THE COMPETITIVENESS EQUATION— THE QUALITY OF THE WORKFORCE

Economist Lester Thurow wrote nearly 2 decades ago that “in the 21st century, the educational skills of the workforce will end up being the dominant competitive weapon.” If so, it appears that America is becoming a formidable threat—to itself.

A workforce that costs more than its competitors can, within reason, overcome this disadvantage through productivity, although the increase in productivity in some instances can itself destroy jobs. Indeed, major steps have been taken in improving efficiency in the United States, with, for example, real factory output per worker having increased from $52,000 to $108,000 since 1990 alone. That is important, but it falls far short of the wage gap that must somehow be offset—particularly as others have improved their productivity, too.

The most obvious place to begin when assessing workforce quality in a knowledge age is with educational qualifications. In China, virtually all high school students study calculus; the corresponding share in the United States is 13%. In 1970, US students made up 30% of all university enrollments in the world; by 2000, the fraction had dropped to 12%. Similarly, the share of PhDs (in all fields) granted by US universities will have declined from 50% in the early 1970s to a projected 15% in 2010. Fewer than 18% of US high-school graduates go on to receive a college degree within 6 years of receiving



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Is America Falling Off the Flat Earth? THE COMPETITIVENESS EQUATION— THE QUALITY OF THE WORKFORCE Economist Lester Thurow wrote nearly 2 decades ago that “in the 21st century, the educational skills of the workforce will end up being the dominant competitive weapon.” If so, it appears that America is becoming a formidable threat—to itself. A workforce that costs more than its competitors can, within reason, overcome this disadvantage through productivity, although the increase in productivity in some instances can itself destroy jobs. Indeed, major steps have been taken in improving efficiency in the United States, with, for example, real factory output per worker having increased from $52,000 to $108,000 since 1990 alone. That is important, but it falls far short of the wage gap that must somehow be offset—particularly as others have improved their productivity, too. The most obvious place to begin when assessing workforce quality in a knowledge age is with educational qualifications. In China, virtually all high school students study calculus; the corresponding share in the United States is 13%. In 1970, US students made up 30% of all university enrollments in the world; by 2000, the fraction had dropped to 12%. Similarly, the share of PhDs (in all fields) granted by US universities will have declined from 50% in the early 1970s to a projected 15% in 2010. Fewer than 18% of US high-school graduates go on to receive a college degree within 6 years of receiving

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Is America Falling Off the Flat Earth? their high-school diplomas. The United States still leads in the fraction of the population’s 35- to 64-year-olds who hold college degrees (in any field), but it ranks seventh among 25-to 34-year-olds. For every American elementary and secondary school student studying Chinese, there are 10,000 students in China studying English. China already is the largest “English-speaking” nation on the globe, although English is a second language. When I visited China in the late 1970s, English lessons were being given over the loudspeakers in the street cars. How long do you suppose US commuters would tolerate mandatory Chinese lessons on their way home from the office? The situation in science and technology is particularly perilous. In the Program for International Student Assessment tests of students’ ability to apply mathematical understanding to real-world problems, US 15-year-olds finished in 24th place among the participating nations. US 15-year-olds finished in 18th place in science. In a test of basic knowledge of both mathematics and science, US 12th-graders finished below the students of 18 other countries in math, and 15 in science. In yet another test, American 8th-graders ranked 9th in science and 15th in mathematics, behind Estonia and Malaysia. The earlier (1999) Trends in International Mathematics and Science Study found no country with 12th-graders scoring significantly below those in the United States in mathematics and only one in physics. Of US students who take the ACT college-entrance examination, a self-selecting and presumably more highly achieving group, 78% are deemed unqualified for college-level work in reading, mathematics, or science. In a 2005 test of science understanding administered by the National Assessment of Educational Progress, 32% of US fourth-grade students performed below the “basic” achievement cutoff level (the lowest of three levels defined for the test). Among 8th-graders, the share increased to 41%. By the 12th grade, the fraction of underachievers had grown to 46%. In mathematics, the same test revealed that fewer than one-fourth of high-school seniors perform at or above their grade level. An examination of the trend over time is no more encouraging. In the abovementioned test of mathematics understanding, the proportion of American high-school seniors scoring below the “basic” cutoff level in 1996 was 31%; in 2000, it was 35%; and by 2005, it had grown to 39%. Recent changes in the test’s methods reduce the confidence one can attach to the trend analysis, but it seems clear that the average level of mathematical understanding attributable to high-school seniors is low and not improving, and these results exclude the 1 million students who are generally not among the top performers and drop out of high school each year.

