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1 Framing the Research on Future Skills WORKSHOP GOALS AND CHALLENGES The goal of the workshop was to explore the available research evi- dence related to two important guiding questions: 1. What are the strengths and weaknesses of different research meth- ods and data sources for providing insights about current and future changes in skill demands? 2. What support does the available evidence (given the strengths and weaknesses of the methods and data sources) provide for the proposition that the skills required for the 21st century workplace will be meaningfully different from earlier eras and will require corresponding changes in educational preparation? At the workshop, Bruce Fuchs (National Institutes of Health) explained that these two questions emerged after he encountered Richard Murnane’s work (Levy and Murnane, 2004). Fuchs said that Murnane described changing workplace skill demands “in the context of education with a clarity that I had not seen before,” leading him to request the Center for Education to convene a workshop. Russell Sage Foundation president Eric Wanner then described the challenge of addressing the two guiding questions. He warned that un- derstanding both future workplace skill demands and educational needs is “an extremely hard problem . . . at the margins of our ability in social science to address in a responsible way.” Wanner said the hypothesis that 

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 RESEARCH ON FUTURE SKILL DEMANDS the underlying “drivers” of skill demand are changing is the catalyst for growing interest in future skill demands. But, he said, if this hypothesis is correct, it means that researchers cannot simply look at patterns of oc- cupational growth from the recent past and project them into the future. He suggested focusing instead on analyzing how the drivers are changing, in order to project future demand for various kinds of occupations and skills. This would provide a basis for thinking about how to reorient the education system. Wanner said that he and colleagues at the Russell Sage Foundation have been trying to address this complex problem for years, since launching a re- search program on the Future of Work in 1994. He acknowledged that the research program “actually looked at the recent past of work,” examining why the wages of high school-educated workers have been in sharp decline over the past several decades. The research program examined several factors that might be reducing demand for—and wages of—high school- educated workers that are also on the agenda for this workshop, he said. These factors include changes in technology, increasing trade, offshoring of work, and immigration. However, Wanner said, research funded by the Future of Work program also found that an additional factor—the regula- tory and labor market framework—is very important in determining wage levels. He observed that, in the United States, 25 percent of all employed workers earn less than two-thirds of the median gross hourly wage of all employees. By comparison, he said, the proportion of workers earning less than two-thirds of the median gross hourly wage is 8.5 percent in Denmark, 12.7 percent in France, and around 20 percent in Germany and the United Kingdom (Lloyd, Mason, and Mayhew, 2008). These differences indicate that wage levels (including the declining wages for high school-educated workers in the United States) should not be viewed only as a reflection of the interaction of supply and demand but also as a reflection of labor mar- ket institutions that in turn influence workers’ bargaining power. Wanner’s comments on wages reflect a major divide in research and policy discussions on changing skill demands. Economic research often views wage differentials as reflections of skill differentials and interprets the widening wage gap between high school-educated and college-educated workers as evidence of rising demand for higher skills (Levy and Murnane, 2004). Other research methods, however, may examine how a range of forces—such as management decisions, labor laws, and the strength of la- bor unions—influence job content, skill demands, and wage levels. At the workshop, the tension between these two research perspectives provoked   This stream of research will be reported in The Russell Sage Foundation Series on Job Qual- ity in Advanced Economies (case studies of 5 European nations), to be published in 2008.

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FRAMING THE RESEARCH ON FUTURE SKILLS  lively debates about the current and future skill demands of service occupa- tions (see Chapters 4 and 7). Overview of the Workshop Workshop planning committee chair Richard Murnane (Harvard Uni- versity) described how the workshop agenda would begin to address the challenges Wanner presented. He said that the first day would focus pri- marily on research on skill demands, and the second day would begin to address supply. The first day’s session on polarization in the national labor market, between high-skill and low-skill jobs, was designed to help frame the subsequent discussions of skill demands of knowledge workers and ser- vice workers, he said. He explained that the workshop planning committee had decided it was not possible to examine changing skill demands across all occupations and industries within a day and a half workshop and had chosen instead to focus on these two job families, because they are large and rapidly growing. He also said that the scope of these two groups of jobs would be defined later by the presenters. Murnane noted that the background papers on knowledge workers and service workers raise questions about whether skills are embedded in jobs, in people, or in communities of working colleagues (Darr, 2007a), il- luminating the complexity of analyzing changing skill demands. These defi- nitional questions are reflected in the variety of research methods and data sets used to study changing skill demands—each with its own strengths and weaknesses. He said he hoped this variety would generate discussion, while also cautioning that “there are real gaps in the methodologies for examin- ing skills.” To begin addressing these gaps and inform future research ef- forts, he said, the first day’s agenda includes a session on research methods. Finally, he said, because the steering committee recognized that concerns about workforce skills are not new, they asked David Finegold to open the workshop with a brief history of past policy discussions on the issue. The workshop agenda addressed skill demand and skill supply some- what separately, in order to address the first guiding question of the work- shop. (What are the strengths and weaknesses of different research methods and data sources for providing insights about current and future skill de- mands?) As noted above, one of the major divides in the research is between methods that focus on job content independent of demand and economic methods, which focus simultaneously on skill supply, demand, and wages. The planning committee structured some panels to address skill demand independent of skill supply in order to ensure coverage of methods focusing on job content, including research based in the sociology of work, qualita- tive studies of work, and research based on job analysis (see Chapters 3, 4, and 5). At the same time, the agenda included discussions of economic re-

