As I have written previously we need an education system that prepares students for the economy they will live in, not the economy that their parents and grandparents experienced. Unfortunately increasingly education policy is moving towards the economy of the past.
Both David Brooks and Thomas Friedman wrote recent columns that illuminate what the economy of the future will be like and what skills matter most to do well in that economy. Both worth reading!
Friedman in a column entitled Need a job? Invent it writes:
This is dangerous at a time when there is increasingly no such thing as a high-wage, middle-skilled job — the thing that sustained the middle class in the last generation. Now there is only a high-wage, high-skilled job. Every middle-class job today is being pulled up, out or down faster than ever. That is, it either requires more skill or can be done by more people around the world or is being buried — made obsolete — faster than ever. … My generation had it easy. We got to “find” a job. But, more than ever, our kids will have to “invent” a job. (Fortunately, in today’s world, that’s easier and cheaper than ever before.) Sure, the lucky ones will find their first job, but, given the pace of change today, even they will have to reinvent, re-engineer and reimagine that job much more often than their parents if they want to advance in it.
In the column Friedman interviews Harvard’s Tony Wagner on the education that our kids will need to succeed in the economy he describes. Wagner says:
“Every young person will continue to need basic knowledge, of course,” he said. “But they will need skills and motivation even more. Of these three education goals, motivation is the most critical. Young people who are intrinsically motivated — curious, persistent, and willing to take risks — will learn new knowledge and skills continuously. They will be able to find new opportunities or create their own — a disposition that will be increasingly important as many traditional careers disappear.” … Reimagining schools for the 21st-century must be our highest priority. We need to focus more on teaching the skill and will to learn and to make a difference and bring the three most powerful ingredients of intrinsic motivation into the classroom: play, passion and purpose.” (Emphasis added.)
Brooks in a column entitled The practical university explores the skills students need most from higher education. He writes:
… universities are places where young people acquire two sorts of knowledge, what the philosopher Michael Oakeshott called technical knowledge and practical knowledge. Technical knowledge is the sort of knowledge you need to understand a task — the statistical knowledge you need to understand what market researchers do, the biological knowledge you need to grasp the basics of what nurses do. Technical knowledge is like the recipes in a cookbook. It is formulas telling you roughly what is to be done. It is reducible to rules and directions. It’s the sort of knowledge that can be captured in lectures and bullet points and memorized by rote. … Practical knowledge is not about what you do, but how you do it. It is the wisdom a great chef possesses that cannot be found in recipe books. Practical knowledge is not the sort of knowledge that can be taught and memorized; it can only be imparted and absorbed. It is not reducible to rules; it only exists in practice.
Brooks uses Sheryl Sanderg’s book Lean In to explore the practical knowledge one needs to succeed in today’s and tomorrow’s economy. He writes:
Focus on the tasks she describes as being important for anybody who wants to rise in this economy: the ability to be assertive in a meeting; to disagree pleasantly; to know when to interrupt and when not to; to understand the flow of discussion and how to change people’s minds; to attract mentors; to understand situations; to discern what can change and what can’t. These skills are practical knowledge. Anybody who works in a modern office knows that they are surprisingly rare. But students can learn these skills at a university, through student activities, through the living examples of their professors and also in seminars.
Play, passion and purpose. The ability to be assertive in a meeting; to disagree pleasantly; to know when to interrupt and when not to; to understand the flow of discussion and how to change people’s minds; to attract mentors; to understand situations; to discern what can change and what can’t. Think about how aligned our education system is with these skills that may well matter most to doing well in a career of forty years or more. Think about how well you can learn these skills –– in what is increasingly becoming the preferred delivery system of policy makers and pundits for future education –– online or in a virtual school. And then be very worried that we are headed in the wrong direction.
I have written previously that the state budget policy on a bipartisan basis for two decades has made tax cuts, corrections and health care the priorities. Which by necessity –– or as Bill Clinton says math –– has meant that education, particularly higher education, and support for local governments have been devastated.
