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Education’s Role in the Economy

In 1983, the U.S. Department of Education presented its report, A Nation at Risk: The Imperative for Educational Reform, to the American people. The report was the result of a two-year study done by the National Commission on Excellence in Education. Its purpose was to examine the quality of education in America, define whatever problems the Commission detected and provide solutions for those problems.

The report opened with the warning: "Our Nation is at risk. Our once unchallenged preeminence in commerce, industry, science, and technological innovation is being overtaken by competitors throughout the world." Citing examples of other industrialized countries, the commission saw systemic changes to education as the primary solution to combating this risk. Employers and economists were emphatic that students were not being given the skills necessary to succeed in the workforce, and that was affecting the economic viability of our country.

It was during this time of national economic inventory that a team of researchers at Teachers College established the Institute on Education and the Economy (IEE) in 1986 with a primary mission to examine education reform measures designed to meet economic and employment needs. In 1993, Thomas Bailey, the George and Abby O'Neill Professor of Economics and Education at Teachers College, became the Institute's director. Researchers at IEE also explore changes in work and how it is organized along with changes in technology. They look at how those changes are affecting the performance of organizations and the people within those organizations.

IEE researchers initially looked at issues such as the relationship of school math and work math, the impact of technology on employee wages, the costs and returns of job training, and how changes in the nature and structure of work would affect skill requirements of workers. Their goal was to understand the implications of changes in the economy and the impact of those changes on all levels of education and training. The findings that came about from these studies in many ways formed the basis for the passage of the School-to-Work Opportunities Act (STWOA) in 1994.

After the passage of STWOA into law, IEE continued to provide feedback on how these programs were being designed and whether or not they were successful in meeting their goals. A project funded by the Departments of Labor and Education led by Thomas Bailey and Donna Merritt, analyzed 22 pilot programs designed to develop skill standards in 22 industries. This project reviewed the progress of the 22 programs and looked at how skill standards could be used in school and work reform efforts.

In collaboration with the National Center for Research in Vocational Education, under the guidance of Teachers College Professor Robert Crain, IEE examined programs designed to integrate academic and career education in New York City career magnet schools. The researchers found the programs to be effective and motivating, with graduates earning more college credits than their counterparts who attended traditional high schools. They also had a surprise revelation in that students entering high school with low reading scores showed gains in reading comprehension as a result of taking computer classes at these schools.

As part of their work with IEE, Professor Margaret Terry Orr and Dr. Katherine L. Hughes did a four-part study for the National Academy Foundation on career academies that looked at preparing seniors for college and careers as well as graduates' experiences five and 10 years out of school. Results of that study were scheduled to come out in the fall of 2001.

Bailey and Merritt also investigated the benefit of school-to-work programs for students heading for college. Two reports on the subject found that these programs also include guided experiences that take place outside the classroom that allow students to explore careers and interests before going to post-secondary school. The activities students are involved in are supported by State standards and at the same time minimize the sense of disconnectedness to the outside world they may feel in a traditional academic setting.

Hughes, a Senior Research Associate who has been with IEE for six years, was also involved in the National Academy Foundation study on career academies. In addition, Hughes has done studies on vocational high schools in New York City, internships, and, most recently, a comprehensive review of the research done on School-to-Work programs.

That report, written by Hughes, Bailey and Melinda J. Mechur, entitled School-to-Work: Making a Difference in Education, examines the progress of STWOA and its impact in U.S. communities. Studies included in the report revealed that School-to-Work programs have reduced dropout rates and increased college enrollment. Career Academies, in linking corporate involvement to secondary school education, were cited as an effective model. Grade point averages improved along with attendance, and some studies showed that time spent in the workplace improved students' self-esteem and helped them mature faster.

Hughes noted that students were not the only ones found to benefit from these programs. Teachers and employers had good experiences as well. Some teachers also participated in internships. "They might spend one day with a business person at the workplace, and the business person will spend one day at the school with the teachers so they can really learn each others' worlds," Hughes explained. "The ones that have done it say they find that it's really useful."

Employers reported having less turnover and reduced recruitment costs. "We assume that is because they were keeping some of these young people who were expecting only to come for a short-term internship," Hughes said.

Critics of the School-to-Work approach to education were afraid it would weaken academic achievement and encourage students to find employment rather than go on to post-secondary institutions, yet the report found no evidence to support this position. Even the most rigorous studies of these initiatives turned up almost no negative results of STWOA.

There is concern, however, that as STWOA began to wind down in October 2001 and as federal funding stops, these programs may not continue to be supported. With test scores taking the higher priority in many states, it is possible that a school's limited resources will be put toward that end rather than School-to-Work initiatives.

"Nobody said the purpose of these programs was to do anything to test scores," Hughes explained. "That's really not what they're for. They're more about soft skills and opportunities, workplace skills and motivation."

A report that came out of the Institute in 1998 entitled Work and Opportunity in the Post-Industrial Labor Market looked at youth employment and wage trends over the past three decades. Former Senior Research Associate at the Institute Annette Bernhardt worked with professors from Pennsylvania State University and New York University on the study. Their research found that during the 1980s and early 1990s, young men took longer to find a full-time job, changed jobs more often and saw both stagnant and unequal wage growth during the first part of their career. Of all the subjects, those without a four-year degree were hit the hardest, though researchers found that having a college degree does not guarantee a strong economic future for young adults.

In response to the growing need for college education, the Tech Prep Education Act provided for the creation of programs that combine secondary and post-secondary education. In a study of programs funded by Tech Prep, STWOA or other workforce development resources, Orr looked at ways in which federal funding for school-to-work has stimulated new programs and endeavors between secondary schools and community colleges.

"There are some wonderful models that show the benefits of providing an integrated educational experience for high school students that combines career and college preparation," Orr said about her findings. "It makes education more relevant and interesting for kids and it seems to motivate them to complete school and to go on to post-secondary education."

The downside, she explained is that the increasing national focus on attending college may be causing parents and their children to shy away from programs with a technical focus. Technical programs, as a result, tend to be under-enrolled when compared to more academically focused ones, like the career academies.

"Economic opportunities for people without some kind of post-secondary education have diminished dramatically," she said. While more people recognize that they need post-secondary education, she explains that many of them are unaware of what different kinds of educational experiences will provide in terms of career attainment. Many traditionally blue-collar jobs now require more technical and computer skills, which in turn require a lot of post-secondary preparation. As a result, wages being paid for some of these more technical skills are "phenomenal," according to Orr.

For more information on the Institute, go to the Web site at

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