In a study released earlier this month called “The Economy Goes to College: The Promise of Higher Education in the Post-Industrial Age,” Georgetown University’s Center for Education and the Workforce (CEW) found that the well-paid, low-skill manufacturing jobs of the past have been replaced with high-skill service jobs requiring a college degree. Looking at the shift from an industrial economy in 1967 to a postindustrial economy in 2007, the study shows how changes in modes of production and consumption explain the rise in the college-educated service economy.
For example, technological advances in manufacturing driven and managed by college-educated workers have tripled output of mass production from $100,000 to $300,000 per person. These sharp increases in productivity have decreased the total manufacturing jobs available from 40% to 10% and increased the proportion of high-skill manufacturing jobs requiring a college education from 20% percent to more than 50%.
Increased mass production has lowered the cost of goods, allowing consumers to spend less in these areas and more in service industries, such as healthcare and business. The increase in disposable income has also allowed consumers to demand more variety and customization in their products. To meet these increasingly complex demands, employers are now requiring a higher skill set and education level in their workers.
Due to these changes, the wage difference between degree and non- degree holders has grown. In 1979, the wage premium for degree holders was 36% for males and females alike. By 2007. The wage premium skyrocketed to 82% for males and 75% for females. The authors of the report conclude that the increased wage premium for college educated workers is due to a lack of skilled and educated workers to fill job market demand, therefore widening the pay gap. As cited in the report, “It has become clear that in the future young adults will have to have some sort of postsecondary credential (including certificates) if they are going to earn middle-class salaries.”
The study recommends that more must be done to expand access to postsecondary education. Understanding the inequities produced along the lines of class, race and ethnicity, education can help to address these disparities for some of the most affected groups, African Americans and Hispanics. This includes not only making postsecondary education more readily available, but providing greater access for African Americans and Hispanics at more highly selective, top-tier schools where students are more likely to graduate. The graduation rates of Hispanics and African Americans at such institutions are 73% compared to 40% at less selective colleges.
Read the full report here.