Every time I write this I hear from my conservative friends that the Democrats don’t really believe in tax cuts. What matters, of course, is what they do and how they vote. Now we have more evidence of tax cuts as the priority on both sides of the aisle. The House Democrats have just released their budget priorities with more tax cuts front and center. And, what matters most, no replacement revenue. Its one thing to favor shifting the tax burden away from low and middle income households to corporations or upper income households. (Or as Governor Granholm and Business Leaders for Michigan previously proposed a sales tax on services.) But that is not what the House Democrats proposed.
If implemented, these tax cuts, just like those of the last two decades, would have the same effect: diminish the state’s ability to make public investments in education, infrastructure and quality of place. The things that matters most to growing the economy. Saying you are in favor of these public investments while proposing large tax cuts with no replacement revenue means you are not really in favor of increased public investments in education, infrastructure and quality of place.
- Spending cuts followed by spending restraints (Michigan, not the nation, has already done the spending cuts)
- Making public investments that grow the economy, particularly education and infrastructure
- Higher taxes
It’s the framework Governor Blanchard followed successfully and that President Obama proposed for the nation in his latest budget. They agreed with Friedman and Mandelbaum who wrote: to assure our “… economic future we will have to spend more, not less, on some things: infrastructure and research and development, and probably education as well.” And to produce the revenue to make those strategic investments requires both spending restraints and tax increases.
I have agreed to write a monthly blog for the online edition of the Grand Rapids Business Journal. I’m excited about the opportunity. You can find my initial post here.
The topics will be the same as I write about here. But obviously with a focus on the West Michigan economy. To us that is the seven county Grand Rapids, Holland, Muskegon region. As we have explored many times in the past, what happens in the Grand Rapids metro is very important to the future health of the Michigan economy. Successful big regional economies are what make a state prosperous. So for Michigan to return to prosperity metro Detroit matters most, but metro Grand Rapids and Lansing are real important too. As the three of them go, so goes Michigan.
And all three are facing many of the same challenges. Despite all the talk of how different the regions are, the data indicate that they are all in the same boat. Too concentrated in the economy of the past, rather than the knowledge-based economy that is the core of successful regional economies; undereducated and without a vibrant central city that is essential to retaining and attracting mobil young talent.
So I will explore in my grbj.com blog where metro Grand Rapids is today, where it needs to go in the future to be prosperous and what it needs to do to get there.
Good news! The Bureau of Labor Statistics just released revised data on Michigan employment for 2011 and 2012. They show larger job gains than previously reported. For the two years combined Michigan added 160,800 jobs, an increase of 4.2%. After a decade of annual job losses (totaling 813,000) this is welcome news indeed.
What I want to explore in this post is how does this compare to past recoveries. Particularly the first two years of the Blanchard Administration (which I was part of) when Michigan was also recovering from a strong national downturn and a near collapse of the Detroit 3. As I wrote in a previous post:
… Governor Blanchard inherited a Michigan economy in worse shape – one can make a strong case far worse shape – than Governor Snyder. We have short memories. The story we have told ourselves over and over again that Governor Snyder inherited the worse economy in Michigan since the Great Depression is not true. Jim Blanchard took office in January 1983. The month before (December, 1982) the state’s unemployment rate was 16.8%. And going up. That month was the peak unemployment rate during the serve downturn of the early Eighties. For all of 1982 the unemployment rate was 15.6%. Rick Snyder took office in January 2011. The month before (December, 2010) the state’s unemployment rate was 11.2%. And going down. The peak Michigan unemployment rate during the Great Recession was 14.2% in August, 2009. When Governor Snyder took office the Michigan unemployment rate had been falling for 16 consecutive months. For all of 2010 the unemployment rate was 12.7%.
Michigan job growth for 1983 and 1984 was 187,700, an increase of 5.9%. The year before (1982) Michigan lost 171,000 jobs. The year before Governor Snyder came to office (2010) Michigan lost 7,000 jobs. Michigan added 180,000 more jobs in 1985 and 96,000 in 1986. No one expects that size job growth in Michigan the next two years.
