Increasingly, less educated job hunters face a big disadvantage in a shifting economy
August 15, 2004
Want a job? Stay in school. Want a well-paying job? Earn a college degree. Nothing new in that statement: A good education has always opened doors in this country. So have hard work and a willingness to learn.
Indeed, generations of Americans have been guided by one principle: Sweat and pay your dues, and you will get ahead.
Today, that assumption is crumbling.
In July, only 2.7 percent of Americans with a bachelor's degree or higher were jobless. Indeed, for all the talk about white-collar layoffs, the unemployment rate in that group never rose above 3.2 percent during the recent economic downturn, according to the Bureau of Labor Statistics.
And high school drop-outs are nearly three times as likely as college graduates to be out of a job.
And as college graduates begin to reap the benefits of a slowly improving economy, the rate of joblessness among those who finished only high school or dropped out remains at nearly 2 percentage points above what it was in 2000, suggesting a widening unemployment gap between well-educated and undereducated Americans.
People without a college degree now compete against recent immigrants, retirees in need of extra income, unemployed professionals and cheap labor overseas. That makes it tough for many to land jobs even at the bottom of the pay scale, a scary reality considering that nearly half of North Carolina workers have only a high school diploma or less.
At the same time, their employment choices are shrinking. Low-skilled factory jobs are becoming scarce. Retail sales, another answer for people without a formal education, added just 4,000 jobs in the state in 2003 -- one-quarter of the jobs created annually in the late 1990s. In comparison, 19,000 young adults dropped out of high school last year.
"And they're competing for how many jobs? It's just not going to work," said John Silvia, the chief economist at Wachovia Securities in Charlotte and a frequent commentator on the state's labor market. "The demand for work far exceeds the supply."
Bottom of the list
Pedro Ortiz of Garner has seen firsthand how the nation's economy has changed in recent years.
With only a high school diploma to show prospective employers, he can't get a foot in the door at manufacturing plants that, a generation ago, would have been happy to get him. In fact, he is having a hard time qualifying for just about any job, anywhere.
"They pick through 20 people, and there will be people there with much more experience," said Ortiz, 31, who finally landed a job last week as a part-time cook after looking for work since April. "Or they'll have the educational background in that field. That's just the way it is."
Ortiz jumped between construction and restaurant jobs in recent years to support his family. Now, he is dreaming of starting his own business as a contractor to get past a handicap that is only getting worse with time: his lack of formal education in a market where even many blue-collar jobs require a community college degree plus experience.
"If you work at McDonald's today, you have to be able to use a computer; the cash register is a computer," said Bernard Anderson, an economist at the University of Pennsylvania who served as assistant secretary of labor in the Clinton administration. "Even laborers today must be able to operate some sort of machine. So education means more for getting and keeping a job, and for earning a higher income, than ever before in the American economy."
Median weekly wages for U.S. workers with a high school diploma were $576 for the first six months of this year. That's half what people with a master's or doctoral degree earned.
For workers who lose well-paying manufacturing jobs, the discrepancy can be painful.
William Leslie was laid off from a $17-an-hour job as a forklift driver at Tyco Electronics six months ago. Now he's looking at jobs that pay $7 or $8, frustrated to learn that 20 years of warehouse experience won't guarantee even a job that pays a few dollars above minimum wage.
At job interviews, recruiters ask him why he never went to college. He tells them that back in the mid-'80s, when he went to work at Tyco, education wasn't a requirement. He heard of the job through a friend of a friend, applied and was hired, few questions asked.
"It turns off the conversation," said Leslie, 44, who has a family to support and a mortgage to pay in Raleigh. "They say, 'OK, we'll get back to you,' but they don't. And if you try to follow up, they make you feel like you're harassing them."
What can be done?
Such experiences raise the question what, if anything, North Carolina and the nation can do to prevent chronic joblessness in the future among its many undereducated workers. With much of the political debate this year focusing on unemployment, initiatives to beef up education and training programs are once again appearing on lawmakers' agendas.
The Bush administration wants to devote $250 million for fiscal 2005 to boost training in certain fast-growing areas such as health care, information technology, financial services and advanced manufacturing. So far, North Carolina has received two such grants: one worth $1.5 million to increase training for jobs in the health sector; and another for $5 million to develop a curriculum for biotechnology students at Forsyth Technical Community College.
The idea is to better connect job seekers with training that prepares them for industries that are expanding, and to reduce redundancies between different agencies, said Mason Bishop, the U.S. Department of Labor's deputy assistant secretary for employment and training. Although the administration's proposed worker training budget for next year represents only a slight increase over this year's budget, the money will prove sufficient because it's used more wisely, he said.
But critics say such efforts fall short of the need, noting that the new programs won't restore tens of millions of dollars cut from other work-training programs in recent years.
"We're now hearing the business community say that more training is needed if we are to keep our competitive edge in a global economy," said Andy Van Kleunen, executive director of The Workforce Alliance, a Washington group lobbying for more money and stronger federal policies to address work force training. "There's also that recognition in states that have been hard-hit by manufacturing layoffs. But here in [the District of Columbia], job training is still considered a social-service issue."
Training, incentives
In North Carolina, worker retraining coupled with incentives for industries willing to move to the state has been the recipe prescribed thus far by lawmakers in Raleigh.
Last month, the state's 58 community colleges, which play a key role in worker training, received their first funding boost in four years when the General Assembly increased the system's budget by 10 percent to $891 million. It will help the colleges adjust to a 25 percent increase in student enrollment since 2000 and help more students access financial aid, among other things. Still, the school system is operating on a budget that remains $35.5 million below what it was in 2000.
Martin Lancaster, president of the state's community college system, was encouraged by the General Assembly's renewed funding. It shows, he said, that lawmakers are beginning to recognize that North Carolina won't be able to compete without a work force that is better educated.
But the increase doesn't address many of the systemic problems surrounding worker retraining, Lancaster added. For instance, many laid-off workers are forced to drop out of the federally sponsored programs because their unemployment benefits expire months before they're supposed to graduate. And some students must work full-time while in school to cover their child-care costs, and fail school because it's too much to juggle at one time.
Pillowtex problem
The layoffs at Pillowtex highlights the challenge facing North Carolina and many other states.
A year after the Kannapolis textile manufacturer laid off nearly 5,000 workers, one-third remain unemployed, according to the N.C. Employment Security Commission. Another third are in school to retrain for other careers.
Forty-six percent of Pillowtex workers did not have a high school diploma, which meant hundreds of workers had to enroll in GED programs before they could even think of a career change. By the time they graduate, many will have exhausted the benefits they receive to be in school.
To get past such humps, more money is needed for education in general and worker retraining in particular, said James Smith, a management professor at UNC-Chapel Hill. It's a matter of channeling tax dollars to programs that have a real impact on people's lives and the health of the economy, he said.
"We don't need to be putting four-lane highways within reach of every home, and we don't need to be spending so much money on Medicaid," Smith said, referring to the program that provides health care for the poor. "Medicaid has become one of the biggest state budget items, and are we healthier? No."
Silvia, the Wachovia economist, suggested the state reconsider generous tax incentives and other handouts to corporations that agree to move to North Carolina, and instead channel the money into worker retraining.
"And anyone running around North Carolina saying we can restore textile and furniture jobs, don't be telling those workers their jobs are coming back, because they won't," he added. "We need to tell them, 'Get an education and move on'."
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