Thinking About the Future: Workforce Development for Kansas Joshua L. Rosenbloom The University of Kansas Department of Economics and Policy Research Institute

Defining the Question Meeting the Needs of Kansas Employers Maximizing Economic Opportunity for Students

The Most Educated are Most Likely to Migrate both in and Out of the State Source: 1990 Census PUMS

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 years

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

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

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

Education Increases Earnings Source:

Education Reduces Unemployment Source:

Earnings Differentials Increase With Age Source: Borjas (2000) based on CPS data from 1997

The Returns to Education Have Been Increasing Since 1980 Source: Borjas (2000)

While the Number of College Educated Workers Has Increased Source:

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

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

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

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

Changes in the Composition of the Kansas Labor Force, Occupation % Change Professional and Technical Service Workers (not household) Managers, Officials, and Proprietors Clerical and Related Sales Workers Craftsmen Laborers Operatives Farmers and Farm Laborers Source: Census and Current Population Survey

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

Changes in Computer Use by Education All Workers Source: Current Population Survey

Changes in Computer Use by Occupation Source: Current Population Survey

Changes in Job Content: Non-Routine Tasks Source: Autor, Levy, and Murnane (2001)

Changes in Job Content: Routine Tasks Source: Autor, Levy, Murnane (2001)

Forecasts of Job Growth for the US by 2010 Source: BLS, Occupational Outlook (2001)

Skill and Training Needs Due to US Job Growth to 2010 Source: BLS, Occupational Outlook (2001)

Comparison of Kansas and US Occupational Structure, 2001 OccupationUSKansasRatio (KS/US) Professional and Technical22.3%23.0%103.3% Service Workers (not household)13.7%15.4%112.8% Managers, Officials, and Proprietors15.3%15.2%99.2% Clerical and Related16.0%14.3%88.9% Craftsmen9.8%10.6%107.3% Operatives10.4%8.4%80.2% Sales Workers6.4%6.0%94.3% Laborers4.6% 99.5% Farmers and Farm Laborers1.4%2.6%180.4% Source: Current Population Survey

Forecasts of Job Growth for Kansas by 2006 Source: Kansas Occupational Outlook 2006

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

Employers Already Commonly Require These Skills Source: Holzer (199?)

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)

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)

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