So what drives these economic turnarounds? The Snyder Administration and its supporters argue that it is their policies working. Basically big business tax cuts, smaller government and now right to work. The Blanchard Administration (as do state elected officials of both parties across the county when their state economies are strong) argued that the Eighties turnaround was driven by their policies working. But in many ways the policies it pursued are the exact opposite of the Snyder Administration. A big income tax increase (to 6.35%), no reduction in the so-called job killing Single Business Tax and once the economy began to expand increased state investments in education, infrastructure and activist business development programming.
So what is the prime driver of the recovery? Quite simply the national economy and particularly the fortunes of the domestic auto industry. Both Governor Blanchard and Governor Snyder took over immediately after the domestic auto industry was in such bad shape that it required federal government bailouts. Those bailouts –– as we explored here and here –– allowed the Detroit Three to reposition itself to regrow once the national economy and auto sales rebounded.
As I wrote previously: … “I don’t believe that the Blanchard tax increases were a major reason for Michigan’s growth in the Eighties. Anymore than I believe the Engler tax cuts were a major reason for Michigan’s economic growth in the Nineties. Or the Snyder business tax cuts have much of anything to do with the growth we are now experiencing that started at the end of the Granholm Administration. … The evidence is overwhelming that what drives Michigan’s economy is the national economy and, most importantly, the domestic auto industry.”
The Bureau of Labor Statistics recently released data on unemployment and average wage by education attainment for 2012. As their education pays chart (below) demonstrates the evidence is overwhelming that those with a four year degree or more work and earn more than anyone else. End of story!
And yet its not end of story. There continues to be a constant barrage of stories that getting a college degree is no longer a good investment. That there are too many college graduates. That the real job demand is in lower skilled occupations. Its malarkey!
To make matters worse, in addition to too many of us are giving our kids bad advice, policy increasingly is moving in the wrong direction too. Politicians from both parties run on more and better jobs platforms and then when in office cut funding for the driver of more and better jobs: higher education. Not smart!
Jordan Weissman in the Atlantic in an article entitled A Truly Devastating Graph on State Higher Education Spending writes about states across the country slashing higher education funding since the onset of the Great Recesssion. (Only energy rich states Wyoming and North Dakota have increased higher education funding since 2007.) The result: much higher tuition. He presents data (below) that demonstrate “deeper budget cuts did generally correlate with bigger tuition increases.”
If more and better jobs are the goal: support for higher education is one of, if not the most, powerful lever available to policy makers. We need to end this disconnect between policy and the economic reality.
Catherine Rampell in a New York Times Economix blog entitled Health Care Aside, Fewer Jobs Than in 2000 makes the case that other than health care the American economy has not added jobs for more than a decade. Pretty amazing and worrisome. Almost certainly unsustainable.
The basic facts: “In 2000, the economy had about 121 million non-health-care payroll jobs. Today, on a seasonally adjusted basis, there are 120 million non-health-care jobs. Meanwhile, the health care industry has added about 3.6 million jobs in that time frame, growing about 33 percent (14.5 million health care jobs today versus 10.9 million in 2000).”
Its no wonder that health care occupations end up on all the “hot jobs” lists. And one of the reasons there is such a big push for education to emphasize math and science. But that is all based on the assumption that health care will continue to be sheltered from globalization and technology. That health care will be delivered largely face to face by professionals serving patients.
In a facsinating article entitled The Robot Will See You Now the Atlantic explores the revolution that may well be around the corner in how health care is delivered. Which if it comes to pass will substantially reduce the need for health care professionals. (And the article claims is likely to sustaintially improve the quality of heath care. Which, of course, is far more important that what jobs are likely to available in the sector in the future.) They write:
But according to a growing number of observers, the next big thing to hit medical care will be new ways of accumulating, processing, and applying data—revolutionizing medical care the same way Billy Beane and his minions turned baseball into “moneyball.” Many of the people who think this way—entrepreneurs from Silicon Valley, young researchers from prestigious health systems and universities, and salespeople of every possible variety—spoke at the conference in Las Vegas, proselytizing to the tens of thousands of physicians and administrators in attendance. They say a range of innovations, from new software to new devices, will transform the way all of us interact with the health-care system—making it easier for us to stay healthy and, when we do get sick, making it easier for medical professionals to treat us.
