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Why Technical Training Will Boost Upward Mobility

Stagnating wages. Gaps between rich and poor. Anemic labor-force participation. Stalled economic mobility. These are hot buttons in America today. The Pew Research Center recently startled many observers with a report that the combination of low-income households plus high-income households now outnumbers our middle class, the vaunted backbone of the United States.

Philanthropists know that our nation’s economy can do better. How can they help?

First they have to understand today’s issues accurately. One of the most mourned developments of the modern era is the stranding of millions of blue-collar workers on the economic margins. Unskilled or ­low-skilled men have seen their real wages decline 28 percent since 1980. Significant numbers of workers who once were proudly independent are now living on disability payments, food stamps, Medicaid, and other welfare benefits. Young people without skills see few routes to a career that can raise a family.

International competition and new technology mean that labor once done by human brawn is now assigned to machines. Contrary to some perceptions, America’s manufacturing economy has grown strongly. While our manufacturers have shed 7 million jobs since the 1970s, their output has climbed to over $2 trillion of products annually. The U.S. economic engine churns out more things and more value than ever before. But the employees it needs now are ones with specialized skills, or the ability to adapt and learn new tasks as work mutates.

Seven out of ten jobs today require at least some kind of training beyond high-school—a certificate, occupational credential, or degree. Due to a combination of new positions and openings due to retirement, millions of work slots open up every year now. Most of the positions that provide a middle-class wage, however, require some kind of specialized knowledge.

Government responses to today’s struggles among the working class have mostly been to funnel more money into unemployment compensation, welfare programs, social services, and disability compensation. While providing short-term salve to the wounded, these responses actually perpetuate economic malaise in the long run. The longer someone stays out of the workforce on long-term unemployment or disability, the less likely they are to ever land a good job again.

Meanwhile, some well-intentioned philanthropists, educators, and reformers have insisted that today’s need for specialized skills means everyone must go to college for four years. Americans who could thrive with the right dose of career and technical education are instead pigeonholed into booklearning and a multiyear college experience they cannot afford, do not need, and often will not complete.

A bias for the bachelor’s degree

Just from 2000 to 2010, enrollment at public four-year colleges increased by 34 percent. Many of those enrollees made good use of their college experience. Many floundered.

In many ways, today’s educational infrastructure is built to push young people into four-year bachelor’s degrees. In the 2013-2014 school year, 74 percent of federal Pell grants went to students aiming for at least a bachelor’s degree. Only 22 percent went to students planning on an associate degree, and just 4 percent went to students pursuing an occupational certificate.

The U.S. bias for bachelor’s degrees is very different from the pattern in may other advanced nations. OECD data show that the U.S. ranks second in baccalaureate attainment, but only 16th in postsecondary attainment below a bachelor’s degree. This preference is influencing U.S. competitiveness. The U.S. “is an outlier in focusing on postsecondary completion rather than on education having as its primary purpose to help young people find a calling or vocation,” writes workforce expert Nancy Hoffman in Schooling in the Workplace.

Seven out of ten jobs today require some kind of training beyond high school—a certificate, occupational credential, or degree.

Many young Americans are being prodded into traditional college courses they are unprepared and unsuited for. This leads to high dropout rates and a growing number of young people with some college experience but no completed degree. And it leaves in the cold many older adults who hold low-wage jobs and hunger for more responsibility and pay, but cannot take a multiyear detour from household responsibilities to go to university. “We need to move away from this one-trick-pony model of a four-year degree for all,” says Drexel University labor economist Paul Harrington.

“A four-year school,” agrees Dennis Dio Parker, is “not the only pathway.” That, he says, is just “a middle-class myth.” Parker is head of Toyota’s Advanced Manufacturing Program, an initiative profiled later in this guidebook which creates employment opportunities for young people interested in skilled technical trades. It offers three interlinked job courses. Enrollees can be schooled as a skilled technician or in engineering, or given business training. This effort has helped ensure that Toyota has a strong human-talent stream for its factories. And it has qualified thousands of participants for high-wage employment.

“We’re pushing all these kids into four-year liberal arts. They have all this debt. They don’t have the aptitude for it. So they end up driving cabs...or tending bar, or unemployed and living with their parents.... Whereas they may have great aptitudes as an electrician or mechanic, making $100,000 a year.” So says Charles Koch, in describing a new top priority of his foundation. “Some of them with that aptitude start their own businesses. They become wealthy because they are satisfying a real need, not because somebody subsidized them and pushed them into things they can’t really make a contribution in.”

