Education

I spent a fascinating day last Thursday at meeting organized by Atlantic magazine under the title: Manufacturing’s Next Chapter. Here was the most startling piece. According to the Bureau of Labor Statistics, employment in manufacturing fell from 17.1 million jobs in January 2001 to 11.9 million jobs in January 2013, a staggering decline of 5.2 million jobs. And yet the hottest topic at the meeting was the complaint that there is somehow a shortage of qualified workers holding back the expansion of manufacturing in the United States. The issue of whether a “skills gap” exists in the United States is a difficult one to parse. On the one hand, there are certainly plenty of companies advertising for new employees; at last count there were about 3.6 million job vacancies, up about 1 million from the depths of the recession in 2010 but still about 1 million below the pre-recession peak. It is also true that in manufacturing the nature of the job has been changing, with employers increasingly looking for computer-literate workers with the ability to operate expensive automated equipment. Though there has been only a slight uptick in manufacturing hiring over the past two years – a gain of about 500,000 jobs from the recession lows of 2010 – it is at least plausible that those with the right skills are in short supply. On the other hand, it’s also clear that U.S. companies aren’t trying very hard to attract workers. Wages for manufacturing workers have been flat for more than a decade, and have fallen behind overall private sector wages. There are some exceptions, like aerospace, information technology and oil and gas, but in most sectors real wages have actually fallen. If there were indeed a serious skills shortage, normally that would be reflected in rising wages as companies scrambled to lure the employees they need. And yet some companies have acknowledged that one of the reasons they are expanding in the United States is that wages are rising in places like China while they are falling in the United States, particularly for new hires. This conundrum – claims of skills shortages coupled with flat wages – has long puzzled me. Basic laws of supply and demand would suggest that a shortage would drive wages up. Rob Atkinson, the president of the Information Technology and Innovation Foundation, suggested a plausible answer to me. Since most U.S.-based manufacturing is operating in a truly global market, the companies have alternatives to paying higher wages. If a company cannot find skilled workers at the advertised wage, then there are other alternatives to offering a higher wage, such as expanding overseas or investing in additional labor-saving technology. What does that mean then, for labor market policies? There is no question the United States needs to do a far better job at ensuring that employees have the skills needed for available jobs. David Arkless, a global expert on labor market trends, said that the United States has become “inward-looking”, and has failed to match the rest of the world in developing systems to better forecast labor market needs and to better train workers for the jobs that will be available. U.S. community colleges remain in general under-funded. Arkless argued that government investment in workforce development is among the best strategies available for attracting investment. Companies too share much of the blame. As Peter Cappelli, director of the Wharton Center for Human Resources, lays out in a fine little book called “Why Good People Can’t Get Jobs,” most U.S. companies have abandoned employee training. The unions that formerly ran many apprenticeship programs have been decimated, and companies don’t want to pay for their own programs, objecting both to the expense and to the risk that a trained employee will  get snatched away by a competitor. But the collective impact of multiple companies behaving the same way is an ill-prepared workforce. Particularly as mature industries like aerospace are facing the imminent retirement of much of their skilled workforce, the failure to train a new generation could be catastrophic. U.S. companies need to start taking a lesson from European competitors like Volkswagen and Siemens who are investing heavily in the United States and partnering with state governments and community colleges to train the workforce they need. I remain unpersuaded, however, that better training and better alignment of skills and the job market will lead to a flowering of the “good jobs at good wages” that manufacturing boosters promise. They may well be good jobs, and there could well be more of them, but the wages are likely to remain modest.

I got the chance last week to visit the Centro Comunitário Lídia dos Santos (or CEACA), an NGO based in the Rio de Janeiro favela of Morro dos Macacos—once the grounds of a zoo, and now home to some 25,000 cariocas (Rio’s residents). Headed by Dona Anna Marcondes Faria, it is the culmination of nearly fifty years of her work to make the community safer. From initial efforts to bring running water and kindergarten classes to the neighborhood, the two story building now offers a host of after school programs, art classes, professional training sessions, and environmental awareness projects. The goal is not just to teach skills but also confidence. CEACA, along with NGOs in some 450 other communities, have gained the attention and support of Coca-Cola, McDonalds, Walmart, and dozens of other corporations. A recurring theme in the conversations we had with our hosts and guides was change. Visiting the community’s recycling building, the manager Dona Regina da Silva spoke to us about the challenge of gaining residents’ support for the business. In the beginning she worked alone, snubbed by many of her neighbors as the “garbage lady.” Today, some 700 families bring bottles, paper, plastics, and other goods each week to exchange for food tokens, and in the building next door women and youths use the sorted neighborhood trash materials to create beautiful items such as pillows, bags, and placemats (you can see their work here). In the computer lab/classroom, we spoke with a group of teenagers. Asked what they wanted to be when they grew up, the students offered up careers including engineers, architects, and biologists. Our guides said that this was a significant shift from just a few years ago—when the dreams were smaller and the enthusiasm less pervasive. One of the teachers that spoke with us was a past student, back to help the younger generation as she finished up her university degree. Though she said that few of her former classmates had followed her into higher education, they all dreamed of it, another big change from the past. Organizations such as CEARA make a difference by connecting individuals within the neighborhood and preparing them for the broader world. Also important in transforming the futures of Macacos’ residents has been Rio’s broader security efforts. On the streets the blue and black uniforms of Pacifying Police Unit (UPP) troops were noticeable, part of a city-wide effort (now in over twenty neighborhoods) to introduce a permanent police presence into historically gang-run areas. Many Morro dos Macacos residents recounted the isolation they felt before the UPP officers arrived. Not only did they face discrimination from those on the outside when they revealed where they lived, they also found it dangerous to simply come and go, as rivalries between the gangs controlling each favela extended to all residents—whether members or not . Now with the UPP in place, residents can travel more freely. With persistent high inequality and poverty rates, and over a million living in Rio’s favelas alone, these individual steps may be small. But from my few hours there, the Morro dos Macacos neighborhood at least felt to be moving in the right direction.

