The Closet Moderate: Human Capital Is Made of People!

Tuesday, January 05, 2010

Human Capital Is Made of People!

I wanted to talk a little bit about Maxine Udall's post on the financial meltdown. I'm not an economist, so I can't speak to the post itself, but I wanted to highlight a dimension that I think hasn't been discussed, in part because it's a matter of intuition rather than data: the political consequences.



We can discern three trends about employment/education over the last 50 years:
  • Opportunities, potential for advancement and job quality for people without a college education have decreased.
  • The % of people w/a college degree has increased.
  • The cost of a college degree has increased dramatically.
In other words, "having an undergraduate education" and "having a (decent) job" became tightly linked, and in response the cost of that education rose.

If you're on board with that assertion, it seems like we're in for a bumpy ride, politically. As this WaPo article outlines, there are two processes taking place. First, older college graduates are being laid off at an unusually high rate. Second, those that are finding work are finding it in less-skilled roles. The article devotes one paragraph to what is, to me, the most important part of the picture: those jobs are coming at the expense of opportunities for recent college graduates.

In other words, there's a group of people out there who have paid a lot of money for a piece of paper that says "you're employable" who are unemployed. In addition to the financial burden of college loans, recent graduates lack the skills to compete with the folks who are trading down, and it's hard to acquire skills when you don't have an income or a job. When the status quo ante was "you can have X" and then the forces unleashed in a cataclysm you had no role in creating and no ability to prevent say "you can't have X" there's going to be a certain amount of bitterness. Amplified, of course, by the fact that you're still going to be hurt by it a decade and a half later.

The lasting political legacy of the recession years may be a great many people who are conscious of the ways in which their prospects and opportunities have been curtailed or destroyed, and feel unable to do anything about it. That cocktail of awareness, bitterness and disenfranchisement is going to take our country to an ugly place if it isn't addressed.

1 comment:

Silent Cal said...

A related problem, I think, is that too many people have gone to college. Everyone saw the formula you describe, i.e. college=good jobs, but like most correlations, it's not always a causation. Tons of folks went to college who should've learned trades, and now we've got a shortage of qualified tradespeople and an excess of college-educated people who don't belong in college jobs.

Don't believe me? Call a plumber and a lawyer and see who shows up first.