Education is Not the Cure for High Unemployment or For Income Inequality

This is an excerpt from a briefing by the Economic Policy Institute. For more information or to download the pdf please see the bottom of the article.

With signs pointing to persistent high unemployment and a recovery even weaker than those of the early 1990s and 2000s, it is becoming common to hear in the media and among some policy makers the claim that lingering unemployment is not cyclical but “structural.” In this story, the jobs problem is not a lack of demand for workers but rather a mismatch between workers’ skills and employers’ needs. Another version of the skills mismatch is also being told about the future: we face an impending skills shortage, particularly a shortfall of college graduates, after the economy returns to full employment.

The common aspect of each of these claims about structural problems is that education is the solution, the only solution. In other words, delivering the appropriate education and training to workers becomes the primary if not sole policy challenge if we hope to restore full employment in the short and medium term and if we expect to prevent a (further) loss of competitiveness and a further rise in wage and income inequality in the longer term. There are ample reasons to be skeptical of both claims:

  • The number of job openings in the current recession has been far too few to accommodate those looking for work, and the shortfall in job openings is pervasive across sectors, not just the hard-hit construction industry, which tends to be the focus of skillsmismatch claims.
  • There is no one education group—particularly not the least educated, as the structural argument would suggest–fueling the rise of long-term unemployment in this recession. If there has been some transformation of the workplace leaving millions of workers inadequate for the currently available jobs, then it was not based on a major educational upscaling of jobs.
  • The challenges the nation faces as high unemployment persists is not better education and training for those currently unemployed. The problem is a lack of jobs.
  • The huge increase in wage and income inequality experienced over the last 30 years is not a reflection of a shortfall in the skills and education of the workforce. Rather, workers face a wage-deficit, not a skills deficit. It is hard to find some ever-increasing need for college graduates that is going unmet: college graduates have not seen their real wage rise in 10 years, and the pay gap with high school graduates has not increased in that time period. Moreover, even before the recession college students and graduates were working as free interns, a phenomenon we would not observe if college graduates were in such demand.

Read more or download the pdf.

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