South Africa is usually regarded as Africa’s economic powerhouse, but international commentators increasingly talk about Nigeria displacing it. Simukai Tinhu tries to get beyond the hype and has written a thoughtful analysis of the strengths and weaknesses of both countries in his article “Will Nigeria Overtake South Africa as Africa’s Powerhouse.” He argues that while Nigeria’s growth rate is high, and its population huge, there are serious weaknesses and instabilities in its political economy. He cites the economy’s dependency on high oil prices, a small entrepreneurial community, the Nigerian brain drain to London, New York, and Johannesburg, corruption, poor infrastructure, the rough neighborhood that is West Africa, and the ethnic and religious conflicts that pose an “existential threat” to state stability. As for South Africa, he sees the threat to its leadership coming not from Nigeria but from its internal “tense social atmosphere,” as manifested in the Marikana massacre. He claims South Africa has failed to analyze the causes of this tense social atmosphere, or to adequately address them. Simukai Tinhu’s comments reflect the importance (I would say primacy) of good governance to sustainable economic growth. Here, South Africa with its functioning democracy, strong government institutions, independent judiciary based on the rule of law, and vibrant civil society clearly has an advantage over Nigeria. Both are plagued with corruption, but in South Africa there is the strong political will to address it, and corrupt public servants and politicians are charged, tried, and jailed. That is much rarer in Nigeria, if not unknown. One factor Tinhu does not address, however, is the educational gap between Nigeria and South Africa. For all of its faults, South Africa has the strongest education system in Africa, and it is the only African country with universities that are regarded as world class.  That promotes the development of a diverse and innovative modern economy. The same is true of medical services. In Nigeria they remain undeveloped; in South Africa there are parallel first world and third world systems, and the HIV/AIDS burden has been much greater. Nevertheless, according to the CIA World Factbook, the average life span for South Africans is forty-nine years in comparison with fifty-two years for Nigerians.

We’ve all seen the headlines: American students are far from stellar performers on international tests. Whether it’s the OECD’s oft-cited gold-standard PISA test on math and reading, the TIMSS test on math and science, or the PIRLS test on reading, American students consistently score in the middle-of-the-pack among their peers in the rich world. Arne Duncan, the Secretary of Education, has called such mediocre results a “wake-up call” for urgent action to reform the U.S. education system. The suggested reforms are often inspired by the highest-performers on international tests, including Singapore, South Korea, Japan, Shanghai, and Finland. But how much currency should we give international test scores? According to the work of Eric Hanushek of Stanford University, they matter a very great deal; if Americans were testing as high on PISA as Finns, the cumulative gains to the U.S. economy could add up to $100 trillion over eighty years. He also argues that math skills—where U.S. students perform worse than reading—are most important for a nation’s productivity in a modern economy. There are certainly benefits to comparing the quality of human capital across the world. To the extent that international labor markets transcend borders, there is more direct competition for the same jobs. Test scores may be a more sophisticated way to measure human capital than the more conventional way, which has been the number of years spent in school. Even if we accept the current array of international tests as a good marker of education quality, questions linger about how useful the international comparisons are. The top-performing countries tend to be small and homogenous. Massachusetts and Minnesota, which are demographically similar to top-performers, also test at similarly lofty levels internationally. Asian top-performers tend to favor a high-stakes and unforgiving testing culture that many in the United States are loathe to adopt. The United States has never been world-leader on international tests, going back to the 1960s. Yet the United States continues to have among the most productive workers and dynamic economies in the world. Japan, whose students have traditionally done well on math and science tests, has an economy that has been in the doldrums since the 1990s. Perhaps the international tests themselves are missing the mark and testing the wrong things. Keith Baker, a retired researcher from the Department of Education, ran an analysis of international test scores from the 1960s against a whole set of country performance indicators in the intervening years, from GDP growth to individual productivity, to democratic environment, creativity, and livability. His findings are striking and counterintuitive; the countries with the highest test scores in the 1960s ended up with the lowest scores of national “success” decades later. It is well established in psychological research that an especially high IQ or being a high school valedictorian is not necessarily correlated with life success later on. In China, there is growing awareness of troubled “high-testing, low-ability” adults, who could not thrive professionally as adults but did extraordinarily well on the grueling high school examination test known as the Gaokao that determines college entry and, many believe, a student’s life prospects. James Heckman of the University of Chicago has done ground-breaking research showing that some of the most valuable skills learned in high school are less academic and more akin to personality traits, such as “stick-to-it-iveness,” optimism, and grit in the face of setbacks. U.S. students may not score better than their East Asian peers in math and science, but surveys indicate they have higher levels of self-confidence—a trait that has its downsides, but that also correlates strongly with entrepreneurship. Countries that come out on top with the PISA test also tend to have low levels of confidence and low levels of entrepreneurship. The United States devotes more money and student time to extracurriculars and less to in-class instruction. Many point to the reversed priorities as a reason for U.S. students’ middling test scores, but it may also be a reason why the U.S. education system produces adults who are more confident in their abilities to start and run a business. In the future, confidence may be every bit as important if not more important than math skills. Thomas Friedman has written extensively about his new equation for individual success in a highly competitive global economy: IQ< CQ+PQ. In other words, keen curiosity combined with intense passion will get you farther than your raw academic intelligence. Vivek Wadhwa, who writes regularly about what makes Silicon Valley tick, adds that “the independence and social skills American children develop give them a huge advantage when they join the workforce. They learn to experiment, challenge norms, and take risks. They can think for themselves and they can innovate.” Before the United States takes big steps to emulate high-scoring East Asian countries, it should take note of how those countries perceive their own education systems. When international test scores are released, their press often overlooks the high performance, focusing instead on the low confidence of the test takers. And in a telling move, East Asian countries are looking for ways to tone down the high-stakes testing in favor of more extracurriculars and a well-rounded student experience. While it is important to guard against undue complacency about U.S. test scores, we should also guard against jumping to conclusions about whether the test scores represent a crisis of U.S. education. Correction: A previous version of this blog stated that, according to Eric Hanushek's research, "if Americans were testing as high on PISA as Finns, the U.S. economy could be $100 trillion bigger eighty years down the road." This is incorrect. The $100 trillion figure is actually the cumulative difference in GDP over eighty years.

