions of strong economies like Germany’s is not increased degree attainment but strong unions and worker protections.

Marc McDonald suggests that when looking at two of the world’s nations with the lowest jobless rates, Germany and Japan, what emerges is a common factor of heavily unionized workforces:

Take a look at two of the most heavily unionized nations in the world: Germany and Japan. Both nations are thriving and have jobless rates far below the U.S. rate. Both nations still have large manufacturing sectors, which are heavily unionized. And both nations are exporting more than ever—even to low-wage nations like China. (Japan, for example, is one of the few nations on earth that has enjoyed a trade surplus with China much of the time in recent years)… Not only are Germany and Japan heavily unionized, both nations have strong pro-worker laws that back up their labor movements. In both nations, for example, it’s virtually impossible to fire full-time workers. Mass layoffs are very rare in both nations.

While many would balk at the suggestion that the U.S. emulate Japan, with its notorious reputation as a stressed out, all-work economy, McDonald notes that, on average, Japanese workers work fewer hours than their American counterparts and enjoy greater benefits. McDonald argues that because workers are protected within these economies, the companies that employ them must think beyond the immediate and develop long-term strategies, rather than short-sighted policies that focus solely on short-term growth and quick shareholder gains.

McDonald may be on to something in his suggestion that as corporations –  and increasingly universities — clamor for the “flexibility” that non-union and non-tenure workplaces promise, they may be embracing a short-sighted strategy. Writing in Harpers last year, Thomas Geoghegan, urges Americans to “Consider the Germans,” and in so doing he counters the claim that what American employers need is greater flexibility and fewer fetters that come with worker representation. In considering the ways that Germany continues to thrive in high-market manufacturing he notes:

All my life as a labor lawyer I have read the same thing in The Economist, about the United States and its wonderful labor-market flexibility. What they mean is: Unlike the Germans, U.S. working people are completely powerless. But it’s precisely because of our labor-market flexibility that we can’t compete. Our workers have been flexed right out of their high-wage, high-skill jobs and into low-wage, low-skill jobs. That’s bad for the workers, of course, and it’s also bad for the economy. The German model—with worker control built into the very structure of the firm—keeps bosses and workers in groups, rubbing elbows with each other, and sometimes just elbowing. It creates a group interaction that over time builds and protects what economists like to call human capital, especially in engineering and quality control. It’s precisely this kind of valuable capital that our atomizing “flexible” labor markets are so good at breaking up and dispersing.

Both McDonald and Geoghegan share the belief that while America obsesses (with good reason) over China, that the model to emulate is that of Germany, with its strong secondary education system and clear worker rights’ laws.

What’s the connection between the value of a college degree and the economic impact of unions?  Just this: if our goal as a nation is economic growth, then we might do better to focus on the rights and status of workers rather than on getting more people to go to college.

Tim Francisco, Center for Working-Class Studies