Not just young people from lower-income families but also many from solidly middle-class backgrounds are struggling under today’s exaggerated focus on a four-year degree as the educational gold standard. Ask the counterperson at your local coffee house about his or her economic background and you are likely to get a very personal glimpse of this dynamic. Learning that a bachelor’s degree is no ­guarantee of economic success can be painful for unsuspecting college graduates. Unless more forms of postsecondary education with clear pathways into careers are established and widely advertised, growing numbers of young people will be burned by this discovery in the future.

Even if it doesn’t result in out-and-out unemployment, many ­college-trained youth now experience a disconnect between their choice of major and employer demands in the workforce. Of the five most popular fields of college study today, only one (health professions and related programs) falls within the category where employers say they are most frantically undersupplied with adequate workers—so-called STEM jobs (science, technology, engineering, and math). Between 2010 and 2020, the U.S. “will produce twice as many graduates in social sciences and business as in science, technology, engineering, and mathematics,” reports the McKinsey Global Initiative, “exacerbating the shortage of qualified candidates for technical jobs.”

Employers flooded with applicants bearing fuzzy and often very soft bachelor’s degrees are finding they need to focus on past work experience and demonstrated competencies, as proxies for skills and knowledge, more than on educational degrees. This is not a matter of employers being overly picky, says Andy Van Kleunen of the National Skills Coalition, but rather of workers lacking basic skills necessary for the real jobs that companies now need to fill. A four-year college degree doesn’t translate the way it once did.

In his 2013 book College (Un)bound, higher-ed expert Jeffrey Selingo summarizes trends this way:

Over the last 30 years—and particularly in the first decade of the new millennium—American higher education has lost its way. At the very top, the most elite and prestigious institutions remain the best—the world still clamors to get into Harvard, Princeton, Yale, Berkeley, Stanford, Amherst, Williams, and a few dozen other household brands. But at the colleges and universities attended by most American students, costs are spiraling out of control and quality is declining just as increasing international competition demands that higher education be more productive and less expensive. Only slightly more than 50 percent of ­American students who enter college leave with a bachelor’s degree. Among wealthy countries, only Italy ranks lower. As a result, the United States is now ranked number twelve among developed nations in higher-education attainment by its young people. As the baby boomer generation leaves the workforce, the country risks having successive generations less educated than the ones that preceded them for the first time.

For a sizable portion of the American population, pursuing a bachelor’s degree now leads to poor outcomes. The college-for-all slogan has produced a triple punch of high student-loan debt obligations, high incomplete-degree rates, and weak career prospects. At the same time, a high-school diploma alone is now inadequate to assure a middle-class standard of living.

Do alternatives exist? Savvy philanthropists, business owners, educators, and workforce reformers know the answer: Yes.

Career and technical education—a yawning opportunity

Lost amid the mania that would push every American toward a bachelor’s degree is an essential middle ground: a credential that is more than a high-school diploma, but less than a four-year degree, and that focuses tightly on technical skills in immediate demand in the marketplace. The currently favored lingo for such training is career and technical education (CTE). CTE integrates education with workforce development and leaves graduates capable of filling the “middle-skill” jobs that are in high demand in our new economy, and that pay family-sustaining wages. It’s an arena that experts agree holds exceptional promise both for reviving America’s working class, and for kickstarting our national economic engine. And donors have wide opportunities to be productive here.

A generation ago, “vocational education” was the term of art. We will use that shorthand occasionally in this book. But the low quality of some previous vocational education has given that term a negative connotation for some educators. Vocational ed was sometimes simply what was offered to weak students, after crude assessment by aptitude test (or, worse, by race). High scorers would be tracked to college prep classes. Low scorers would be dumped into work-training programs that often were not very ambitious or particularly well taught. This is one source of today’s unwise insistence in places on “college or bust.”

This crude history eventually led to dried-up funding for vocational education. Since 2000 alone, funding for high-school vocational ed programs has declined by 15 to 20 percent. Career-focused education remains anathema to some educators, notes Nicholas Wyman of the Institute for Workplace Skills and Innovation. “The ‘college-for-­everyone’ mentality has pushed awareness of other possible career paths to the margins,” he recently wrote in Forbes. “The cost to the individuals and the economy as a whole is high.”