Perhaps the most prized real estate at the annual State of the Union address is the first lady's box, where, for over thirty years, persons of great distinction have been invited to sit and be recognized in the national spotlight. Foreign dignitaries, war heroes, renowned academics, innovators, and others of such esteem frequently receive the honor. But no one sat closer to Mrs. Obama last year than Jackie Bray, a once-unemployed, single mother from North Carolina whose return to the manufacturing workforce was in part the result of a training model developed in Germany. After losing work as a packaging mechanic, Bray enrolled in a new vocational program at Central Piedmont Community College (CPCC), one of the largest school systems in North Carolina. CPCC has partnered with Siemens, the German engineering conglomerate, to design the types of technical training classes that graduates need to work at their sprawling new Charlotte factory. For qualifying students like Bray, the company pays for tuition and training before bringing them on full-time to manufacture generators and turbines. CPCC and Siemens also participate in an award-winning initiative called Apprenticeship 2000, a four-year program for select high-school juniors and seniors in which classroom instruction is combined with hands-on training at a Charlotte area technical company. While the program is still small, all of the apprenticeships are paid and result in a job. The school has built on this partnership by signing a pioneering agreement with a regional German chamber of commerce to offer its students an advanced manufacturing education that is certified by German industries. This type of dual system, which partners private industry with vocational schools (typically with the support of government), has been the norm in Germany for centuries. About 60 percent of German high-school students looking to continue their education pursue an apprenticeship. Approximately half a million German businesses use apprenticeships to train roughly 1.5 million workers in 350 recognized jobs every year. While still relatively rare in the United States (where it might be called a co-op), the German model is one the White House hopes to scale up. "I want every American looking for work to have the same opportunity as Jackie [Bray] did," the president noted in his 2012 address." Join me in a national commitment to train 2 million Americans with skills that will lead directly to a job." In May of last year, the German Embassy responded to the president's challenge by launching the "Skills Initiative" at a conference sponsored by the Washington, DC-based Aspen Institute. The bilateral program aims to unite U.S. and German businesses with local education and training providers like CPCC. German Ambassador Peter Ammon has pledged to make the initiative a cornerstone of the mission's work in the United States, and is currently working with the governors of Ohio, Maryland, Massachusetts, Pennsylvania, Wisconsin, and Virginia. For the world's fourth largest economy, it is not only an opportunity for cultural exchange, but a sound financial investment. More than 3,400 German businesses have investments in the United States, where the supply of high-skilled labor has not kept pace with the demand from those companies with U.S. operations. German firms currently employ more than 550,000 American workers, roughly 11 percent of the "insourced" jobs in the United States. And nearly half of these are in manufacturing. Germany accounted for $215 billion in U.S. foreign direct investment (fourth largest) in 2011, creating jobs in many struggling state and local economies. For the United States, the partnership provides a highly effective vocational training model that could not only help educate the next generation of workers, but also provide a viable and attractive alternative to the four-year college trajectory.

