Is America Prepared to Win the Global Skills Race?

Alan Greenspan, Chairman of the Federal Reserve Bank is famous for, among other things, saying things no one understands (and sounding smart doing it). Recently however, he managed to speak quite plainly (by Greenspan standards) about the skills problem that now exists within the American workforce. Here’s what the Fed Chief said about it during his semi-annual report to Congress on February 12, 2005 (For his complete statement see: http://www.federalreserve.gov/boarddocs/hh/2004/february/testimony.htm), “….For the past twenty years, the supply of skilled, particularly highly skilled, workers has failed to keep up with a persistent rise in the demand for such skills. Conversely, the demand for lesser-skilled workers has declined, especially in response to growing international competition. The failure of our society to enhance the skills of a significant segment of our workforce has left a disproportionate share with lesser skills. The effect, of course, is to widen the wage gap between the skilled and the lesser skilled….In a democratic society, such a stark bifurcation of wealth and income trends among large segments of the population can fuel resentment and political polarization. These social developments can lead to political clashes and misguided economic policies that work to the detriment of the economy and society as a whole.”

Although the term ‘bifurcation’ may sound strange, the problem that Greenspan describes should be quite familiar to anyone paying attention to the world around them for past twenty years or so. We are simply not turning out enough people with high-level skills nor are we ‘up-skilling’ enough lower-skilled workers to fill the gap. It is especially notable that the oracle of the American economy is concerned enough to raise this as a looming issue for the future of our economy.

Few doubt that this is a serious issue, but what should we be doing about it? Here’s what Greenspan had to say about the solution:

“As I have noted on previous occasions, strengthening elementary and secondary schooling in the United States--especially in the core disciplines of math, science, and written and verbal communications--is one crucial element in avoiding such outcomes. We need to reduce the relative excess of lesser-skilled workers and enhance the number of skilled workers by expediting the acquisition of skills by all students, both through formal education and on-the-job training.”

Okay, so we need to do better at making sure that as many people as possible develop the higher level applied and conceptual skills that the good-paying, wealth-creating jobs of the future will demand. But who should be taking the lead in tackling this problem head on? Well the rationally non-exuberant Mr. Greenspan cops out on this hot potato question – he finished his remarks to the committee by saying merely that the Federal Reserve will play its part by continuing its efforts to ensure price stability (i.e., fight inflation).

No worries - the Fed has fiscal policy covered. But who should be responsible for fixing the skills problem - government, schools, businesses or individual workers? The answer is all of them – indeed each one has an important role to play. Here are a few suggestions regarding what each of these stakeholders can do to reduce the high skills deficit:

· Government – State and local governments have yet another excellent reason to create communities that are compelling places to live for high-caliber talent. They must not only attract high-skilled talent but grow this level of talent as well using their educational institutions and assets. A key challenge is helping lower-skilled and even some higher skilled workers displaced by the global economy to repurpose and reskill themselves. They should either be directly provided with training and learning opportunities or given access to the financial resources and social support necessary to pursue new skills and career paths on their own.

· Educational Institutions – Few learning institutions have been able to ignore the skills problem, but despite a huge amount of attention and pressure, too many schools are still not equipping students to competitively vie for high-skill, high wage jobs once they enter the workforce. Many states have introduced standardized tests to measure basic proficiency and pressure schools to turn out students prepared to become productive citizens in the 21^st century global economy. These steps are necessary but not sufficient. More must be done to elevate student proficiency beyond the basics.

· Businesses – While companies are directly affected by the skills mismatch, many look to government and universities to solve the problem. Businesses however need to be more proactive in partnering with educational institutions and localities and contributing their financial resources and knowledge to craft curricula and create learning environments that will produce the types of educated and skilled workers needed today and in the future. Corporations also need to do more to help their workers upgrade their skills and retrain and repurpose themselves when necessary.

· Workers – Individuals should be proactive and self-reliant in finding opportunities to acquire the skills they need. Expecting training and learning opportunities to find you isn’t acceptable. Actively seek them out from schools, government agencies and corporations.

The future well-being of the American economy and our society depends increasingly on our ability to create high-skilled, high-paying jobs and our proficiency in preparing an ever greater proportion of our workforce to fill them. Each of us should put our ideology aside and start working together now.