Behind the scenes, however, private-sector donors and businesses have been quietly working, and making alliances together, to produce successful models of career-oriented education. Philanthropists have discovered, in CTE, a way to help individuals who otherwise would be stuck in an economic rut to achieve stable, middle-class lives. Employers and new job creators have found talented workers that they desperately need. And this alliance has unfolded in a low-cost, efficient manner, opening on-ramps to jobs for graduates relatively quickly and without painful political debates or social dislocations.

Blouke Carus—chairman emeritus of the Carus Corporation, a high-tech manufacturer in Illinois—argues that all U.S. youth should experience work-based learning, not just those in technical fields. In his decades as a donor and businessman, Carus has investigated European models of apprenticeship, engineering, and education reform, and worked to bring their lessons to American education. Among other advantages, “work-based learning motivates kids beyond belief,” says Carus. “They see a future for their studying. They realize they if they read and write and figure and learn the sciences, a good life can unfold for them.”

Carus has lots of company in drawing inspiration from successful European models of apprenticeships. Countries like Switzerland, ­Germany, and Austria have linked education and work in many ways, seamlessly integrating academics and vocation. Fully 70 percent of young people in Switzerland, 65 percent in Germany, and 55 percent in Austria are enrolled in apprenticeships. And all three countries have youth unemployment rates around half the U.S. level.

Robert Luddy—a donor, entrepreneur, and founder of CaptiveAire Systems, America’s leading supplier of kitchen ventilation systems—has tightly woven apprenticeships into both his business and the network private schools he has created through his philanthropy in Wake ­County, North Carolina. As profiled later in this guidebook, Thales Academy operates a technology-intensive track for high-school students that has, as a focal point, a rigorous internship and apprenticing program.

Luddy is quick to answer when asked why apprenticeships are useful in a modern age:

To form and develop individuals, you need mentors who can provide structured guidance. Some disciplines require traditional academic instruction for mastery. In other fields you have to learn directly under the supervision of vocational masters, because the task is nuanced, complicated, requires a specialized facility, or takes a long time to absorb. Whether you’re learning to play the piano, or operate a business, or lay bricks, you really can’t master it in a classroom. Mentors and various work experiences were foundational for me and helped me to grasp crucial concepts that weren’t taught in school.

While acknowledging economic and cultural differences between the U.S. and European counterparts, advocates of apprenticeship like Luddy believe it is one of the easiest and surest ways we could improve the quality of our career education—and that it is a model where philanthropists working on a small scale can be especially helpful.

Thanks to active leadership from donors, old negative perceptions of career-oriented education are quickly being scrubbed away. “Manufacturing now involves higher pay and needs workers with higher skills,” states Andi Korte, vice president of continuing education and workforce development at North Carolina’s Sandhills Community College. “These are high-tech jobs. They earn respectable incomes doing important work.”

Indeed, one of the philanthropic goals pursued by Karen Buchwald Wright, president and CEO of the Ohio-based Ariel Corporation, is to change the public perception of manufacturing. “Today’s manufacturing is high-tech, high-skilled, and pays very well,” she says. “It’s a career path that can easily lead to management, if the person has the right attitude and aptitude.”

Perhaps best of all, middle-skill jobs are plentiful in the American economy. Data compiled by the National Skills Coalition show that 54 percent of U.S. jobs fall into the middle-skill category. Low-skill jobs are now just 15 percent of our total. And 31 percent of U.S. jobs are high-skill.

Yet too few young people pursue middle-skill jobs, because they don’t understand the opportunities they offer, or because they’ve bought into the four-year-degree-for-all mentality. And too few of the blue-collar adults who are struggling in today’s job market are figuring out how to raise their skills to the middle level, in prompt and cost-effective ways. There is a big upside, with many beneficiaries, as this mismatch can be solved.

Many young Americans are being prodded into traditional college courses they are unprepared and unsuited for.

And there is reason to believe that more and better technical education could particularly revolutionize the educational experience of young men in America. Since the 1960s, educational trends have been zipping upward for females—who now significantly outnumber men on college campuses. But males have been suffering and declining on any number of educational measures. Equally, adults men have been getting battered in the labor force, with both rates of employment and levels of pay tumbling for many males.