It has been more than five years since the last congressional effort at comprehensive immigration reform dissolved in acrimony. Since that time, the U.S. government has deported nearly 2 million unauthorized immigrants; a weaker economy and tougher border enforcement resulted in arrests of illegal crossers at the border with Mexico dropping from more than 850,000 to 327,000 annually, the lowest since the early 1970s; and skilled immigrants, facing long waits for green cards as well as the diminished opportunities of a weaker economy, are no longer coming to the United States in the numbers they once did. This week, the effort at rewriting an antiquated and ineffective set of laws starts again. A bipartisan group of senators released today a broad set of principles for a comprehensive reform of immigration laws. Similar bipartisan efforts are quietly under way in the House. President Obama travels to Las Vegas Tuesday to lay out the White House thinking. The optimistic scenarios call for legislation to be approved by later this year. The biggest hurdles are political ones. Many leaders in the Republican Party, including Senator Marco Rubio (R-FL) and House Speaker John Boehner (R-OH), have come out in support of immigration reform, recognizing that some action is needed to reverse the party’s falling fortunes with the growing number of Latino voters. But in the House, a majority of Republicans come from safe districts where the greatest threat is a primary challenge, and a vote for immigration reform would likely trigger such a challenge. The GOP leadership will either need to persuade those members to take a tough vote for the party’s future, or be prepared to pass legislation with Democratic votes and a minority of Republicans. But the substantive questions matter enormously as well. The 2006-2007 legislation died for a variety of reasons, but one of the biggest ones was that it became such an unwieldy mess of complex and conflicting mandates that even the strongest supporters of reform lost their enthusiasm for it. Here are five big issues that need to be handled successfully this time around. Workplace enforcement. The failure to create any effective means for ensuring that employers hire only authorized workers was perhaps the biggest reason the last major immigration reform law, in 1986, was followed by a surge of illegal immigration. In the past five years, considerable progress has been made under a federal system called E-Verify, in which new hires are checked for their eligibility against Social Security and immigration records. About 10 percent of employers are now enrolled and the number is growing rapidly. But the system cannot protect against identity fraud. Legislation will need to resolve this issue, but in a way that does not impose big burdens on small employers. The operating principle should be to create a system that’s easy for honest employers to follow, coupled with aggressive enforcement and harsher penalties against employers who refuse to play by the rules. Border security. By the available measures, U.S. borders are far more secure than they were five years ago. But there is little trust in the measures provided by DHS, and as I have written elsewhere with colleagues, substantial improvement in performance measures is badly overdue. The Senate proposal calls for the creation of a commission of southwest governors, attorneys general and community leaders to make recommendations on whether the border is secure, which would provide a trigger for many of the 11 million undocumented immigrants currently living in the United States to apply for permanent residence and citizenship. This is not a bad suggestion, but there are two dangers. First, the commission may conflate control of illegal immigration with control of illegal drugs moving across the border. Both are real problems, but they are different ones. Second, the Senate proposal sets out the utterly unrealistic goal of arming the Border Patrol “to prevent, detect and apprehend every unauthorized entrant.” If a secure border means no illegal entry, it will fail; as my co-author, former DHS economist Bryan Roberts has noted, even the Cold War inter-German border – with barbed wire, watch towers and armed guards with shoot-to-kill orders – was successfully crossed by about 1,000 people each year. Skilled immigration. There is broad consensus that the United States needs to make it easier for the best and brightest immigrants, many graduating from U.S. universities, to remain in this country. Four senators – Rubio, Orrin Hatch (R-UT), Amy Klobuchar (D-MN), and Chris Coons (D-DE) – are set to introduce legislation that offers a good balance. It would: increase the H-1B visa cap from 65,000 annually to 115,000 but with flexibility depending on labor market conditions; eliminate the quota for graduates with advanced degrees from U.S. universities; allow spouses of H-1B holders to work; eliminate the national quotas for green cards that make waits so long for Chinese and Indians; and make it possible for visa holders to renew without returning to their home countries, a procedure that often triggers lengthy and unnecessary background checks. Temporary work programs and/or higher quotas for unskilled immigrants. It is notable that the modern era of illegal migration to the United States began when Congress eliminated the temporary work program known as Bracero in 1964. For all of the many serious problems with the program, it had the virtue of providing legal employment for unskilled workers, mostly from Mexico. When that door closed, many decided that coming to the United States illegally was their only option. The challenge here is to find a balance that opens new legal opportunities for low-skilled immigrant workers without depressing wages or reducing job opportunities for Americans and previous immigrants. It is encouraging to see the Chamber of Commerce, the AFL-CIO, and the Service Employees International Union trying to find common ground. Legalization. Ironically, if the first four pieces can be put in place, an agreement on some sort of earned legalization for undocumented migrants already in the United States -- long considered the most controversial issue -- may actually be the easiest piece to achieve. For the past five years, we have tried the alternative, known as “attrition through enforcement.” Record deportation levels, workplace raids and investigations, and a variety of state laws have made life in this country miserable for many of those without status. But surprisingly few have left. Like it or not, they are mostly here to stay. Opinion polls show that the public is pretty comfortable with that, and favors legalization. The real challenge will be to convince lawmakers that a new “amnesty” will not attract another wave of illegal migrants as happened after the 1986 legislation. And for that, the first four pieces – tough border and workplace enforcement couple with sensible and flexible legal immigration quotas – are the key.

