The Workforce Is Calling, Higher Education, Will You Answer?

According to the National Center for Education Statistics, current undergraduate enrollment in the United States is about 20 million. American universities are in crisis, with their very business model and value proposition under threat. Yet they miss the elephant in the room: if you consider the urgent need to retrain the U.S. workforce, there is unmet market demand to serve a population more than half the size of the current undergraduate classes. I have advised university presidents, I have spoken on numerous college and university campuses, and I have read more than my fair share of mission statements. Rarely do they mention “degrees” or “college-age students” although that is what they sell and to whom they sell it; they most often mention “transformational learning experiences.” Who are they transforming? University presidents and boards: the American—no, the global—workforce awaits your answer.  

Higher Education Outlook: Distressed

Several years ago, Harvard Business School professor and author of the seminal The Innovator’s Dilemma Clay Christensen predicted that “as many as half of American universities would close or go bankrupt within 10 to 15 years.” When asked about this prediction more recently, Christensen doubled down: “If you're asking whether the providers get disrupted within a decade—I might bet that it takes nine years rather than 10.” The closures have not been that swift but perhaps they should be, as a 2016 Ernst and Young study found 800 of the approximately 4,000 colleges and universities in the United States vulnerable to “critical strategic challenges.” The website Education Dive tracks college and university closures; on its running list, 86 colleges have closed, merged, or been acquired since 2016. While many, perhaps most, of the mergers may be distressed deals, some are long-overdue strategic moves to better align a comprehensive portfolio of offerings from subject matter experts with facilities to reach a broader audience or simply common-sense consolidation of operations of geographically adjacent institutions. Expect the number of mergers to rise. 

Higher Education Diagnosis: Major Myopia

Higher education, in the United States at most institutions, is not sustainable. The business model is badly broken. Costs are too high. Debt levels for students are daunting. And given the speed of change, by some reports, much of the value of the content of an undergraduate degree expires at or before graduation. A survey by Career Builder found that half of graduates do not go into the field of their university major and one third of graduates never work in the field of their major. LinkedIn data shows that while recent graduates used to have 1.5 jobs in the first five years after graduation, they now have almost double that number. So if you are myopically focused on preparing your students for their first jobs, you are critically shortsighted. More jobs, more adjustment, more adaptation. How do we prepare folks for that? Undergraduate students need some of the skills most in the demand in the market today—uniquely human soft or behavioral skills in learning and adapting in order to create new value. Why isn’t this the focus of higher education? 

Higher Education Prescription: The Larger Market

What is the target market for higher education? By all accounts, and looking at marketing expenditures, the market is high school students. Higher education institutions are deeply investing in fighting over who gets what percentage of the 20 million students seeking undergraduate degrees, while a market of almost 12 million in the United States alone is untapped. Given the reach of online education, it is arguable that the market potential is much, much greater than that 11.5 million. 

Higher Education Threat: Debt

Also this week, perhaps in an attempt to persuade us that there’s “nothing to see here, folks,” Beth Akers, a senior fellow at the Manhattan Institute and a former Council of Economic Advisors economist, declared in a Boston Globe opinion piece, “Actually, Most Millennials Aren’t Drowning in College Debt.” Student loan debt currently stands at $1.5 trillion, higher than any other form of debt except mortgage obligations, and increasingly, parents are taking out loans for their kids while some of them are still under debt loads from their own education. As a result, Millennial home ownership is 8% below that of Generation-X and retirement may be affected for all generations.There certainly is something to see here. Zack Friedman has offered a comprehensive view on student loan debt from a finance perspective, and Brandon Busteed has done so on the topic of how to consider the cost and return on college and university investment from an educational perspective. 

