P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Thinking About the Future: Workforce Development for

Kansas

Joshua L. RosenbloomThe University of Kansas

Department of Economics and

Policy Research Institute

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Defining the Question

• Meeting the Needs of Kansas Employers

• Maximizing Economic Opportunity for Students

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

The Most Educated are Most Likely to Migrate both in and Out of the State

Migration Propensity Relative to State Labor Force

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Not HS Grad HS Grad or GED Some Post-Secondary

BA or More

Moved To KS in last 5 years

Moved From KS in last 5 years

Source: 1990 Census PUMS

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Defining the Question

• Preparing Students for the First Job– Think about the next 5 years

• Preparing Students for their Work Life– Think about the next 40-50 years

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Agenda

• The Economics of Education and Training

• The Changing Nature of Work: Past Experience and Future Trends

• What Skills Will Workers Need?

• Implications for Education Policy

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Chief Conclusions

• Computerization continues to transform work

• Computers are– Substitutes for routine work– Complements for non-routine work

• The workforce of tomorrow will need better cognitive skills

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Basic Economic Concepts

• Education and training are like investments in machinery– Costly investments are made today– They result in pay-offs in the future

• This is evident in returns to education

• Economists refer to these investments as Human Capital

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Education Increases Earnings

0

10,000

20,000

30,000

40,000

50,000

60,000

Master'sDegree

Bachelor'sDegree

AssociateDegree

SomeCollege, no

Degree

High SchoolGraduate

Some HighSchool, noDiploma

Me

dia

n A

nn

ua

l In

co

me

($

)

Source:

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Education Reduces Unemployment

0

1

2

3

4

5

6

7

Master'sDegree

Bachelor'sDegree

AssociateDegree

SomeCollege, no

Degree

High SchoolGraduate

Some HighSchool, noDiploma

Un

em

plo

ym

en

t R

ate

(%

)

Source:

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Earnings Differentials Increase With Age

Source: Borjas (2000) based on CPS data from 1997

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

The Returns to Education Have Been Increasing Since 1980

Source: Borjas (2000)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

While the Number of College Educated Workers Has Increased

0

5

10

15

20

25

30

35

40

1960 1965 1970 1975 1980 1985 1990 1995 2000

Pe

rce

nta

ge

of

Lab

or

Fo

rce

College Graduates

High School Graduates

Source:

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Basic Economic Concepts

• General Human Capital– Raises productivity with many employers

• Specific Human Capital– Raises productivity with only one employer

• Examples– An electrician’s skills are general– An astronaut’s skills are specific

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Basic Economic Concepts

• Education could also be a signal

• Employers may use education to screen for ability

• Signaling and Human Capital models can both be true

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

The Changing Nature of Work

• Two factors determine what skills employers demand

• Preferences– What people want to purchase

• Technology– Determines the prices of goods and services– Determines the best way to produce them

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

The Changing Nature of Work

• Rising incomes affect consumption– Less income is spent on food and housing– More is spent on services—especially leisure

and health care

• Technological Change– Rising productivity has reduced cost of

manufactured goods and agricultural products– Computerization has reshaped production

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Changes in the Composition of the Kansas Labor Force, 1950-2001

Occupation 1950 1990 2001 % Change

Professional and Technical 0.09 0.20 0.23 148.77

Service Workers (not household) 0.08 0.14 0.15 90.32

Managers, Officials, and Proprietors 0.09 0.12 0.15 63.79

Clerical and Related 0.11 0.18 0.14 34.80

Sales Workers 0.08 0.06 0.06 -20.65

Craftsmen 0.14 0.11 0.11 -23.51

Laborers 0.07 0.04 0.05 -31.31

Operatives 0.13 0.11 0.08 -33.34

Farmers and Farm Laborers 0.22 0.04 0.03 -88.32

Source: Census and Current Population Survey

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

The “Computer Revolution”

• Prices of Computers have fallen dramatically and will continue to do so

• The diffusion of Computers has been striking

• Computers are best at “routine tasks”• They replace workers doing these tasks• They enhance productivity of workers

doing non-routine tasks

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Changes in Computer Use by Education