U.S. students are now graduating from high school at the highest rate since good records began being kept in the mid-1970s, according to new data released today by the National Center for Education Statistics. After spending yesterday in downtown DC watching the second inauguration of President Barack Obama -- and listening to commentators quickly split into those who saw his inaugural speech as ambitious and visionary and those who denounced it as overly liberal and partisan – I was heartened to see the new numbers. They showed, among other things, that the graduation rate of Latino students, who are the fastest growing demographic in the country, has jumped by 10 percentage points in just the past five years, from 61.4 percent in 2006 to 71.4 percent in 2010. Watching the political gridlock in Washington, it is easy to conclude that progress in social policy has become almost impossible. We are regularly warned that a whole raft of serious problems – government debt, climate change, spiraling health care costs – are escalating while the government fails to agree on the big solutions that such big problems seem to require. But in part we may just be too impatient. In a large, complex democracy, progress tends to come in small, sometimes unnoticed steps, rather than in huge leaps. The gains in high school completion are a case in point. It is really only in the last decade or so that the United States made it a national goal to raise education performance; before that, education was left almost exclusively to the states. The No Child Left Behind act ushered in by President George W. Bush with strong Democratic support did, for all its flaws, put the weight of the federal government behind education reform. The Obama administration, while tweaking the approach in various ways, has continued to use an array of both sticks and carrots to try to encourage states to raise their game. According to the latest statistics, the on-time high school graduation rate rose to 78.2 percent in 2010, up from just 71.7 percent in 2000. Including GEDs, about 88 percent of Americans had earned a high school or equivalent degree in 2010. Can the increase in high-school graduation rates be attributed to the national focus on education? As with so many social policies, it’s hard to know for sure. Some experts attributed the improvement to focused strategies for helping low-performing students at risk for dropping out. But others pointed to external factors like falling teen pregnancies, and the deep recession which reduced job opportunities for high-school dropouts and increased the incentive to stay in school. U.S. high school completion rates are still far, far too low – the U.S. ranks 22nd out of the 27 advanced countries in the Organization for Economic Cooperation and Development. But at least the arrows are now pointing in the right direction. Is similar progress possible in other areas? It may be happening already even as we fail to notice. There was no grand bargain on taxes and spending in President Obama’s first time, and one doesn’t seem terribly likely in the second. Yet little by little the government’s fiscal position is improving. As Ezra Klein pointed out in the Washington Post last week, the various spending cuts and tax increases already enacted have solved about two-thirds of the problem of putting the country back on a stable fiscal path for the medium-term. On climate, while cap-and-trade legislation has been stillborn, the combination of the recession-induced economic slowdown, more aggressive regulation of emissions by the Obama administration, and the falling price of natural gas due to new extraction technologies currently has the U.S. roughly on track to meet its pledge to reduce greenhouse gas emissions to 2005 levels by 2020. Even health care costs, which continue to grow far too rapidly, grew much more slowly in the past three years than they did over the previous decade. President Obama put a big list of problems on the table in his inaugural address – economic inequality, immigration, gun violence, and climate change. In none of these, with the possible exception of immigration, is he likely to get a big, grand bargain solution. But that does not mean that progress is impossible. The lesson from recent years is not that big solutions are not needed, but instead that focusing over time on big social problems, and acting in small increments where larger ones are impossible, can still produce significant gains. What matters most is moving in the right directions.

MILAN – New technologies of various kinds, together with globalization, are powerfully affecting the range of employment options for individuals in advanced and developing countries alike – and at various levels of education. Technological innovations are not only reducing the number of routine jobs, but also causing changes in global supply chains and networks that result in the relocation of routine jobs – and, increasingly, non-routine jobs at multiple skill levels – in the tradable sector of many economies. How, then, should policymakers confront the new and difficult challenges for employment (and, in turn, for the distribution of income and wealth), especially in developed economies? From recent research, we have learned a number of interesting things about how the evolution of economic structure affects employment. The tradable side of advanced economies has not generated any real net increases in employment for at least two decades, while the jobs that it has created are concentrated in the upper-income and upper-education ranges, with employment declining in the middle and lower range of income and education. Growth in high-end services employment is matched by contraction in high-employment components of manufacturing supply chains. Until the crisis of 2008, middle- and lower-income job growth occurred entirely in the non-tradable sector of the economy, which accounts for roughly two-thirds of advanced countries’ output and employment. Here, incomes and value added per employee remained largely flat. Jobs could be eliminated by technology, but not by global competition; and, unsustainable, debt-fueled domestic-demand growth helped to delay the current employment deficits. As a result, the advanced economies have been shedding routine jobs at a rapid rate, while adding non-routine jobs (for example, those that cannot yet be replaced or reduced by machines and networked computers). This has fueled a dramatic rise in the return on education and high-level skills, with the share of total income received by owners of capital and high-end employees increasing in advanced countries for more than two decades. Growth and employment are thus diverging in advanced countries. The key force driving this trend – technology – is playing multiple roles. The replacement of routine manual jobs by machines and robots is a powerful, continuing, and perhaps accelerating trend in manufacturing and logistics, while networks of computers are replacing routine white-collar jobs in information processing. Part of this is pure automation. Another important part is disintermediation – the elimination of intermediaries in banking, online retail, and a host of government services, to name just a few affected areas. But technology’s impact does not stop there. The same class of information technologies that automate, disintermediate, and reduce the costs of remoteness are also enabling the construction of increasingly complex and geographically diverse global supply chains and networks. Global supply chains – constantly in flux, owing to rising developing-country incomes and shifting comparative advantage – locate productive activities where human and other resources make those activities competitive. Links in these chains include not only intermediate products and assembly, but also a growing range of services – research and development, design, maintenance and support, customer service, business processes, and more – as transaction, coordination, and communication costs fall. The result is what is sometimes called the “atomization” of global supply chains: increasingly fine subdivisions are feasible, more efficient, and locatable almost anywhere. Proximity still matters in terms of transport and logistics costs. But, with the developing world accounting for the largest new markets and most of the growth in global demand, the logic driving atomization should become even more compelling. The efficient ongoing decomposition of global supply chains, networks, and services has two related consequences. First, the tradable part of the global economy – where competition for economic activity and jobs is direct – is becoming a larger share of the whole; the same is true of individual economies. Second, parts of global supply chains that were not competitive are no longer protected by being adjacent to parts that were. Adjacency is no longer a requirement. These dynamics and related challenges are not confined to advanced countries. Over the next decade, for example, China will replace much of its labor-intensive assembly employment with higher-value-added employment in manufacturing and services, not only in the tradable sector, but also – even more noticeably – in the rapidly growing non-tradable part of its economy. The expanding scope and diminishing costs of automation and additive manufacturing may affect labor-intensive functions globally, including in earlier-stage developing countries. A key factor in adapting to these forces is investment. For individuals, businesses, educational institutions, and governments in advanced countries, broad-based, elevated, and efficient investment in education and skills is critical. Closing wide information gaps in the market for skills would also increase the efficiency of these investments. Across-the-board upgrading of human capital will improve income distribution both directly and indirectly (by reducing the supply of lower-skill workers relative to demand). It will also (partly) mitigate the concentration of wealth that results from a highly skewed income distribution. On the tradable side, competitiveness depends not only on human capital, but also on a host of other factors: infrastructure, tax systems, regulatory efficiency, policy-induced uncertainty, and energy and health-care costs. There is no guarantee that taking the right steps in these areas would entirely overcome the employment challenges that individuals and countries face, though doing so would help. In fact, it is possible that we are entering a period in which major adaptations in employment models, work weeks, contract labor, minimum wages, and the delivery of essential public services will be needed in order to maintain social cohesion and uphold the core values of equity and intergenerational mobility. This article originally appeared on www.project-syndicate.org.