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Is America Falling Off the Flat Earth? Ironically, US 4th-graders rank near the 80th percentile among nations participating in 2003 science testing, but by the 12th grade, US students plummet to the 5th percentile. Similarly, by the 12th grade, US students descend to the 10th percentile in mathematics (in 1995, the most recent year for which data are available). A benchmark test given to US students in 2005 indicates that over the most recent decade, 4th-graders modestly improved in mathematics and science, 8th-graders remained basically unchanged in performance, and 12th-graders lost additional ground. In fact, other tests displayed that 17-year-olds have not improved in scores in mathematics for a quarter-century. It seems that the longer our children are exposed to our K-12 education system, the worse they do. If we wish to be average by global standards, we will need to improve a great deal. Can anyone imagine a football coach at any American high school greeting his players on the first day of fall practice by saying, “This year let’s get out there and try to be average for the Gipper!”? It can, of course, be argued that comparing averages and medians tells only part of the story, as indeed is often the case. But in this instance, further parsing of the data generally reveals that the United States has a disproportionately small share of the highest performers and a disproportionately large share of the lowest performers. Although this is widely overlooked, it is not simply the poorer-performing students who are falling through the gaping cracks of our educational system but also the highest performers who—much to the nation’s detriment—are frequently being forced to learn in an environment approaching the lowest common denominator. As former Federal Reserve Chairman Alan Greenspan explains, “If you don’t solve [the K-12 education problem], nothing else is going to matter all that much.” In choosing words to characterize the present health of the US public K-12 education system, he selected “pretty awful.” Speaking from the perspective of business, the president of the US Chamber of Commerce, Thomas Donohue, says, “If companies were run like many education systems, they wouldn’t last a week.” As one digs deeper, additional societal concerns emerge as consequences of the nation’s education shortcomings. For example, according to the Federal Reserve’s data, during the 15 years ending in 2004, the net worth of families led by college graduates increased by 61% while that of families led by high-school dropouts rose by only 12%; the disparity generated during the above period eventually exceeded a factor of 6. In 1980, college graduates, on the average, earned 75% more than high-school graduates (and 150% more than those without a high-school diploma). In today’s knowledge age, a quarter-century later, the wage gap between high-school and college graduates is over

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Is America Falling Off the Flat Earth? 130%. Households led by a college graduate have, on the average, more than 4 times the net worth of households led by high-school graduates with no college education. Over the past 2 decades, median real income has declined (by about 10%) for all households except those including a recipient of a bachelor’s or higher degree—the latter having seen an increase. Greenspan notes that “it’s pulling our society apart.” His successor as chairman of the Federal Reserve, Ben Bernanke, adds that “we’re probably not doing what we should be doing in terms of ensuring that all children have opportunities to learn mathematics and science.” Finding a solution to America’s failing K-12 performance is complicated by the character of the nation’s education delivery system that comprises some 15,000 school districts that are locally managed, generally apply local budgetary policies with local hiring and retention practices, and often use local standards of achievement. Certainly not all schools are failing, but the average of all schools is certainly failing, and failing resoundingly. Bill Gates has remarked, “When I compare our high schools to what I see when I’m traveling abroad, I’m terrified for our workforce of tomorrow.” I had a similar reaction when, as but one example, I visited a school in Sri Lanka in an area that not long before had been ravaged by the tsunami of 2004. There, amidst the wreckage of homes and in the heat and humidity of a tropical jungle, attentive children were attending school in open-air classrooms. Encouragement was taken by some observers in 2005, when 65,000 US students participated in Intel’s global science and engineering fairs. But it should not go unnoticed—even with recognition that quality is far from uniform—that 6 million students took part in the corresponding events in China. Yet the Asia Society reports that China educates 20% of the world’s students with only 2% of the world’s educational resources. Jay Greene points out that inflation-adjusted spending per public school student in the United States increased by a factor of 7 from the end of World War II to the present, but 12th-grade test scores have remained substantially unchanged over that extended period, as has the high-school graduation rate. The United States spends more per student on secondary education than any other nations except Switzerland and Luxemburg and more on primary education than any nation except Luxemburg. The problem appears to be not what we are spending but rather how we are spending it. States, on the average, spend only 61% of their education budget on classroom instruction. The nation’s capital, which ranks third in spending per pupil, finds itself in last place in the fraction of its budget dedicated to instruction—53%. As the nation awaits fundamental structural changes, most of which must be introduced at the local level, more funds will need to be devoted, at least in the near term, at the national level—hopefully to jump-start a turnaround. In the judgment of many, America’s K-12 educational process simply needs to embrace the

