SCOTT JAGOW: It’s back to school time, and I was just thinking about the day I left home for college. I couldn’t wait to get there. Then I ran out of money and couldn’t stand any more dorm food, so suddenly I couldn’t wait to go home. You remember. But as the kids head off to college, here’s a good question: In the global economy, do we need more college education or do we need more training? Economist and commentator Glenn Hubbard shares his thoughts.
GLENN HUBBARD: Countries like China and India are integrating into the global economy. That’s swelling the global labor supply, especially for low-skilled tasks.
These days ever-dropping transportation, technology and communication costs mean firms can use labor from all over the globe to produce a single good.
And much of world trade today is actually in tasks as much as it is in goods.
We can expect offshoring of those tasks to continue at all skill levels, from staffing call centers to reading X-rays or even preparing tax returns.
Ultimately, this offshoring gives companies a competitive edge. As they earn more money, they expand, launch new products and services, and hire new workers.
But worker portability from industry to industry and task to task will depend on training.
Now, economists and policymakers frequently utter the mantra of traditional education as the answer.
A good college education certainly offers general skills for many jobs. But traditional higher education alone won’t be a silver bullet.
Instead, training in, say, community colleges or specialty programs is going to be the ticket.
The skills involved will be people skills as well as technical skills as services expand.
Public financial support for that training is critical if we really want to spread the gains from trade to everyone.
One-size-fits-all government training programs haven’t really worked as industries wax and wane and the labor landscape changes.
We’re going to need more tailored, individualized training for people whose unemployment might otherwise be lengthy.
We can give them that, and health insurance too, through government-financed Personal Reemployment Accounts.
So far the Congress hasn’t been willing to spend much money to help broaden the gains from trade. Protectionist talk is far easier.
But let’s not tarnish the back-to-school spirit. It’s an optimistic one.
Changes in global labor markets need not shake that optimism — if we help people cope with change.
JAGOW: Glenn Hubbard is Dean of the Columbia Business School.