Emerging Voices features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This article is from Lisa Martilotta, a principle in Akilah Institute for Women, Rwanda’s first women’s college. She describes her organization’s efforts to link college education to employment opportunities for young women in Rwanda. The only investment with the possibility of infinite returns is the investment in youth, and more particularly, young women. Nobel laureates, political leaders, and celebrity NGO founders all agree on this, but as Isobel Coleman wrote on her blog in December, the challenge remains: how can we bridge the ever-increasing gap between youth development and the demanding market? We launched the Akilah Institute for Women (Akilah) in 2010 in the capital of Rwanda, Kigali, to meet the needs of both marginalized rural women and the booming private sector. Akilah is a college for young women offering three-year diploma programs in market-relevant fields. If you’re an East African woman, odds are that you will be married and pregnant before twenty rather than attending classes, since school is an investment that many families reserve for their boys. Meanwhile, Rwanda’s private sector logs regular complaints of a poorly trained workforce that cannot meet the need for skilled professionals. Taking these phenomena into account, Akilah set out to build a bridge connecting young women to the fastest-growing sectors of the economy. We quickly realized that in East Africa, education and training institutes don’t typically collaborate with the private sector—and vice versa. They are also rarely affordable to the overwhelming majority of women. Our solution was to offer fairly priced higher education that incorporates two crucial elements: market-relevant curricula and professional development programs that connect graduates directly to the workforce. One of our alumnae, Francine, lost her parents, and all but one of her siblings, in the 1994 genocide, leaving her as a toddler in her adolescent sister’s care. She had no money to pay for tuition for the national university and was blocked from developing a career. In East Africa, women represent 53 percent of the population, but for cultural and historical reasons they are at a serious disadvantage in both school and jobs. It is estimated that a mere 1 percent of the Rwandan population has access to higher education, and a shockingly low one-third of that group is female. But at Akilah, Francine entered a novel program that focuses on the hard and soft skills necessary to work in an environment of scarce employment: not just how to wait tables or clean a room, but the concrete development of English language, leadership, ethics, teamwork, public speaking, and entrepreneurial skills. Our approach centers on a team-based learning method that mirrors the job site and teaches essential professional and leadership capacities, such as effective communication, problem solving, and critical analysis. This program was designed by listening to and incorporating the needs of growing East African markets. For our students, like Francine, who struggle to afford even their tiny fraction of the tuition fees—a personal investment that builds each student’s sense of ownership in her future—we built a student loan program in collaboration with Vittana. Today, Francine is earning a monthly salary that is ten times her previous earning potential, as surveyed upon admission. She and each of her classmates had a job offer before they graduated and seventeen are now training with Marriott in the Middle East, preparing to return home to assume positions of responsibility in Sub-Saharan Africa’s very first Marriott hotel. This illustrates Akilah’s successful efforts to forge internship and employment partnerships with the business community. But even after graduates enter the workforce, this “turning education into employment” model means that the institution shares responsibility with its alumnae for offering services to ensure career paths stay wide, long, and well lit. Our vision is to expand into a network of campuses for women across East Africa. The demand definitely exists: the constant flow of new applicants, as well as requests by other local and national authorities for a campus in their jurisdiction, illustrates the dire need for such scalable institutions that invest in youth, women, and the workforce.  And the model is scalable for two main reasons: first, we have created a scalable package of specially tailored curricula and related academic programs for East African women to ensure ease of implementation at each new campus; and second, we have strong support from like-minded global investors. Our second campus is currently under construction in Bugesera, Rwanda, and plans for the third in Burundi are well underway with the Burundian government and private sector. Youth, workforce, and market development has consequences for all nations, especially low-income ones. The World Bank and others have argued that insufficient job opportunities correlate with intolerance, low civic engagement, and low levels of optimism about the future. This creates the conditions for social strife everywhere, and may have been among the precursors for the genocide that cost the lives of almost a million people in Rwanda in 1994. So why aren’t more like-minded institutions popping up in areas where youth are unemployed?  We see three reasons: Too many academic institutions do not firmly grasp the intimate connection between their mission and the growth of a nation. It costs institutional time, energy, and resources to engage in deep and meaningful collaboration with private-sector partners. Academic institutions often prioritize other things that lead to donor dollars or income. The private and public sectors too often fail to play a tangible role (most importantly, with funding) in the development of academic institutions. They either do not see their connection with national development or deem the investment too costly and instead adopt short-term approaches to profit. But for those educational institutions that embrace the maxim that the only investment with infinite returns is in connecting young people like Francine to growing organizations and markets, the benefits far outweigh the costs.

