Thursday, September 19, 2013

The Costly 20% Left Behind

Talk shows are sure to disproportionately draw callers who disparage public servants, but a Gallup tracking study shows that the proportion of these workers that are fully engaged in their jobs is the same as those in the private sector.

This is a workforce problem, not one unique to government.

Learning this, some would sputter that public servants are different because they are paid with tax dollars, but economists point out that as consumers, we in fact shoulder a hidden tax from private sectors workers who are no more or less engaged in their work.

Alarmingly, a new study co-authored by Dr. Peter Ubel at Duke’s Fuqua School of Business here in Durham reveals that one-fifth of the participants in his research study which was conducted with Dr. David Comerford at the University of Stirling, ”preferred boring but easy” tasks to “engaging but demanding” tasks.

My forty years of experience as an executive tells me those with what Ubel calls “effort aversion” probably coincide with those in the Gallup study who are “actively disengaged” across both the public and private sectors.

In the latest ranking of global competitiveness, America has climbed back to fifth in the world based on twelve measures related to institutions, infrastructure, higher education and training, health, technological readiness, innovation etc.

One measure is labor market efficiency.  This includes such things as the ability to to get the “best effort” from people in their jobs, “meritocracy in the workplace” and the “flexibility to shift workers from one economic activity to another” without social interruption.

The United States ranks fourth in the world on labor efficiency but I doubt this plumbs the price we are paying by having 2-in-3 workers disengaged and 1-in 5 actively disengaged and effort adverse, two areas that in my opinion require serious attention.

Unfortunately, a majority of Americans have lost faith that working hard and determination pay off.  Only a little more than 4-in-10 now believe that capitalism works, even somewhat.

Fifty-seven percent of employed U.S. adults say the work they do does not require a college degree, unchanged from 2005. Even four in 10 employed college grads say a degree isn't necessary for what they do. 

A report this summer entitled How Technology Is Destroying Jobs was published in the MIT Technology Review.  It confirmed that while technology improves productivity, it now creates a net loss in jobs. 

It has also polarized the workforce and hollowed out the middle class.

While technology has created workforce upheaval ever since the Industrial Revolution in the 1700s, through the 1990s the result was still a net positive in the number of jobs.

With the technology fueled during WWII, non-farm job growth was nearly 38% during the 1940s when I was born.  It fell to less than 20% in the 1990s and minus 1% in the 2000s.

Since 2007 when the Great Recession began, we have been obsessed with the devastation wrought by the financial industry on the economy .  But the more strategic issue is that our troubles in the longer term relate to technology.

It isn’t just a question of training or re-training.  If the jobs don’t disappear entirely, at the very least they will be dumbed down.

For example, one of the reasons the economic stimulus didn’t work better than it did was not only because it was too small but because much of the work it fueled is increasingly done by machines.

At the conclusion of that report an expert is quoted as saying , “technology progress does grow the economy and create wealth but there is no economic law that says everyone will benefit.

Gallup’s “payroll to population” metric is not much higher than when I retired nearly four years ago even though the unemployment rate is several points lower.  There are positive signs, but underemployment is still between 17% and 18% of the workforce.

With half of all adults employed today, it is no surprise that nearly 6-in-10 say that their work does not require a college degree including nearly 7-in-10 Americans who make between $30,000 and $74,999 who also agree as do more than 8-in-10 who make less than $30,000.

The belief that jobs no longer require a degree includes a third of those in professional, executive and managerial positions and nearly half white collar jobs.

Maybe most telling of the “dumbing down” is that four in ten college grads and 13% of those with a postgraduate degree now say the work they are doing does not require a degree.

Studies show that the most important thing employers expect people to learn in college is how to think critically and analyze and solve complex problems.  It seems that employees, though, are feeling those skills are less and less significant due to technology.

For an excellent and entertaining overview of why college is worth the cost including time and effort, click here to watch a quick “Question Tuesday” video by author John Green, where he makes the case that a person only has to make a $1.75 more per hour to make college worth it.

The U.S. Census just released an update about the 19.9 million students who are attending college this year, nearly 7% of the population over the age of 3.

Impressive is that they spend $117 billion on discretionary items (car, clothes, cellphones, entertainment, personal care etc.) They spend another $287 billion on non-discretionary things like room and board and tuition for a total of $409 billion.

That’s a significant part of the economy in itself.

Those attending college by ethnicity are Hispanics 3.4 million (up nearly half a million this year) Blacks just over 3 million, Asian Americans 1.45 million and Non-Hispanic whites 11.65 million.  Another way to look at this is by percent within each group, 6.8% of Hispanics, 8% of Blacks, 9.4% of Asian Americans and 6.2% of Non-Hispanic whites.

Only 5.5% of white males are enrolled.  Overall, nearly 8-in-10 college students are between the ages of 18 and 24. 

One could assume that the 7% of the population enrolled in college are predisposed to be engaged and willing to take on tough assignments when they enter the workforce but there are far too many other factors at play.

In my opinion, just as important as learning to critically think, and analyze and solve complex problems are to the workforce is social and emotional learning, including the ability to resolve conflict, which some states such as Illinois are wisely making a part of the K-12 school curriculum.

This is also something conservative columnist David Brooks synthesized from many studies as crucial to achievement in his Rousseau-styled 2011 book The Social Animal.  

The issue of education and job creation is far more complicated than what some politicians relate.  The solution isn’t just for everyone to be good at math or become engineers and computer scientists.  Nor is it about shortchanging liberal arts subjects which employers see as crucial.

It isn’t as easy as buying local or focusing on manufacturing jobs or rolling back globalization and technology in a return to isolationism.  Nor is this as simple as everyone having two parents or being home schooled or embedding certain values.

This is an extremely challenging conundrum, but whatever the solution, it will involve doing something about the 1-in-5 workers who are actively disengaged and effort averse across every sector of the economy.

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