Summer 2004 - Volume 7 Number 3
The Education/Jobs Gap: Underemployment or Economic Democracy
Aurora, ON: Garamond Press (revised edition), 2003
The question of why many people go to school beyond the mandatory requirements would seem to be quite obvious in our society. In most advanced market economies since World War II, there has been a positive empirical correlation between pursuing formal post-secondary education and experiencing greater economic benefits: the more education, the better the job. The "learning-earning" linkage generally bore true both on an individual level and an aggregate level during the post-war economic boom. For example, in the mid-1960s, John Porter's The Vertical Mosaic provided the first systematic sociological study of inequality in Canada. It demonstrated clearly that wealth, power and prestige were closely associated with higher education. What it did not show as clearly was that the children of those who already enjoyed wealth, power and prestige were disproportionately linked to opportunities for education.
Instead of arguing that education leads to elite status, it would have been equally plausible to contend that a university education was simply one of the "perks" of the upper class. Nonetheless, the firm conclusion from Porter's and others' analyses was that education was the means to individual upward mobility and that increasing access to postsecondary studies would give an equal chance for talented people to succeed, regardless of their social background. Hence, the massive expansion of the universities and the creation of colleges across the country were justified, in part, as an effort to make equal opportunity a reality. As well, it was seen as a social investment befitting a nation that was no longer content to rely on natural resources and branch-plant manufacturing, but was eager to cash in on an increasingly "high tech" future.
Investing in higher education to develop and enhance one's intellectual capacity or human capital can still be shown, in many cases, to provide greater economic benefits today than stopping after high school. In fact, the proponents of the post-industrial knowledge-based economy thesis, where formal educational credential attainment is thought to be the "currency" of the information economy, tend all to adhere to the merits of the human capital theory that underlies most of the dominant answers to my question: Why do many people pursue post-secondary education?
In The Education/Jobs Gap, David Livingstone offers some insight into the limits of human capital theory and proposes that workplaces be reorganized within a framework of economic democracy. By debunking the common assumption that, on an aggregate level, investments in learning activities lead to greater individual and societal economic benefit, Livingstone shows that the distribution of benefit is mediated by one's social class, race and gender. Evidence suggests that, since the 1970s, there has been a decline in the number of employment opportunities that make use of learning and skill attainment, most dramatically in the occupational classes of industrial and service workers. One of the greatest failings of human capital theory, according to Livingstone, is its failure to address the widespread societal problem of underemployment among workers with credentialed knowledge. He argues that there is an underutilization of investments in learning (both informal and formal) that show the necessity to assess critically the assumptions underlying the very premise that has drawn people to pursue post-secondary education over the last few decades.
The idea that people's capacity to learn is an economic resource that must be developed to maximize their economic return, just as any other commodity in a market economy, is key to human capital theory. On a societal level, formal education attainment would lead to higher productivity and macroeconomic growth. This dominant perspective on the relationship between education and employment assumes a rather linear progression of increased earnings and increased levels of education. A precept of human capital theory, and the basis for much educational policy of vocational and academic institutions is simply the logic of capitalism: the market rewards those who invest. Most people from all social classes regard an advanced education as very important to success in society. Contrary to the tenets of human capital theory, however, Livingstone draws on data from Ontario and the US to show that, while investment in education has grown significantly, and substantial gains in access to post-secondary education by lower social classes have occurred since the 1970s, compensation growth for all but corporate executives and self-employed owners has withered. Average incomes have stagnated and underemployment is now recognized by the Organization for Cooperative Economic Development as a social problem. It appears that, while a greater number of persons in the industrial economies are accessing formal educational institutional hierarchies than ever before, there are still class-based differential rates of access. The gap between current and desired participation in formal postsecondary education for the working classes is greater than for corporate executives, managers and professional employees. However, the participation in informal learning (time spent outside the curricula of formal educational providing educational programs, courses or workshops with an authorized instructor, in order to acquire understanding, knowledge or skill) was not found to differ across class.
Livingstone's data show that Canadians spend about three times the number of hours per week engaging in informal learning than they do engaging in organized education. As he points out, this finding sheds light on the genuine character of our knowledge society: after all, anyone can access informal learning on their own volition and timetable and "apparently people in socially disadvantaged statuses are just as likely to do so as those in the most socially dominant positions (although the most oppressed people may have less discretionary time beyond necessary employment and household work to engage in informal learning activities)."