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 RESEARCH ON FUTURE SKILL DEMANDS search (see Chapters 2 and 6). With this structure, the workshop addressed a variety of different research methods and data sources. In his overview of the workshop, Murnane said that the second day’s discussions would begin to consider the implications for public policy and education. He cautioned, however, that time and budget constraints pre- cluded an in-depth focus on education and training, suggesting that these questions might be addressed in other National Academies activities. As a result, the workshop only partially addressed the second guiding question of the workshop (see Chapters 7 and 8). The participants did not arrive at a shared definition of future skill demands meaningfully different from earlier eras and did not examine in depth the corresponding changes in educational preparation that would be required. A BRIEF HISTORY OF DEBATES ABOUT SKILLS AND U.S. COMPETITIVENESS David Finegold (Rutgers University) described three eras of public de- bate and discussion about workforce quality (Finegold, 2007). 1. The era of A Nation at Risk (National Commission on Excellence in Education, 1983), from about 1983 to about 1996. This era was characterized by concerns about the perceived low quality of U.S. education and its effects on the global competitiveness of U.S. manufacturing firms and workers, especially relative to Japan and Germany. 2. The era of the “war for talent” from about 1997 to about 2001, when the rapid growth of the nation’s information technology industry, together with the impending retirement of the highly educated baby boom generation, drove concerns about skill shortages. 3. The era of The World Is Flat (Friedman, 2005), from about 2001 and continuing today, characterized by concerns about the loss of highly paid professional and technical jobs to other nations. Finegold noted that, despite concerns raised in the first two eras, the United States remains the global leader among the world’s economies, with growing productivity and output. The continuing strength of the national economy is partly attributable to unforeseen events, such as the recession in   One research method for understanding changing skill demands and educational needs— employer surveys—was discussed briefly at the workshop but was not explored in depth.   For example, the U.S. gross domestic product increased by over 3 percent annually in 2004, 2005, and 2006, and, after growing more slowly at 0.6 percent in the first quarter of 2007, rebounded to 4 percent in the second quarter of 2007 (U.S. Bureau of Economic Analysis, 2007).

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FRAMING THE RESEARCH ON FUTURE SKILLS  Japan in the 1980s, which reduced competition from that nation, and the bursting of the dot-com bubble in 2000, which reduced demand for infor- mation technology talent. Finegold said he agreed with the argument made in Cappelli (2003) that the war for talent is overblown, and that the labor market is more flexible that most people recognize. For example, concerns about the loss of skilled baby boomers to retirement have been partly al- layed as an increasing percentage of people over age 55 have participated in the labor force between 2001 and 2006 (Mosisa and Hipple, 2006). Finegold went on to say that, while U.S. firms are doing well, policy makers and experts in the current era have questions about how many U.S. college graduates these firms will employ (see Chapter 3). He explained that China, already the world leader in low-cost manufacturing, is now invest- ing in research and development of advanced service and manufacturing industries, and India is rapidly developing its software industry. Individual U.S. workers bear more of the risks of employment than in the past, as companies provide less job security and fewer health insurance and pension benefits (National Research Council, 1999). He said that the performance of U.S. students in international comparisons of science, technology, engi- neering, and mathematics education raises questions about their competi- tiveness as future workers. For example, the scores of U.S. 15-year-olds in mathematics literacy and problem solving were lower than those of 15-year-olds in most other developed nations participating in the Program for International Student Assessment (PISA) test in 2003 (U.S. Department of Education, 2004). Nevertheless, Finegold, said, the nation’s economy retains key strengths in workforce skills, as home to many of the world’s best research universi- ties, an innovation-friendly environment (including intellectual property protections and venture capital), and a population aware of the benefits of lifelong learning. He said that this workshop is one of several efforts to understand future skill needs, including a review of long-term skill needs in the United Kingdom (United Kingdom HM Treasury, 2006) and several National Academies studies (e.g., National Research Council, 2007a). Throughout the day and a half workshop, other experts echoed the con- cerns Finegold raised about the competitiveness of the individual worker. In his final reflections, Murnane warned that U.S. democracy might become unstable if opportunities for upward mobility are lost due to the widening gap in wages between low-skill and high-skill jobs.