By EDUARDO PORTER
October 9, 2013
One of the few things that nearly everyone in Washington agrees on is that American workers are the best. ...
I never thought that. When I was about six or seven, it occurred to me that I was wildly lucky to be born in America.
In general, this notion that Americans have to be better than everybody else in order to deserve the benefits of being American is an insidious one that benefits elites at the expense of average Americans.
Fact is, they are not.
To believe an exhaustive new report by the Organization for Economic Cooperation and Development, the skill level of the American labor force is not merely slipping in comparison to that of its peers around the world, it has fallen dangerously behind.
Though we possess average literacy skills, we are far below the top performers. Twenty-two percent of Japanese adults scored in the top two of six rungs on the literacy test. Fewer than 12 percent of Americans did.
Twenty-nine percent of Americans scored in the lowest two rungs [of numeracy] — 10 percentage points more than the average. By percentage, more than twice as many Finns as Americans scored in the top two.
Among those at the lowest level of literacy in the U.S., 53% are Hispanic and 20.9% are black, or 73.9% NAM. Among those at the lowest level of numeracy, 37.3% are Hispanic and 31.5% are black, or 68.8% NAM.
The O.E.C.D. study lands in the midst of a contentious debate over whether the United States faces a skills shortage. Over the last couple of years, employers have been saying that they can’t find enough skilled workers. Economists and other commentators have pointed out that employers would probably find them if they offered higher wages.
The report suggests that the sluggish employment growth since the nation emerged from recession probably has little to do with a skills deficit that has been a generation in the making. But it pretty forcefully supports the case that this deficit is an albatross around the economy’s neck. ...
Yet while other countries seem to have gotten the message, racing ahead to build skills, the American skills set is standing still.
For instance, the youngest Koreans, age 16 to 24, scored 49 points more, on average, on literacy tests than the oldest cohort of 55- to 65-year-olds. ... in the United States that is not always the case: 30-year-olds in 2012 scored lower, on average, in literacy tests than 30-year-olds in 1994. ...
And yet, the report raises a couple of vexing questions. The highly skilled in the United States earn a much larger wage premium over unskilled workers than in most, if not all, other advanced nations, where regulations, unions and taxes tend to temper inequality. So if the rewards for skills are so high, why is the supply of skilled workers so sluggish?
“The human capital base in the United States is quite thin,” said Andreas Schleicher, the O.E.C.D, deputy director for education and skills. “The American economy rewards skill very well, but the supply hasn’t responded.”
... Immigration by less educated workers from Latin America plays some role. But as the O.E.C.D. notes, two-thirds of low-skilled Americans were born in the United States.
In other words, the Hispanics born in the USA aren't doing so hot.
And the United States has a poor track record in improving immigrants’ skills. ...
The other question is equally perplexing: if the supply of skilled workers is so poor, how can the United States remain such an innovative, comparatively agile economy? In other words, even if the American skill set is poor compared with that of its peers, who cares?
Mr. Schleicher answered that question like this: today, the American labor market is good at attracting talented foreigners, offering them more money than they could make elsewhere.
“Japan has fantastic human capital but uses it quite poorly,” Mr. Schleicher told me. “The United States is the opposite. It has mediocre assets but is good at extracting value from them.”
It might have something to do with Japan having only as much land as California (and probably less usable land), but more than three times as many people.
And still, with every advantage (including oil), California manages to have the highest poverty rate of the 50 states (according to the most sophisticated new measure of poverty).
The question is, which country has the most difficult challenge? Mr. Schleicher says it’s no contest. In Japan, all you have to do is liberalize labor market regulations and allow firms to exploit human capital to its fullest. Here, human capital has to be painstakingly built, one cohort at a time. That work cannot begin soon enough.