Workforce Challenge: Shifting Market Demand for Skills 

PricewaterhouseCoopers Annual CEO Survey, IBM Institute for Business Ventures, The World Economic Forum, The Institute for the Future. Pick your favorite source, because they are reporting almost exactly the same thing. Each has a list of top future-of-work skills and nearly all are focused exclusively on uniquely human skills—those skills that are hard to automate. Recently, IBM noted the dramatic shift in the skills in demand in 2016 and 2018 as determined by surveying 5,670 global executives in 48 countries. Note the rise in demand for nontechnical, uniquely human skills. But what are universities focused on? Codifying and transferring existing skills and predetermined knowledge, especially technical skills, to get students their first job.  

As the Workforce Needs Human Skills, Universities Close Liberal Arts Programs

Yes, that’s right. In crisis, many higher education institutions are closing liberal arts and humanities programs in favor of majors filled with technical skills training. A study by David Deming and Kadeem Noray at Harvard University and the employment analytics company Burning Glass Technologies found that “the earnings premium for STEM majors is highest at labor market entry and declines by more than 50 percent in the first decade of working life.” The reason for this is that technological change is so rapid that workers simply cannot learn the new tools and technologies as efficiently as students, who are dedicated to learning. The result is continual turnover. People with human skills or aptitudes parlay their STEM experience into other jobs where it is an asset, notably in management. It is interesting to note that more than half the people surveyed by the British Council in management and leadership positions had an undergraduate degree in either humanities or social science. My take on this is that while technology skills depreciate, human, or behavioral, skills appreciate. A previous study by Deming, which I have cited several times, found that while jobs requiring high math and high social skills are on the rise, so are jobs that require high social skills but low math skills, while jobs requiring high math skills and low social skills have been declining for the past several decades. Deming’s work shows that social skills have been rising since the 1980s, yet we are not prioritizing those skills in education. 

Furthermore, a recent study by the BBC found this: “In the US, an undergraduate student who took the seemingly most direct route to becoming a lawyer, judge or magistrate—majoring in a pre-law or legal studies degree—can expect to earn an average of $94,000 a year. But those who majored in philosophy or religious studies make an average of $110,000. Graduates who studied area, ethnic and civilizations studies earn $124,000, US history majors earn $143,000 and those who studied foreign languages earn $148,000, a stunning $54,000 a year above their pre-law counterparts.”.

Yet we gut liberal arts programs in favor of technical programs to get young people their first job just when their career arc is growing longer and more volatile. 

The Growing Market That Higher Education Ignores

Per The Enterprise Guide to Closing the Skills Gap by IBM, “The skills challenge will not dissipate; in fact, it’s increasing in severity. Global labor markets are only tightening, as unemployment rates continue to decline. Compounding the issue, new skills requirements continue to emerge, while other skills are becoming obsolete. And while digital skills remain vital, executives tell us soft skills have surpassed them in importance.” The Sisyphean task of hiring and firing (“fill and spill”) to match talent to need simply no longer works. As the IBM report states, “Organizations must embrace the fact that learning is a lifelong journey. While lifelong learning has always been critical, our digital world now requires new ways of working, which makes lifelong learning a must to the long-term success of organizations and individuals. As such, organizations should consider the propensity to learn as a top skill in employees. The propensity to learn and embrace lifelong learning should be encouraged and empowered by organizations and considered key requirements in hiring.” Recent research by MIT and Massachusetts General Hospital suggests that while we have long positioned learning in the first third of our lives due to conventional wisdom about our peak fluid intelligence, we are now discovering that we have many peaks across our lives. 

Who Will Answer The Call?

To summarize, learning agility and adaptability are now paramount considerations in hiring. Recent neuroscience research suggests that humans may be built for lifelong learning. Business leaders report that social or behavioral skills are now the most in-demand skills with 80% of CEOs reporting talent is their number one concern. One hundred and twenty million people worldwide, with almost 12 million in the United States alone, will need retraining in both behavioral and technical skills. Higher education, the world’s workers are calling. Will you answer?   

Preorder Heather E. McGowan's book "The Adaptation Advantage: Let Go, Learn Fast, and Thrive in the Future of Work" here.

This article was first featured in Forbes.