… Specifically, they imagine the application of data as a “disruptive” force, upending health care in the same way it has upended almost every other part of the economy—changing not just how medicine is practiced but who is practicing it. In Silicon Valley and other centers of innovation, investors and engineers talk casually about machines’ taking the place of doctors, serving as diagnosticians and even surgeons—doing the same work, with better results, for a lot less money. The idea, they say, is no more fanciful than the notion of self-driving cars, experimental versions of which are already cruising California streets. “A world mostly without doctors (at least average ones) is not only reasonable, but also more likely than not,” wrote Vinod Khosla, a venture capitalist and co-founder of Sun Microsystems, in a 2012 TechCrunch article titled “Do We Need Doctors or Algorithms?” He even put a number on his prediction: someday, he said, computers and robots would replace four out of five physicians in the United States.
Will machines eliminate 80% of doctor jobs? Who knows? But probably unlikely and certainly not soon. But it also almost certain that smarter and smarter machines will dramatically change the way health care is delivered and with it both the demand for health care workers and the occupational structure of the sector. (The article speculates that along with fewer doctors the sector will need more IT workers as well as nurses and para professionals.)
The article adds to the evidence that predicting job needs into the future is getting harder and harder. And that we need to resist calls to alter our education to prepare people for specific occupations that we believe will be in demand in the future. That kind of narrowing of education is almost certainly not good for either the student’s career or the economy.
Two important editorials highlight how far off track too many state policy makers are when it comes to education policy. And that the consequence of bad policy is harmful not just to Michigan kids (what matters most) but also to employers and the economy. Both are must reads!
The Detroit News in an editorial entitled Michigan kids deserve a strong educational foundation: Weakening state curriculum would make Michigan students less competitive makes the case against lowering high school graduation requirements. Adoption of those standards seven years ago was one of the signature accomplishments of the Granholm years. They passed with broad bi-partisan and business community support. They represent a major step in educating all Michigan kids for the economy they are going to live in rather than the one their parents and grandparents lived in which is in irreversible decline.
That is now under attack in the legislature where bi-partisan legislation is under serious consideration to roll back the standards in favor of reemphasizing vocational training. Not smart! As the News writes:
The Grand Rapids Business Journal in an editorial written by Carol Valade –– Gemini Publications’ editor –– entitled Current education policy creates another generation unfit for jobs makes a powerful case that preparing college students for specific occupations that policy makers believe are in high demand is not good for either students or employers. Valade writes:
What matters most is that Snyder (and politicians everywhere) is attempting to set long-term public policy, believing that the government can solve the problems of business and force colleges and universities deplete their dwindling state revenues to pump up student levels and programs the politicians believe are necessary to fill the “skills gap.” It is especially embarrassing — and inexplicable — to see Snyder, especially given his business background, walk this state into such an abyss. … But the bottom line is that no one knows — especially not politicians — what skill sets will be needed next. Such is often the theme of columnist Thomas Friedman, who cites “the curiosity quotient” as being more important than IQ in a “world guaranteed to change in unpredictable ways” and the continuing suddenness of such change as has been witnessed for more than 10 years.
Good news. Both Detroit and Grand Rapids are on Forbes list of 15 emerging downtowns across the country. Obviously good news for Michigan’s two largest cites. But, more important, its good news for their region’s and the state’s economy.
Why? Because as Forbes writes –– and we have noted repeatedly –– “One of the main factors businesses consider when deciding on where to relocate or expand is the available pool of college-educated workers. And that has cities competing for college-educated young adults. … And there’s one place this desired demographic, college-educated professionals between the ages of 25 and 34, tends to want to live: tight-knit urban neighborhoods that are close to work and have lots of entertainment and shopping options within an easy walk.” (Emphasis added.)