Clearly the barriers are not the same. And the value attributed to this learning, whether it be at home or on-the-job, is not well recognized nor compensated. So while the less schooled population may be highly competent in informal dimensions of knowledge, or at least as competent as more highly schooled people, the market rewards for this type of skill learning is low. Employers want credentials. Livingstone reports that nearly 40 % of respondents to a survey on learning activities of Canadian adults "feel at least moderate pressure from employers to engage in further employment-related learning on their own time, and around half of the further education courses they take are required by their employers." While the demand for formal credentials in the labour market has increased, the full utilization of workers' skills necessary to perform the job is declining, leading some theorists to postulate a period of credential inflation. The biannual surveys of public attitudes toward education conducted by the Ontario Institute for Studies in Education found that, in 1994 and 1996, approximately 40% of the "workforce have had work-related skills that they could use in their jobs but have not been permitted to do so." Hence the problem of underemployment, one dimension of which is the performance gap, as Livingstone calls it, which cannot adequately be addressed by human capital theory. The capacity of workplaces to apply workers knowledge and to compensate adequately is mismatched. In the US, real wages of all classes of workers except those with advanced degrees were lower in the 1990s than they were in the early 1970s. Livingstone points out, as well, that unionized blue collar workers have been able to protect their wage structures "far better than white collar service workers who have higher cognitive skill requirements in their jobs but who are rarely unionized." On the other hand, "non-union 'secondary' service and blue collar jobs that remained around 40 percent of US jobs during the 1980s, and which employed very high proportions of blacks and Hispanics, saw wage levels and most other aspects of job quality decline while occupants' education levels increased."
In Ontario, the degree of underemployment varies across occupational class. "Those employed in working class jobs are significantly more likely than those in most other class positions to have educational credentials that exceed the skill requirement of their jobs."
In terms of gender differences, Livingstone observes yet another class dimension. In the two occupational classes that have traditionally been exclusively male jobs, corporate executives and skilled industrial workers, it is the women in the boardroom who are more likely to be underemployed than male executives whereas female trades workers have not generally required higher qualifications to perform the same work as their male counterparts.
In terms of race, visible minorities across all class positions are somewhat more likely to experience the underemployment performance gap than other ethnic groups. Youth are also more likely than other age cohorts to experience underemployment.
The solutions proposed to the education/jobs gap have tended to view the schooling system as needing fixing. The dominant arguments suggest that schools and postsecondary educational institutions must be more responsive in training for the skill needs of the postindustrial knowledge economy in order to remain competitive in the global economy. As Livingstone says: "Political leaders continue to insist that educational reforms will provide the solutions to economic problems." He, however, suggests a more fundamental structural solution to the problem: the democratization of the workplace because "the most pertinent social policy question is not what work requires of schools but how can work be reformed to permit fuller use of peoples' current education and continuing learning capacities?"
Livingstone's critique of human capital theory takes up the complexities of contemporary postsecondary education participation and labour market utilization of workers' knowledge in the G7 nations. He shows how, in workplaces where workers have the organizational capacity to negotiate collectively with the employer (as in unionized workplaces), working people have been better able to resist job enlargement and wage erosion and to contest and negotiate more meaningful work which takes advantage of more of their knowledge. Nevertheless, it is clear that much of the working knowledge held by employees, whether acquired through formal or informal educational means, is exceeding the capacity of the "new" economy to provide jobs that fully employ and compensate their skills. Human capital theory has exceeded its usefulness in explaining the education-work relationship. As long as an education-jobs gap exists, I will be asking why people pursue post-secondary education?
Jane W. Haddad, M.A., Professor, Faculty of Business, Seneca College of Applied Arts and Technology, presented her first academic paper entitled "Barriers to Continuing Education and Employment for Female Heads of Families on Social Assistance," at the Ontario Division Annual Meeting of the Association of Canadian Geographers in Hamilton in May 1983, and continues to research issues of access to post secondary educational institutions and labour markets for marginalized groups in society. She is currently participating in a SSHRC CURA grant called "Bridging the Solitudes" assessing the problems and pathways in pursuing programmes, securing meaningful employment and developing citizenship, experienced by disenfranchised youth studying at Seneca College. She can be reached at 416-491-5050, ext. 6334 or email@example.com.
• The views expressed by the authors are those of the authors and do not necessarily reflect those of The College Quarterly or of Seneca College.
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