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Is America Falling Off the Flat Earth? free-enterprise system—with its competition, measurable standards, and consequences for all—and make performance-related compensation the coin of the realm, as is the case in virtually every other pursuit in the nation and, increasingly, in the world. A few years ago, it was reported that California was taking action in that regard: In 1999, it passed a law mandating that students pass an exit examination to receive a high-school diploma. A passing grade in mathematics was set at 55%. The examination was multiple-choice, with four possible answers to each question; seemingly, this at least assured the not-unlucky, totally uninformed student of a 25% score, for openers. Furthermore, students were permitted as many as six tries to pass the examination in the normal course of affairs and even more in “special” circumstances. Yet there emerged a cacophony of objections by vocal citizens who believed even this set of undernourished standards to be too demanding, and a series of lawsuits and political maneuverings arose to eliminate the requirement. Similarly, attempts by a few school boards around the country to lengthen the school year by a week or two have not infrequently resulted in decisive action: the members of the school board were summarily thrown out of office by enraged parents. The problem of low expectations has not been confined to California. Alabama, for example, reported that in 2005, 83% of its fourth-graders ranked as “proficient” on its state test of academic achievement. But in the most widely accepted national test, the National Assessment of Educational Progress, only 22% of Alabama’s fourth-graders scored at or above the proficient level. In truth, neither of the measures matters much. What counts today is how the children of Alabama rank with the children of Singapore, Moscow, Hong Kong, Delhi, Beijing, and Berlin. There is little consolation in being first among losers. A Gallup poll offering 20 options reported that the American public ranks lack of student motivation, lack of parental involvement, and home-life issues as the three factors adversely affecting the nation’s public schools. In sharp contrast, participants in the Teach for America program, which seeks highly qualified new college graduates to teach in challenged public schools, rank teacher shortcomings, principal shortcomings, and inadequate expectations of students as predominant. The foremost conclusion of the National Academies’ Gathering Storm committee was that along with increasing parental interest and involvement in our public schools and their children’s education, the greatest leverage for improving K-12 performance resides in providing qualified, motivated teachers, particularly in mathematics and science. In generations past, America’s classrooms were the beneficiary of an abundance of extraordinarily capable women who, because of the failings of those eras, had only the most