As part of CFR’s Renewing America initiative, we spend a lot of time looking at how well the United States is doing against other countries in areas such as education, investment, research and development, and the other foundations of a strong economy. Usually the answers we find are mixed – the United States is pretty strong on innovation and higher education, pretty weak on infrastructure and primary education, etc. Most of the answers are not terribly surprising. But a new report out yesterday from the National Research Council and the Institute of Medicine stunned me: on the one measure that counts the most – longer and healthier lives for Americans – the United States is failing abysmally. Americans are living shorter, unhealthier lives than citizens of any other advanced country in the world. The report, entitled “U.S. Health in International Perspective: Shorter Lives, Poorer Health,” is a catalogue of horrors. Here are just a few highlights:  Among seventeen high-income countries, the United States ranks last in life expectancy for males and second-last for females. The United States has been falling in this ranking for the past three decades, especially among females. The United States has the highest infant mortality rate of any of these countries. U.S. adolescents and young adults die more frequently from traffic accidents and homicides, and have the highest rate of sexually transmitted diseases, including AIDS. Since 1980, the chances that a newborn will live to age fifty have been consistently lowest or second-lowest among the seventeen countries. And the United States has been getting steadily worse over time. The chart below from the report is slightly confusing, but it captures this deterioration. What it measures is the likelihood that a girl who reaches age fifteen will live to age fifty. From 1958 to the early 1970s, the odds of an American girl dying before age fifty was about the same as that of a Japanese girl or a British girl. Since then, the United States has fallen further and further behind. Today, the odds of the American 15-year-old girl dying before age fifty is about 4 percent, compared with a 2 percent average likelihood in the other sixteen countries. What the numbers in the chart suggest is that the United States is about forty years behind where it ought to be in improving the health of its young women. It is hard to find encouraging trends. To quote the report’s summary: The panel was struck by the gravity of its findings. For many years, Americans have been dying at younger ages than people in almost all other high income countries. This disadvantage has been getting worse for three decades, especially among women. Not only are their lives shorter, but Americans also have a longstanding pattern of poorer health that is strikingly consistent and pervasive over the life course—at birth, during childhood and adolescence. There are a few positives if you look hard enough. Americans drink and smoke less than those in most other advanced countries. Fewer of us die from cancer. And those who manage to make it to age seventy-five actually live longer than their peers in other countries. There is no single reason why Americans are so unhealthy. The report cites multiple causes that range from more reckless individual behavior to social ills. On the individual side, Americans consume more calories, have higher rates of drug abuse, are less likely to wear seat belts and more likely to drive drunk, and are more likely to use guns against each other. The societal causes include inaccessible or unaffordable health care, cities and suburbs that discourage people from walking, higher levels of poverty (especially child poverty) and income inequality, a lack of social mobility, and a weaker social safety net. The report notes, however, that even the most privileged Americans – white, upper income, college-educated, with health insurance – are in poorer health than their peers in other wealthy countries. The report has many recommendations, but its primary goal is to raise awareness about just how bad the health of Americans has become. It notes: “Americans may know about some deficiencies in the U.S. health care system, but most might be surprised to learn that they and their children are, on average, in worse health than people in other high-income countries.” I was one of those.