Expanded tech-oriented training could help boys and men become more successful in K-12 education, in college, in job-winning, and in earnings trajectories—all the areas where males, especially blue-collar males, have been in eclipse. As the Atlantic pointed out in a 2013 article, “Young men may be a vanishing breed on the college campus, but there are some colleges that have no trouble attracting them—schools whose names include the letters T-E-C-H. Georgia Tech is 68 percent male; Rochester Institute of Technology, 68 percent; South Dakota School of Mines and Technology, 74 percent. This affinity pattern points to one highly promising strategy for reconnecting boys with school...career and technical education.”

First work, then prosperity

A previous guidebook in this series by The Philanthropy Roundtable was all about how donors can help disadvantaged Americans step onto the first rung of the economic ladder. Clearing Obstacles to Work: A Wise Giver’s Guide to Fostering Self-Reliance explored hundreds of strategies for getting troubled youths, the homeless, former prisoners, disabled veterans, addicts, welfare-dependent single moms, and others into ­entry-level jobs. This 2015 guide showed that paid work—even of the simplest type—provides structure, stability, dignity, social interaction, and meaning, which is why heaps of evidence show that a job is a surer route out of poverty and unhappiness than any combination of social services. Philanthropic funders have become quite skilled in recent decades at introducing struggling populations to productive work, and helping them learn the basic skills needed to hold a job over the long haul.

For those coming out of poverty, incarceration, addiction, or dependence, a regular workplace and steady paycheck of any size will often be life-changing. But after an individual has reached that milestone, and proven he or she has mastered the disciplines and soft skills of being a useful worker, what’s the next step? Staying for a long time in an entry-level job paying $8 to $10 per hour can make it hard to raise a family or achieve the security of a middle-class existence. The natural next step is to increase one’s technical skills. Only with greater knowledge and abilities and technique can one command higher wages and a path upward.

If

you’re a donor already involved in opening doors to entry-level work, investing in career and technical education is a natural extension of your help. Excellent vocational education is needed to keep disadvantaged populations moving forward and upward. And it has the added benefit of helping businesses and local communities become more functional and successful. Technical education may be today’s best tool for expanding America’s vital middle class and boosting America’s competitiveness.

Indeed, the authors of the Harvard Business School report Bridge the Gap call middle-skill jobs today’s main “springboard” into ­middle-American prosperity. Individual donors, private foundations, and corporations are beginning to shift resources with this in mind. Bret Halverson, an expert consultant on this topic, finds evidence that philanthropies and for-profit institutions are shifting some resources away from traditional education investments specifically so they can fatten their spending on CTE and workforce training.

Stagnating wages are a very appropriate concern for charitable action. Shortages of workers needed to keep American business strong are another very legitimate concern for public-spirited donors. Career education combats both negatives. Indeed, helping Americans become as productive as possible is a concern that goes back very far and very deep in the American experience. Benjamin Franklin, Peter Cooper, Julius Rosenwald, and many more of our greatest philanthropists placed this issue at the very center of their charitable concerns.

With the rise of high-quality career and technical education as a replacement for the mediocre vocational education of recent decades, many donors are showing signs of willingness to get back into this historic pursuit. Wise givers will of course want to see evidence of good results. A recent study from the Thomas B. Fordham Institute sheds some light on how positive the results in this area could be for learners. Using rich data from the Arkansas Research Center, this analysis followed more than 100,000 students from eighth grade through high school and into postsecondary education. It tracked which students took CTE courses and which didn’t, then measured whether exposure to career and technical training brought tangible employment prospects to students. The results are heartening:

In general, taking just one additional CTE course above the average increases a student’s probability of graduating from high school by 3.2 percentage points, and of enrolling in a two-year college the following year by 0.6 percentage points. It also increases a student’s probability of being employed the year after graduation by 1.5 percentage points, and boosts his or her expected quarterly wage that year by $28 (roughly 3 percent). Dual enrollment—earning college credit while still in high school—magnifies the impact of an additional CTE course by doubling the probability that a student will enroll in a two-year college the year after graduation. All of these differences are statistically significant.

This study found that low-income students were particularly likely to enjoy sturdy gains from exposure to career and technical education. Among lower-income students, for example, taking CTE classes made it 25 percent likelier the student would graduate from high school.