0

10

20

30

40

50

60

70

80

1984 1986 1988 1990 1992 1994 1996 1998

Pe

rce

nta

ge

of

Wo

rke

rs U

sin

g C

om

pu

ters

College

Some College

High School

Less than High School

All Workers

Source: Current Population Survey

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Changes in Computer Use by Occupation

Source: Current Population Survey

0

10

20

30

40

50

60

70

80

90

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Per

cen

tag

e o

f w

ork

ers

Professional and Technical Managers&Administrators SalesClerical Craftsmen OperativesLaborers Service

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Changes in Job Content: Non-Routine Tasks

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

1959 1969 1979 1989 1998

Rel

ativ

e to

195

9

Cognitive/Analytical Cognitive/Interactive

Manual

Source: Autor, Levy, and Murnane (2001)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Changes in Job Content: Routine Tasks

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

1959 1969 1979 1989 1998

Rel

ativ

e to

195

9

Cognitive Manual

Source: Autor, Levy, Murnane (2001)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Forecasts of Job Growth for the US by 2010

0

2000

4000

6000

8000

10000

12000

14000

16000

Production,construction,

operation,maintenance andmaterial handling

Professional,Paraprofessional,

Technical

Service Clerical andadministrative

support

Managerial andAdministrative

Sales and related Agriculture,forestry and

fishing

Job

s (1

,000

s)

Replacement Jobs New

Jobs

Source: BLS, Occupational Outlook (2001)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Skill and Training Needs Due to US Job Growth to 2010

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

College+ College Degree Some College ModerateExperience

Short Term OJT

Fra

ctio

n o

f Jo

bs

Share of 2000 jobs

Share of openings

Source: BLS, Occupational Outlook (2001)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Comparison of Kansas and US Occupational Structure, 2001

Occupation US Kansas Ratio (KS/US)

Professional and Technical 22.3% 23.0% 103.3%

Service Workers (not household) 13.7% 15.4% 112.8%

Managers, Officials, and Proprietors 15.3% 15.2% 99.2%

Clerical and Related 16.0% 14.3% 88.9%

Craftsmen 9.8% 10.6% 107.3%

Operatives 10.4% 8.4% 80.2%

Sales Workers 6.4% 6.0% 94.3%

Laborers 4.6% 4.6% 99.5%

Farmers and Farm Laborers 1.4% 2.6% 180.4%

Source: Current Population Survey

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Forecasts of Job Growth for Kansas by 2006

-20000

0

20000

40000

60000

80000

100000

120000

140000

Production,construction,

operation,maintenance andmaterial handling

Professional,Paraprofessional,

Technical

Service Clerical andadministrative

support

Managerial andAdministrative

Sales and related Agriculture, forestryand fishing

Job

s

New Jobs

Replacement Jobs

Source: Kansas Occupational Outlook 2006

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

In the Future Workers Will Need the Ability to:

• Do math, read, and write at the high school level

• Solve semi-structured problems

• Work in teams

• Communicate effectively

• Use computers to do everyday tasks

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Employers Already Commonly Require These Skills

Task Performance Frequency of Non-College Jobs, 1996

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Do arithmetic Deal withcustomers in

person

Read paragraphs Deal withcustomers on the

phone

Use Computers Write paragraphs

Daily Once a Week

Once a Month

Source: Holzer (199?)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Skill Needs Cited by Kansas Employers

• Most commonly cited skill needs– Listening/oral communication—76%– Problem solving—75%– Goal setting/personal motivation—73%– Work attitudes/habits—72%– Decision making—70%– Organizational effectiveness/leadership—70%

Source: Stella, Krider, Ash (1997)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Skill Needs Cited by Kansas Employers

• Least frequently cited skill needs– Electrical—24%– General labor—32%– Skilled trades/crafts—32%– Machine operation—34%– Mechanical—36%

Source: Stella, Krider, Ash (1997)

P R I P o l ic y R es earc h In s t ituteThe Univers ity of K ansas

Policy Recommendations: Building a Workforce for the Future

• Education needs to improve cognitive skills training– Increase number of college graduates– Improve training in high school

• Effectiveness of vocational training requires further study

• Develop Institutions for re-training– Community colleges are best suited for this role