Unemployment dropped last month to its lowest level since 2001, yet wage growth is below levels seen in the late stages of previous economic expansions and underemployment remains above the lows of the previous cycles. These dissonant readings point to an increasing mismatch between workers’ skills and the roles employers are seeking to fill, a conflict measured by the Beveridge curve, which tracks the relationship between unemployment and job vacancies. The higher level of the curve since the 2008 crisis shows the workforce isn’t entirely satisfying the need for skills that have become more important in the postrecession economy.
The new economy is not like the old economy. Once that settles in, there is an obvious strategy to pursue: overhauling our education system so it produces far more people with elite job skills. These skills often involve critical thinking and a facility with science and technology. Fields such as information technology, life sciences, cybersecurity, robotics, automation, artificial intelligence-assisted research and advanced statistical analysis are certain to grow in coming years.
Freshmen and seniors at about 200 colleges across the U.S. take a little-known test every year to measure how much better they get at learning to think. The results are discouraging.
At more than half of schools, at least a third of seniors were unable to make a cohesive argument, assess the quality of evidence in a document or interpret data in a table, The Wall Street Journal found after reviewing the latest results from dozens of public colleges and universities that gave the exam between 2013 and 2016. (See full results.)
At some of the most prestigious flagship universities, test results indicate the average graduate shows little or no improvement in critical thinking over four years.
While the “disinvestment” narrative is simple and appealing, it collapses under scrutiny. If state funding to public colleges falls by $100 per student, it seems logical to conclude that tuition must go up by $100 to compensate. But that isn’t what happens. In a new study, I compare tuition and direct state funding changes at four-year public colleges between 2004 and 2015. This covers both a boom in state funding (2004-08) and a bust (2008-12). Sure enough, the relationship is quite weak. Less than 5% of changes in state funding pass through to higher tuition. In other words, if funding falls by $100 per student, tuition will rise by less than $5.
Colleges do tend to cut spending when state funding goes down. But the expenditures they cut are usually in areas unrelated to instruction, such as research and administration. When funding goes up, colleges largely plow that money into higher spending rather than return it to students through lower tuition.
However, the state disinvestment hypothesis falls apart upon closer scrutiny of the data. This report uses a fixed-effects regression method, which isolates underlying tuition trends from fluctuations plausibly caused by state disinvestment. At four-year public colleges between 2004 and 2015, every dollar of per-student subsidy cuts was associated with a tuition hike of less than five cents. State subsidies appear to have little, if any, effect on tuition levels at public colleges.