Simply put, giving to CTE programs is good philanthropy, because it’s good for people. Here are seven specific ways that training Americans for middle-skill jobs benefits them:

Higher pay

Earning an associate degree will take a worker’s earnings, on average, from $35,380 to $44,140 per year (in 2012 dollars), a nearly 25 percent increase. Other research shows that Americans with some college but no degree (some of whom might have an industry-recognized certificate) earn around $250,000 more over their lifetimes than those with a high-school diploma only. One analysis from California showed that CTE associate degrees produced a 25 percent bump in pay, and certificates led to a 10 percent jump.

One analysis showed that associate degrees in career and technical fields produced a 25 percent bump in pay, and certificates a 10 percent bump.

Access to benefits

Middle-skill jobs are much more likely to be linked to health care and retirement savings vehicles.

Social mobility

Career and technical training provides qualifications that stack on top of previous competencies, gradually increasing earnings and building the market power of a worker. “Anybody can use stackable credentials to advance in a profession,” notes Blouke Carus. “If an auto mechanic wants to go the next step and become a mechanical engineer or a process operator or a chemical analyst, that’s entirely possible.”

Aligning schooling more appropriately with work

Many young people spend years in higher education that ultimately have little or no influence on their life in the workforce. This is wasteful and hurts both students and employers. The best CTE programs make sure that the dollars and hours students put into their schooling will bear fruit in their life that follows. “The world is not saying, ‘Oh, you have a piece of paper? Sure, we’ll hire you.’ Specific skills and competencies are needed,” summarizes Tom Riley of the Pennsylvania-based Connelly Foundation.

Making it easier to meld work and learning

CTE certificates, degrees, and certifications are often set up to be accessible to people who are actively working and supporting dependents. “We have lots of people in our community who need a very short burst of training to improve their value to employers—training that sometimes requires as little as three weeks, sometimes as much as 14 weeks, but rarely more than that,” says Sandy Shugart, president of Valencia College in Orlando, a CTE-rich school profiled later in this guidebook.

The fact that apprenticeships, on-the-job-training, internships, and mentoring are so often part of CTE training is also very helpful to people already in the workforce. “Because CTE is career-focused, it has a unique advantage for working learners,” write the authors of ­Georgetown University’s 2012 report Five Ways That Pay Along the Way to the B.A. “In the short run, students with relevant knowledge and skills can secure positions that pay.... In the long run, students will have developed career-relevant skills and gained work experience that bring dividends as they advance their careers.”

Lifelong learning

With a rapidly changing economy, career education is not something to be done for a few years then left behind. The most successful workers will keep learning and evolving in their skills to remain competitive. Nimbleness, adaptability, and fresh knowledge are at the heart of the finest CTE and middle-skill programs, marking a significant departure from old school vocational-ed programs.

National impacts

Political debates over inequality, fairness, minimum wages, free trade and global economics rage today. Helping ensure that more workers have the skills that employers and our marketplace need is not only the best route to the middle class for those individuals, but also the healthiest route to national success and happiness without resort to class conflicts, trade wars, national conflicts, forced wealth transfers, and government distortion of our economy

Recent research by Nobel laureate Angus Deaton uncovered ­alarming life-span declines among white working-class Americans who have apparently been resorting to alcohol, drug addiction, and suicide at increased rates in response to economic disappointment—with the effects largely confined to those with a high-school education or less. Social reasons—the decline of marital stability, high out-of-wedlock births, sagging religious participation, and so forth—are probably involved in this as well. But a feeling of economic “dispossession” growing out of failures to participate successfully in our increasingly technological economy is undoubtedly involved, and are easier to reverse, through good technical education, than some of the social factors.

Stronger investments in CTE could also lower America’s high dropout rates for both high school and postsecondary education. U.S. Department of Education figures show that more than four out of ten students at four-year colleges, for instance, fail to graduate within six years. The career education programs profiled in this guidebook have far stronger completion rates, and keep engaged in schooling whole categories of students who would otherwise withdraw from education.

Career and technical education has the capacity to revolutionize both individual lives and our national economic soul. The purpose of this guidebook is to provide the best recipes for success. We will explore a host of approaches that donors are using. We’ll extract the most useful nuggets on how to extend prosperity and improve our workforce, and use them to inform your own philanthropic giving. Whether you are a donor who has been active in field, or a newcomer, you’ll learn lessons you can put to use immediately.

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