America's skills crisis carries lessons for Britain

There are few US ills that don't owe something to its faltering educational attainment.

Yesterday's FT contained one of those ominous stories that only grow in significance over time - the findings of a survey by Nielsen that reveals a huge, looming skills shortage in the US as the baby boomer generation retires.

In the next five years, America's top 100 industrial companies face an average training bill of $100m to fill the gap between these older, retiring workers and the younger, less educated cohort coming through to replace them. It's payday - in a very real sense - for an economy that has long been under-investing in its people. And it's a warning sign to economies like the UK that, when it comes to investing in skills, you can't afford to take your eye off the ball.

Despite their modest place on page 22 of the paper, it's hard to overstate the long-term significance of findings like these. The killer reading on the topic is the excellent book by Harvard economists, Claudia Goldin and Larry Katz, The Race Between Education and Technology, which tells the story of America's relationship with education throughout the 20th century.

The authors recall the country's early lead in education, achieved by building one of the world's first universal systems of free primary schooling. And they set out how, since the 1970s, that lead has been squandered: the quality of teaching in the country's school system has decayed, high school graduation rates have flat-lined, and too many students - even among those who make it to college - have failed to reach the end of four year degrees.

There are few American ills that don't owe something to this faltering of educational attainment. But perhaps the most dramatic consequence has been for the living standards of ordinary American workers. The supply of skilled labour may have slowed, but new technologies wait for no man: advances in computing have only accelerated, making education ever more important in the jobs market.

As a result, the returns to skills, at all levels, but particularly at the top, have increased sharply since the 1980s. This increase explains much of the rise in American income inequality in the past 30 years. And even for average workers the results have been dramatic; astonishingly, the real value of wages for the median American worker has barely increased in 30 years.

In America's race between education and technology, then, technology has taken a commanding lead. But what does this mean for the UK? For one thing, it means that the jobs package announced yesterday by President Obama carries a lesson for the Chancellor George Osborne. Around 15 per cent of the proposed new spending is to go into education: $25 billion to modernise 35,000 crumbling schools, alongside $35 billion to prevent the layoff of up to 280,000 teachers. Obama has found an approach that targets both the current and future needs of the American workforce.

None of this is to say that the Chancellor should be finding new money for our schools, above existing budgets. Happily, the UK school system is in nowhere near the same crumbling state as that in the US. But it does remind us that, when it comes to the supply of skills, we have little room to be complacent.

Returns to skills in the UK have continued to rise in the past ten years, both in terms of wage advantages and upward mobility, even while graduate numbers have increased dramatically. Any slowing of educational expansion will likely feed through into higher wage premiums for skills and, from there, into higher income inequality. That matters not just for our long-term economic health but also for the fairness of any eventual recovery.

James Plunkett leads the Resolution Foundation's Commission on Living standards.

James Plunkett is director of policy and development at the Resolution Foundation

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Leader: Mourning in Manchester

Yet another attack shows we are going to have to get to used to the idea that our liberalism and our freedoms can only be preserved by a strong state.

Children are murdered and maimed by a suicide bomber as they are leaving a pop concert in Manchester. As a consequence, the government raises the terror threat to “critical”, which implies that another attack is imminent, and the army is sent out on to the streets of our cities in an attempt to reassure and encourage all good citizens to carry on as normal. The general election campaign is suspended. Islamic State gleefully denounces the murdered and wounded as “crusaders” and “polytheists”.

Meanwhile, the usual questions are asked, as they are after each new Islamist terrorist atrocity. Why do they hate us so much? Have they no conscience or pity or sense of fellow feeling? We hear, too, the same platitudes: there is more that unites us than divides us, and so on. And so we wait for the next attack on innocent civilians, the next assault on the free and open society, the next demonstration that Islamism is the world’s most malignant and dangerous ideology.

The truth of the matter is that the Manchester suicide bomber, Salman Ramadan Abedi, was born and educated in Britain. He was 22 when he chose to end his own life. He had grown up among us: indeed, like the London bombers of 7 July 2005, you could call him, however reluctantly, one of us. The son of Libyan refugees, he supported Manchester United, studied business management at Salford University and worshipped at Didsbury Mosque. Yet he hated this country and its people so viscerally that he was prepared to blow himself up in an attempt to murder and wound as many of his fellow citizens as possible.

The Manchester massacre was an act of nihilism by a wicked man. It was also sadly inevitable. “The bomb was,” writes the Mancunian cultural commentator Stuart Maconie on page 26, “as far as we can guess, an attack on the fans of a young American woman and entertainer, on the frivolousness and foolishness and fun of young girlhood, on lipstick and dressing up and dancing, on ‘boyfs’ and ‘bezzies’ and all the other freedoms that so enrage the fanatics and contradict their idiot dogmas. Hatred of women is a smouldering core of their wider, deeper loathing for us. But to single out children feels like a new low of wickedness.”

We understand the geopolitical context for the atrocity. IS is under assault and in retreat in its former strongholds of Mosul and Raqqa. Instead of urging recruits to migrate to the “caliphate”, IS has been urging its sympathisers and operatives in Europe to carry out attacks in their countries of residence. As our contributing writer and terrorism expert, Shiraz Maher, explains on page 22, these attacks are considered to be acts of revenge by the foot soldiers and fellow-travellers of the caliphate. There have been Western interventions in Muslim lands and so, in their view, all civilians in Western countries are legitimate targets for retaliatory violence.

An ever-present threat of terrorism is the new reality of our lives in Europe. If these zealots can murder children at an Ariana Grande concert in Manchester, there is no action that they would not consider unconscionable. And in this country there are many thousands – perhaps even tens of thousands – who are in thrall to Islamist ideology. “Terror makes the new future possible,” the American Don DeLillo wrote in his novel Mao II, long before the al-Qaeda attacks of 11 September 2001. The main work of terrorists “involves mid-air explosions and crumbled buildings. This is the new tragic narrative.”

Immediately after the Paris attacks in November 2015, John Gray reminded us in these pages of how “peaceful coexistence is not the default condition of modern humankind”. We are going to have to get used to the idea that our liberalism and our freedoms can only be preserved by a strong state. “The progressive narrative in which freedom is advancing throughout the world has left liberal societies unaware of their fragility,” John Gray wrote. Liberals may not like it, but a strong state is the precondition of any civilised social order. Certain cherished freedoms may have to be compromised. This is the new tragic narrative.

This article first appeared in the 25 May 2017 issue of the New Statesman, Why Islamic State targets Britain

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