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Is America Falling Off the Flat Earth? limited set of career opportunities other than teaching. Today, many of these would-be teachers are not in the classroom at all but instead are in the executive suite, operating room, or law office. The impact on the nation’s schools is palpable. According to the most recently available data, 69% of US fifth- through eighth-grade students are being taught mathematics by teachers who do not possess a degree or certificate in mathematics. Fully 93% of students in those grades are being taught physical sciences by teachers with no degree or certificate in the physical sciences. Even in high school, the corresponding likelihoods are 31% for mathematics, 61% for chemistry, and 67% for physics. (In contrast, 81% of the physical-education teachers in grades 5-8 and 9-12 have degrees in physical education.) Many entire school districts do not have a single teacher with an academic degree in mathematics or science. If it offers any consolation, help is on the way: English-speaking tutors, many with master’s degrees in mathematics or science, are now available over the Internet from South Africa, India, and Israel; they generally charge $3-20 per hour. One wonders whether this might be a precursor of outsourcing the teaching of our children. Often, physical-education teachers are simply assigned to teach physics; anointed might be a more descriptive term. Many of them have a distinct lack of interest in the subject they must teach and a lack of comfort with it that is both evident and contagious to their students. The dearth of background and excitement on the part of these teachers translates into a lack of intriguing experiments that can be conducted in a science class, a lack of real-world applications that can be presented in a mathematics class, and a lack of interesting and provocative insights that can be offered in both. Thus, when a Raytheon survey asked 11- to 13-year-olds whether they would rather clean their room, eat their vegetables, go to the dentist, take out the garbage, or learn mathematics and science, fully 84% simply went with the garbage. Tom Friedman asks, “If Einstein were alive today and learned science the boring way it is taught in many US schools, wouldn’t he have ended up at a Wall Street hedge fund rather than developing theories of relativity for a Nobel prize?” The inadequacies of the nation’s public school systems spill into our colleges and universities in a domino-like effect: three-fourths of all 2- and 4-year institutions feel compelled to offer remedial courses. Twenty-two percent of all freshmen enroll in mathematics remediation. In most school districts, physical-education teachers are paid on the same wage scale as physics teachers, and excellent physics teachers are paid the same wages as mediocre

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Is America Falling Off the Flat Earth? physics teachers, on the grounds that this is “fair.” But when we encounter a pursuit that really matters in our secondary-education system, we somehow manage to find a solution to the pay conundrum: for example, we put a priority on paying our high-school football coaches very well for the extra duties they perform. Not surprisingly, a Sports Illustrated online survey reveals that the nation’s university students believe overwhelmingly that the athletic departments in their institutions have more power than the academic faculties. The public K-12 school system in the United States continues to be largely impervious to the forces of the free-enterprise system. About 46% of new teachers abandon the profession within 5 years. The attrition rate is even higher among science and mathematics teachers. In 2004, in Maryland, my home state, 523 mathematics teachers resigned. In spite of a monumental effort, only 91 qualified replacements could be hired. The situation is even worse in the case of physics teachers. Geoffrey Summers, of the University of Maryland Baltimore Campus, noted that “if we add four physics teachers per year in Maryland public schools we will double the rate of physics teachers that Maryland currently produces.” That is in a state with nearly 6 million inhabitants. Maryland is not alone in this respect. Before the University of Texas initiated its UTeach program, of which more will be said, only 16 of 12,000 graduates in 1996 were certified to teach secondary science and 5 to teach mathematics. At the University of North Carolina, Erskine Bowles, in his inaugural address as president, remarked, “Think about this: in the past 4 years, our 15 schools of education at the University of North Carolina turned out a grand total of three physics teachers. Three. And we’re going to compete with those guys in Asia? Come on—not that way.” And a recent article in Science points out that “last year, BYU, a private institution run by the Mormon Church, graduated roughly five percent of all the new physics teachers produced by all U.S. colleges and universities in 2006. Its class of 16 dwarfs the production of any other university.” Why do classroom teachers abandon the profession? There are, of course, a plethora of reasons: lack of prestige, lack of inherent discipline in the classroom, lack of parental support, demanding work, inadequate pay, and so on. The number 1 source of dissatisfaction among teachers in low-poverty suburban public schools is, according to one survey, poor salary (51% of respondents), but among high-poverty public schools, the lack of administrative support (50%) ranks number 1. U.S. News & World Report states that whereas a high-school teacher must work 43 hours to make $1,000, the average corporate CEO can do so in 2 hours and 55 minutes. Kobe Bryant takes only 5 minutes and 30 seconds on the basketball court—and Howard Stern need labor only 24 seconds in his chosen profession. Simply stated, if a teacher is to inspire today’s young people, that teacher had better be