While freer trade makes everyone collectively richer, the impacts are unequal. There are winners and losers, and even among the winners there are some who gain a great deal and some who gain very little. The precise relationship between expanded globalization and rising income inequality remains in dispute, but economists now generally accept that freer trade, immigration and investment, along with technology, have played some significant role in the growing gap between the rich and poor and the shrinking middle class in the United States. For many years, I have listened to economists offer the same remedy: the collective benefits of trade are so large – Americans as a whole are are some $1 trillion better off as a consequence of decades of growing globalization, according to the most widely cited study – that the winners should compensate the losers. Those whose incomes are rising – the bankers, the consultants, the business executives, and others whose market value has been enhanced by globalization – should be taxed to help out the factory or construction workers who are losing out to lower-wage competition. Such help could take many forms, from unemployment insurance to job retraining programs to wage subsidies that help close the gap between better-paid manufacturing jobs and the lower-paid service jobs that laid-off workers are most likely to find. But at a fascinating conference yesterday at the Peterson Institute for International Economics entitled “Ethics and Globalization,” Bill Galston of Brookings posed a question: What happens if the winners from globalization refuse to compensate the losers, or compensate them inadequately? This, he pointed out, is precisely what has happened over the last generation in the United States as lower-skilled workers have lost jobs or seen their wages fall in part as a result of global competition. And, Galston continued, if we know that the winners have no intention of compensating the losers, then don’t we have an obligation to think about “second best” policies that might help spread the gains from globalization? The challenge produced startlingly little in the way of sensible responses from the assembled experts. Ann Krueger, the former deputy managing editor of the International Monetary Fund, raised the usual alarm bells, warning that any effort to restrict imports or otherwise protect American jobs would send the country careening back to the horse-and-buggy era. Galston wasn’t suggesting protectionism, but the default response of too many economists is still to raise that specter, even though there has been surprisingly little new protectionism in the wake of the financial crisis. Arvind Subramanian of Peterson had a more interesting response. He pointed out that the rapid economic growth triggered in China, India, and other emerging markets as a result in part of globalization has unquestionably reduced global inequality, even as it has increased inequality within the United States and other advanced economies. And he was quite candid in noting that, as an “international cosmopolitan,” he is not terribly concerned if, for example, Chinese exchange rate policies displace American workers. What worries him is that workers in countries poorer than China will be hurt. Not much comfort here for the losers in the United States. Subramanian did suggest that globalization has created the need for bigger social safety nets, but then noted that those reaping most of the benefits – corporations and highly skilled individuals – are increasingly adept at avoiding the taxes that might pay for these programs. The only slightly encouraging signal came on a separate panel from Michael Froman, the top White House adviser for international economic affairs who is considered a front-runner to be the next U.S. Trade Representative. As I explain in the current issue of World Politics Review (subscriber only), the Obama administration has quietly developed an ambitious trade agenda, including the Trans-Pacific Partnership, a proposed U.S.-European free trade agreement, and new talks on services and information technology liberalization at the World Trade Organization. Froman said that the only way these and other trade initiatives can move forward is if we recognize and respond to the distributional consequences of freer trade. Many of the Obama administration’s core policy ideas – more progressive taxation, increased infrastructure investment, expanded college access, job retraining, attracting foreign investment – can be seen as efforts to spread the benefits of globalization more widely. But most of these initiatives have won little support in Congress. The Peterson Institute conference was subtitled “The Tradeoffs Underlying Our Policy Choices.” The dictionary definition of a trade-off is “the relinquishment of one benefit or advantage for another regarded as more desirable.” The question about the the current form of globalization remains: more desirable for whom?

For communities looking to attract the coveted highly-skilled, highly-paid workforce, there is often little substitute for a locale's livability. Job opportunities, no matter how plum, may fail to lure workers if a city is determined to be undesirable by potential emigrants. In describing what motivates the so-called Creative Class to relocate, urban theorist Richard Florida notes that "quality-of-place”—a city's built and natural environment, its population diversity and vibrancy—is the deciding factor. Perhaps no U.S. city has proved more effective at recognizing their quality-of-life shortcomings and making a drastic effort to turn things around than Oklahoma City. The impetus for action, as is often the case, was a crisis. "It was a really destitute place to live," said Roy H. Williams, president and CEO of Oklahoma City's Chamber of Commerce, referring to the state capital in the late 1980's and early 1990's. After booming on a ten-fold increase in the going rate for Oklahoma crude between 1972 and 1981, plummeting energy prices in subsequent years decimated OKC's industry, financial institutions, real estate values and, of course, city coffers. But the final straw didn't come until 1991, when the city lost out to Indianapolis in a heated competition to woo United Airlines into building a local maintenance hub—a move that would have brought more than a thousand jobs. In the end, the company told city officials that the deciding factor was Indianapolis' higher quality-of-life. As OKC's leaders licked their wounds in the aftermath, the Chamber of Commerce convened for a major strategy session. "We knew we had to do something out-of-the-box," Williams told me, "We had to build a better product." Enter the Metropolitan Area Projects Series or MAPS, as it's commonly known. Hashed out by OKC's business and policy community, the public-private initiative, passed in December 1993, laid out a series of major capital projects for construction, including a new sports arena, ballpark, library, trolley transit system, music hall, convention center, and the renovation of a downtown historic district known as Bricktown. This first program, or MAPS 1, was funded by $309 million in entirely local funds, without the issuance of debt, through a 1 percent sales tax increase that would sunset after 5.5 years. Indeed, MAPS 1 was so successful the city has pushed forward with two more iterations. MAPS 2, also known as "MAPS for Kids," focused on OKC's crumbling education infrastructure, investing close to $500 million in construction for local public schools. MAPS 3, which passed in December 2009 and has projects expected to run through 2017, will provide nearly $800 million in taxpayer funds for a 70-acre grand central park, over 50 miles of new biking and walking trails, and other recreational upgrades. Those involved in the process say MAPS has worked so well for so long (across multiple administrations) because of the close partnership between the public and private sectors, the fact that each initiative has been targeted and limited in scope, and that there has been such a strong track record of the city delivering on its promises. Indeed, a Chamber of Commerce report states that the total value of new investment related to MAPS from the mid-1990s through 2008 totaled about $3.1 billion, with an additional $1.9 billion announced. But perhaps the most dramatic symbol of the city's revitalization came in 2008, when the Seattle Supersonics moved to Oklahoma City and, in a matter of four years, made the NBA finals and was deemed the number one sports franchise in America, an ESPN ranking based on an analysis of finances and fan surveys. "It’s more than just a basketball team: it’s the culmination of 20 years of civic reinvention, and the promise of more to come," writes Sam Anderson for New York Times Magazine on the exceptional rise of the Thunder. "After all of that sacrifice — the grind of municipal meetings and penny taxes and planning boards, the dust and noise and uncertainty of construction, the horror of 1995 — the little city in the middle of No Man’s Land has finally arrived on the world stage."