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"It's the Economy, Stupid!"

February 24th, 2014 by dfarish

 

During the presidential election campaign of 1992, and on the heels of a short, sharp national recession, James Carville, a political advisor to the Clinton campaign, famously characterized what the election was all about by coining the phrase that I’m using as the title of this blog post.

Now here we are, 22 years later, and in every political campaign since the Great Recession of 2008, this same phrase—although now tellingly focused specifically on jobs—is the basis of the platform of almost every candidate for office.

The problem is that the focus on jobs—understandable, given that in almost six years the economy has not fully restored the jobs lost in 2008 and 2009—goes well beyond mere political sloganeering.  It permeates every conceivable facet of society:

  • A pipeline to bring oil from the tar sands of Alberta to the U.S.?  Yes, it may be an environmental disaster, and lead to a significant increase in the release of greenhouse gases—but the pipeline project will put “20,000 US workers to work and spend $7 billion stimulating the US economy," (TransCanada CEO on Proposed PipelineFox News, August 31, 2011).
  • Raising the minimum wage, and lifting millions of Americans out of poverty?  A seemingly worthy goal, but it will cost us 500,000 jobs, (Congressional Budget Office report, February 18, 2014).
  •  Obamacare?  Sure, it will provide medical coverage for millions who do not now have insurance, but people with medical coverage will work less and that will cost us “2.3 million jobs,”(Fox News, February 4, 2014).
  • Millions of people are unemployed and looking for work, while open positions go begging?  Well, if higher education would simply close the skills gap, many of these people could get jobs. In fact, if higher education was more focused on training people for the jobs that are now needed, and less on the idea of a liberal arts education, we would all be better off, (Obama vs. Art History, Inside Higher Ed., January 31, 2014).

Of course, generally unstated is the qualifier:  it’s not just more jobs, but more good jobs:  jobs that pay a living wage, and allow people to reach (or stay in) the middle class. They were here, and in numbers, just a few years ago. Good political leadership would bring them back—and since they aren’t yet back, that must mean we have poor political leadership, and the incumbents should be thrown out of office—and that attitude prompts every politician to promise more jobs, good jobs—if you will just elect him or her.

Well, I’m sorry to be a wet blanket, but this very serious problem is much less about the quality of political leadership, or a wrong-headed educational focus, than it is about some fundamental changes in the nature of our economy—and solving the problem will require careful and complex solutions, not just a change in office holders.

In his February 14 column in The New York Times, Joe Nocera focused on some differing views by economists and computer scientists on the impact of digital technology on middle-class jobs. One sobering example from the world of photography compares once-venerable Kodak, with 140,000 employees at its high water mark as a company, with Instagram that, when sold to Facebook in 2012 for $1 billion, had just 13 employees.

The industrial revolution that began in the 18th century and gradually transformed America (and most of western Europe) from an agrarian economy to a manufacturing economy, dramatically improved the lives of millions of workers—but only after they left their farms for work in the city, gained universal access to a K-12 education, benefited from the creation of child labor laws, and formed labor unions.

Now we are in the midst of another seismic shift, as we transition from a manufacturing economy to a knowledge economy. Of course, manufacturing won’t disappear, any more than farms disappeared two centuries ago—but the proportion of the economy that is based on manufacturing will be significantly less, just as agriculture assumed a lesser role in the economy of the 19th and early 20th centuries.

It is wrenching when whole industries disappear.  The loss of the New England textile mills by the mid-20th century, or the near elimination of steel manufacturing in the Midwest over the last 50 years, disrupted hundreds of thousands of lives, and dramatically changed local economies—as also happened with logging and fishing, two industries that employ a fraction of the workers they did two generations ago.

In the past, it always seemed that new industries replaced those that were lost, and workers who lost their jobs could always find new ones (and often at higher pay). Today, however, the workforce is being increasingly bifurcated between those who find work in the service industry—often at very modest wages—and those whose education allows them access to much better paying jobs in technology.

So there are two points to be made: First, digital technology may well be creating jobs—but not as many as are being lost when computers and robots replace workers in jobs that are repetitive in nature (think assembly line). Moreover, many of the new technology jobs require considerably more education than was true of the jobs that are being lost.  Second, service jobs will continue to increase in number, but, for the foreseeable future, most will be low-paying, and certainly less lucrative than the manufacturing jobs that have been permanently lost.

This situation poses real challenges for our society in general, and our educational system in particular. The aspiration of many families to see their children move from a blue-collar world to a white-collar world has meant their needing a college education. Ironically, the consequence has been that some often well-paying blue-collar jobs are going unfilled, even as we have seen an increase in unemployed, or underemployed, college graduates.

This problem is not limited to the United States. Unemployment is much higher in many European countries, and many of those who are unemployed are college graduates—as is true in many developing countries, where the emphasis on increasing the number of college graduates was not accompanied by the rapidly growing economy necessary to employ these graduates.

The bottom line is that the new economy is not well designed to absorb new workers, be they high school dropouts or college graduates, unless they have marketable skills. That most certainly does not mean that college students should avoid the liberal arts, or major in subjects that do not interest them. What it does mean is that, in selecting a major and hopefully at least one minor, a college freshman should plan from the outset to acquire the skills and knowledge that include a focus both on quality employment directly upon graduation, and on skills and knowledge that will last a lifetime.  A major in the liberal arts, with a minor in a professional field, or the converse—in either case, a balanced educational portfolio—is the best option in an uncertain world.

At the risk of seeming self-serving, here at Roger Williams University that is exactly the path we strongly advise our students to follow—and increasingly they are following this advice, and obtaining great jobs when they graduate.