Is education good for business?
Education and business go together like peanut butter and jelly. During the current recession business seems to have forgotten that education is the key to economic recovery. We only have to take a short journey back to 1944 when President Roosevelt signed the Servicemen’s Readjustment Act better known as the G.I. Bill to understand the relationship between education and business.
When the economy collapsed during the Great Depression Americans looked towards better education to increase the possibility of employment. Between 1930 and 1940 there was a significant spike in high school graduation rates from 30 percent to 50 percent. Add to that the soldiers returning from World War II and the GI Bill was responsible for the explosion in college attendance. By 1947 the veterans made up 49 percent of all college admissions. If we reflect on those times we will realize that the rise in an educated work force helped make General Motors, R.C.A., U.S. Steel, and I.B.M. the giants of industry. It also was the beginning of the middle class.
We know that an educated workforce has value. In the 1960’s economist Theodore Schultz coined the term “human capital” to refer to the value of human capabilities. He saw education as an investment in human capital that helped improve business production. According to Thijs van Rens, a researcher and Affiliated Professor at Barcelona Graduate School of Economics, in his article, The Value of an Educated Workforce: What We Learn From a Comparison Growth and Inequality Across Countries he wrote:
“….the average worker in an average country that went to school for seven years
earns about 14% more on her first job than another worker that dropped out after
six years in school in her first job. Twenty years later, the difference between their
wage is still about 14%. Increasing the average education level of the entire workforce
in an average country by one year increases that country’s output by about 8% initially, suggesting the social return is similar to or even a bit lower than the private return. However, eventually the extra year of education raises that country’s output by as much as 42%.”
We are struggling in a paralyzing recession. We need an educated workforce to come up with good old American ingenuity to get us back on track. It is imperative that we teach our young people the importance of securing a good education and the impact it has on their personal growth and the economy as a whole. Unfortunately American secondary schools are saddled with No Child Left Behind, budget cuts, and shrinking graduation rates. College attendance is at an all -time high but college graduation rates are stagnant. Community colleges are coming to the rescue by providing entry level academic programs, technical programs and vocational programs. In addition, community colleges are functioning as the financial alternative and gateway to four year colleges. They are providing the additional post- secondary education that is needed to move the country’s economy forward at an affordable cost.
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This blog was written as a means to begin a continuing dialogue with my readers and fans of nancisnotions.com. Hopefully I have stimulated some reactions, insights and passion. What are your thoughts about the value of an educated workforce on business? Does more education mean higher wages and less profit for business or better ideas and more profit? Come on, share your thoughts. I look forward to hearing from you!