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Is America Falling Off the Flat Earth? excited about the subject at hand, be knowledgeable enough to answer penetrating questions, and be informed enough to provide interesting, challenging coursework. The evidence along those lines is not encouraging. For example, the Los Angeles Times reported that last year 35% of the future elementary-school instructors who studied at California State University, Northridge, said to be the largest supplier of new teachers to the Los Angeles Unified School District, received Ds or Fs in their first college-level mathematics class. And with today’s inflated grading standards at most colleges and universities, it is not easy to get a D or an F. Some have suggested opening the K-12 teaching ranks to practicing engineers and scientists who wish to change careers or take early retirement to meet new challenges or who are simply committed to the cause. Ironically, examples are rife wherein such people are denied the opportunity to teach 9th-grade algebra but are permitted to teach in a research university. In my own case, I would be deemed unqualified to teach in virtually any grade school in America, but was welcomed, on taking early retirement from a position in the aerospace industry, to teach both undergraduate and graduate students in the School of Engineering and Applied Science of Princeton University. The US Department of Education estimates that 60% of the new jobs that will open in the 21st century will require skills possessed by only 20% of the current workforce. Similarly, industry surveys indicate that 90% of the fastest growing jobs will require at least some post-secondary education. Jobs that demand technical training are growing at 5 times the rate of those requiring non-technical skills. And, as has been widely publicized, a person with a bachelor’s degree will have median lifetime earnings that exceed earnings of those with only a high-school diploma by about $1 million. Most parents don’t seem to be losing much sleep over all this. One survey found that 70% of the parents of America’s high-school students believe that their children get about the right amount of science and mathematics. A Harris poll reports that 58% of Americans believe that the United States is performing “very well” or “somewhat well” in mathematics and science education compared with other nations. And in another poll, only 15% of the parents surveyed indicated that the most pressing problem facing high schools in their communities was “low academic standards.” In contrast, 73% cited “social problems and kids that misbehave.” Nor do students themselves seem to be losing much sleep over an issue that will have such a profound impact on their lives. About 83% of students eligible for free tutoring elect to forgo it. The average American youth now spends 66% more time watching television than in school (a number that is beginning to diminish as students devote more

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Is America Falling Off the Flat Earth? time to increasingly realistic but generally educationally hollow video games). Over 40% of America’s 4- to 6-year-olds have their own television sets in their bedrooms. In the case of their older brothers and sisters, the fraction approaches 70%. When MIT made the materials it uses in its courses available free of charge on the Internet, well over half the users were outside the United States. Roy Singham, CEO of ThoughtWorks, which has operations around the world, observes, “When you’re in college drinking beer and watching the Super Bowl, your counterpart in China is on his fourth book.” Could it be that most of America’s parents and students “just don’t get it”? That question, as far as students are concerned, was actually addressed in the Trends in International Mathematics and Science Study 1998/99. When it comes to self-perception, American youth truly excel. In fact, it was no contest. US high-school seniors ranked number 1 among the 20 participating nations in agreeing that they were doing well in mathematics and number 3 in agreeing that they were doing well in science. The problem is that the same group of students finished 18th in the mathematics examination and 17th in the science examination. As my young son once announced on the opening day of yet another soccer season, “This year we’re really gonna’ get ‘em; last year we were too overconfident!” Indeed, it seems that at least when it comes to science and mathematics, America’s youth rank considerably higher in confidence than in competence. Tom Friedman, writing in The Earth Is Flat, takes a somewhat more critical perspective. “Mathematics and science,” he says, “are the keys to innovation and power in today’s world.” He goes on to say that “American parents had better understand that the people who are eating their kids’ lunch in mathematics are not resting on their laurels.” He describes a conversation with his own daughters that began, “Girls, when I was growing up, my parents used to say to me, ‘Tom, finish your dinner. People in China and India are starving!’ My advice to you is: ‘Girls, finish your homework. People in China and India are starving … for your jobs.’” There is yet another critical ingredient of workforce quality: motivation—the drive to apply one’s talents. This is seldom mentioned in most competitiveness debates; generalizations tend to be unfair to that not insignificant segment of the workforce that is highly motivated and possessed of a strong work ethic. But, as IBM’s Nicholas Donofrio, puts it, “The attitude I see in Estonia, Mexico, Brazil, China, Latvia—they’re hungrier than we are.” Employers in many of those countries take the “default” position vividly expressed by former Green Bay Packers coach Vince Lombardi: “If you are not fired with enthusiasm, you will be fired with enthusiasm.” My own experiences in visiting over 100 countries

