Preparing America’s Workforce: Are We Looking in the Rear-View Mirror? by Alan S. Blinder Princeton University CEPS Working Paper No. 135 October 2006 I am grateful to Princeton’s Center for Economic Policy Studies for research support.Preparing America’s Workforce: Are We Looking in the Rear-View Mirror? The great conservative political philosopher Edmund Burke, who probably would not have been a reader of The American Prospect, once observed, “You can never plan the future by the past.” But when it comes to preparing the American workforce for the jobs of the future, we may be doing just that. For about a quarter-century, demand for labor appears to have shifted toward the college-educated and away from high school graduates and dropouts. This shift, most economists believe, is the primary (though not the sole) reason for rising income inequality, and there is no end in sight. Economists refer to this phenomenon by an antiseptic name: skill-biased technical progress. In plain English, it means that the labor market has turned ferociously against the low skilled and the uneducated. In a progressive society, such a worrisome social phenomenon might elicit some strong policy responses, such as more compensatory education, stepped-up efforts at retraining, reinforcement (rather than shredding) of the social safety net, and so on. You don’t fight the market’s valuation of skills; you try to mitigate its more deleterious effects. We did a bit of this in the United States in the 1990s, by raising the minimum wage and expanding the EITC. Combined with tight labor-markets, these measures improved things for the average worker. But in this decade, little or no mitigation has been attempted. Social Darwinism has come roaring back. With one big exception: we have expended considerable efforts to keep more young people in school longer (e.g., reducing high school dropouts and sending more kids...
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