Our Economy Relies On College Grads

New workforce study shows high demand for college-educated workers in today's service economy.

Sure, you know a college diploma opens doors and increases your earning potential. That's why you've enrolled in an online degree program.

But you probably haven't considered that in today's postindustrial service economy, a college education is increasingly becoming the admission ticket to the workforce.

A new study sheds light on the growing demand for high-skilled workers. And it puts to rest fears that manufacturing jobs of the past are being replaced with low-paid, dead-end service jobs.  

Take a look at the numbers:

• Today's college-educated are just 32 percent of the workforce, but produce more than 50 percent of the nation's economic output, up from 13 percent in 1967.
  
  
• More than 60 percent of the nation's workforce has at least some college education, up from just 25 percent in 1967.

So what's behind the shift?

Deeper knowledge, critical thinking skills required

According to the study, "The Economy Goes to College: The Hidden Promise of Higher Education in the Postindustrial Service Economy" produced by Georgetown University's Center on Education and the Workforce, it's growing consumer demand for high-quality, highly-customized goods and services.

"Producing today's high-quality goods and services requires employees to have a deeper knowledge of their fields of study and a better understanding of applications on the job," the study says.

Take a basic commodity like food as a case in point.

Once upon a time, food was completely produced, prepared and eaten at home. Today's commercial production and preparation of food requires numerous networks and numerous workers with considerably more education and training.

Farmers today represent only 5 percent of the value added in food production, according to the report, while almost 20 percent of the value added in the food network comes from bankers, insurance firms, advertisers and other business services involved in bringing food to the consumer's table.

Business services need skilled workers

"The shift in America's workforce has not been from factories to fast-food outlets. Rather, the key growth in U.S. employment has come in offices and non-office settings like hospitals and schools that provide higher-skill services," according to the study.

"Nearly two-thirds of Americans now work in these higher-skill workplaces."

And they're making good money.

"Demand is high for these elevated levels of skill. Employers are paying substantially more for workers with post-secondary education."

The authors provide even more eye-opening statistics:

• Since the end of World War II, the economy added more than 80 million new jobs in high-wage, high-skill service industries.

• At the same time, the share of goods-producing jobs plummeted from 50 percent to less than 20 percent of all jobs.

• Between 1967 and 2007, the share of high-skill managerial and professional jobs grew by more than 13 percent, from 21 percent to 35 percent of total U.S. employment.

• During that same time, the share of high-wage jobs for workers with a college education more than doubled, and the average salary of a college graduate was 80 percent higher than that of a high school-educated worker.    

High school diplomas not enough

"The U.S. economy's largest and fastest-growing sectors – business services, finance, health care and education – have little room for high school educated workers," the study says. And, the economy's growing technological sophistication has only increased the demand for educated workers who can utilize the new technology.

The study identifies 10 trends in the postindustrial economy that have been the driving force behind the creation of more high-skill jobs:

• a skill-intensive, service economy that is rooted in increased productivity

• changes in consumption patterns

• changes in how goods are produced

• consumer demand for greater variety and sophistication in good s and services

• the computer in all its manifestations

• networks that use information technology to integrate production, minimize cost and engage customers

• the need for critical thinking skills to solve problems and innovate on the job

• business-to-business services

• a new division of labor that has nearly half of U.S. workers employed in offices

• an increase in the share of high-quality managerial and professional jobs

Soft skills, lifelong learning also important

"As consumers have demanded more from companies, those companies have demanded a deeper and broader set of skills from their workers: not just cognitive skills, but interpersonal skills and other non-cognitive competencies," the report finds. "Employers have raised entry-level education requirements for their workers and expect them to engage in lifelong learning on the job."

Bottom line, education has never been more important in the U.S. workforce.

Where will you add value?

Image Credit:  Boris-B/Shutterstock.com

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