The reality is that the most prosperous places in the country, by and large, are big metros anchored by vibrant central cities. With the core characteristic of the central city being a high proportion of its residents with a four year degree. The all too prevalent Michigan belief that central cities are part of our past is simply wrong. As is the notion that cities are only where the poor live. College educated Millennials in particular are increasingly choosing to live in and around big city downtowns. Michigan needs it biggest cities –– Detroit primarily, but also Grand Rapids and Lansing/East Lansing –– to be talent magnets. If not, its hard to imagine Michigan being competitive in retaining and attracting the knowledge-based enterprises which are increasingly driving the American economy.
As Forbes recognizes, Detroit and Grand Rapids are making progress. But there is a long way to go. Its time for the state to make central cities a lynchpin of its economic development efforts.
The Detroit News published today an op ed I wrote about what is needed to recreate vibrant central cities in Michigan –– particularly Detroit. The op ed can be found here.
Its basic theme: “The purpose of the exercise: It is not simply to reduce the deficit, but to ensure prosperity. Solvency is vital, but it is not enough.” From That Used To Be Us by Thomas Friedman and Michael Mandelbaum.
As we enter the age of financial managers for Michigan’s major cities we need to follow the advice of Friedman and Mandelbaum. Balancing city budgets, certainly necessary, is not enough. The end game should be cities that are attractive places to live, work and play. That individuals and enterprises want to call home. And that requires adequate financing and the ability to provide basic services and amenities. Simply balancing budgets is not enough.
Getting this right matters most in Detroit. As we explored previously not just for the city but also for the region and state. If Detroit does not become a talent magnet its hard to imagine how either the region or state are prosperous in the long term.
In a recent Detroit Free Press op ed John Austin writes about a Michigan Future report he and I worked on entitled Revitalizing Michigan’s Central Cites: A Vision and Framework for Action. The report was published in 2003.
As John writes:
We said a grand political bargain needed to be made … The basic deal was this: City officials would need to make tough political decisions — namely, changing the way basic public services are delivered to be at the same quality and the same cost as those of their surrounding suburbs, and the development of a measurement system to hold them accountable; and regionalizing or incorporating many public services that could be managed more effectively or efficiently at the county, regional or state level (think transit and parks systems). In return for these changes, the state would establish Michigan’s urban cities as the priority for a variety of investments in infrastructure, housing, parks and public safety. In other words, the governor and state would wheel up some heavy financial artillery toward investing and building up core cities. They would also promise that regionalization of services and tax base had to be coupled with a tangible improvement in the quality of services provided to current residents of central cities — meaning any trade of “control” would be met with clearly enhanced services.
Obviously nothing like that happened in 2003 or in the years since. By and large actions at the state, regional and local levels have made things worse –– particularly in Detroit. Far too many central cities didn’t make the tough political choices to balance their budgets and reorganize to provide higher quality services at a competitive cost. And the state and regions didn’t make central cities a priority for public investment.
In fact state policy has made it harder to provide quality services and amenities the last decade –– particularly the last two years –– with revenue sharing cuts, transportation spending cuts and formulas that are anti urban/anti transit, property tax cuts and limitations, and the elimination of the brownfield and historic preservation tax credits.
So the predictable happened: our central cities continued to depopulate and too many of them ran out of money. What has changed since 2003 is the importance of vibrant central cites to regions and state. More so today that a decade ago strong central cities, which are attractive places to live particularly to young mobile talent, are a central ingredient to prosperous regions and states.
The fix remains the same: we need central cities which are able to provide quality services at reasonable costs and we need more investment from the state and regions to make our central cities attractive places to live, work and play. These need to be done simultaneously: its not just structurally balanced budgets or structurally balanced budgets first and then we will consider state and regional investments. But both/and. Our central cities need to be responsibly managed and we need the state and regions to make vibrant central cities a priority.