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Is America Falling Off the Flat Earth? suggest that it is difficult to name five in which, on average, customers receive worse service than in the United States. Gilman Louie, the Silicon Valley entrepreneur and former CEO of the high-technology firm In-Q-Tel, tells of attending a lecture by an industrial leader in Japan at which the student audience spontaneously began chanting in unison the Japanese word for innovation. Some businesses in India outfit work cubicles with cots for employees who elect to work late and remain overnight. On a visit to Bangalore, I was told that the young engineers and computer scientists writing software were so committed to their tasks that if an employer simply provides them pizza (yes, in India!) for dinner, “the kids will work all night.” In contrast, in a recent survey of 431 US business leaders, nearly three-fourths cited a lack of work ethic and professionalism as a characteristic of US high-school graduates. (As a case in point, I recently had difficulty gaining the attention of a clerk at—where else?—the customer-service desk of a local computer store because of her ongoing telephone conversation with a boyfriend. When the clerk finally appeared in front of me, I, rather amused by the ridiculousness of the situation, smilingly remarked, “You know, if you worked for me, I’d fire you!” The clerk returned my smile and replied, “That’s why I don’t work for you!” USA Today reports one US business executive as saying that “[organizations] are realizing it’s less risky to [employ] internationals because they’re more coachable, more socialized, have no posses, and have not been Americanized.” That executive predicts that in his field, by about 2010, foreigners will fill 50% of all the jobs available, compared with the roughly 25% they fill today. The article goes on to assert that US youth are “lacking the fundamentals.” The executive being quoted was not whom one might expect. It was not the CEO of some high-technology company, such as IBM, Microsoft, or Dell. Rather, it was George Raveling of Nike—speaking of basketball players in the National Basketball Association! Raveling’s remarks are echoed by Red Auerbach, legendary coach of the Boston Celtics: “All those years I traveled overseas and held clinics, I said to people, ‘You know what? There’s going to come a day when these countries are dangerous for us because these guys are listening. You look at the foreign kids who come over and everyone of them is solid fundamentally. Not our guys. No one can teach them because they all think they are stars when they’re 15.” As if to punctuate his observation, the United States had just finished in sixth place in the world basketball championships. Former NBA executive Jerry Colangelo could easily have been referring to America’s free-enterprise system and our system of higher education rather than basketball (or base-

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Is America Falling Off the Flat Earth? ball, for that matter) when he lamented, “We invented the game, we taught people how to play the game, and they came back and knocked us off the perch.” The two teams in the 2007 NBA finals, San Antonio and Cleveland, had half and one-fourth of their players from abroad (including the tournament’s Most Valuable Player), respectively. Their players came from Argentina, France, Slovenia, Netherlands, Lithuania, Serbia and Montenegro, Brazil, and the Virgin Islands. No fewer than 28 countries were represented on the rosters of playoff teams. NBA Commissioner David Stern is reported in the abovementioned USA Today article as being “startled at how fast the rest of the world has come along.” To take an example from another sport invented in the United States, fully 44% of the starting line-ups in last year’s major league baseball all-star game were foreign-born. This trend is being replicated in many fields other than basketball and baseball in which, ironically, other nations are successfully adopting our own proven but oft-ignored practices. In the case of economic competitiveness, the nations posting the most remarkable gains in recent years have to a large extent been doing so simply by copying the attributes of our systems of higher education, business management (pre-Enron era), and free enterprise and in many instances implementing them more effectively than we. David Gergen describes a presentation by Harvard economist Richard Freeman that provides a good summary of the above considerations: Freeman “argued that we have been sugar-coating the impact that China, India, and the former Soviet Union may have on jobs and incomes in America in coming years. Unless we find some answers, our children—and certainly our grandchildren—will be in for a very rough ride.”