TJEd & COLLEGE PART II “Titanic Education” by Oliver DeMille

by Oliver DeMille

(To read TJEd & College Part I, click here)

Needing Greatness

Higher education is incredibly important for today’s rising generations. As the middle class dwindles and the divide between the affluent and others widens, many of the old education/career options are becoming less viable. Today’s parents and young people simply must understand what is changing and how it affects them, or they will likely fall behind.

To understand what is happening, we need to step back and look at today’s education/career economy for what it actually is, not what it was twenty or thirty, or even ten years ago. Consider the following:

1. For most people in our current world higher education has become “hire” education. The idea of colleges as the place of truly great leadership education for our future community, national, business and cultural leaders has been almost entirely replaced with another view: college as career training, period. There are, of course, pros and cons to this change.
2. College majors that train for careers certainly have an important place in a successful society, but now even “hire” education is experiencing widespread and increasing mediocrity. When over half of recent college grads find themselves jobless and need to move back in with their parents, the economic reality has clearly been altered.
3. Some have argued that we should stop promoting higher education to most youth and instead emphasize tech training or simplified community college requirements with direct career prep rather than broad education. But this path will only hurt our nation. We don’t need such anti-college views to spread. Quite the contrary. We very much need “great” college views to spread. We need a lot more anti-mediocrity (and truly “great” higher education) views to go far and wide.
4. This is more than just philosophy. It has a direct economic impact on young people and their careers.

Let’s spend some time understanding how this all shakes out. First, a seismic shift is occurring in the economy, though not everyone realizes it yet. Specifically, in 2009 the United States had 18% of the world’s middle class, but it is on pace to have only 7% by 2030. (“Globalization Bites Back,” The Atlantic, May 2015) This is causing some big changes. It also has important ramifications for what kind of education we should be providing for our youth right now.

How does this apply to your family? Let’s start from the beginning.

Setting Out

The American standard of living that became the norm after World War II is now disappearing. It increased between 1946 and 1996, but in the last two decades it has declined. Today the pace of this decline is accelerating.

To wit: where an average American middle class family in the early 1980s could make do with one bread winner, pay off their home well before retirement, and retire with a significant savings and company-funded retirement plan, today these things have changed for most people. Such a family now has both parents in the full-time workforce to cover the monthly bills, fewer children, higher expenses, little to no savings, vehicles financed by debt, and over $15,000 of unsecured consumer debt—not to mention a mortgage that would have made their parents shudder.

This isn’t even the same lifestyle as earlier generations. And it’s getting increasingly difficult every year.

All indications are that this trend will continue. But that’s only half of the issue. A second factor is just as significant: By 2030 China and its neighbors will have 66% of the world’s middle class (up from approximately 28% in 2009). (Ibid.) Europe’s share of the middle class will be down from 36% to 14%, and Latin America down from 10% to 6%. (Ibid.)

Many people don’t understand the ramifications of this shift, but they are huge. What does this all mean for regular people and their families? What does it mean for the future of colleges, universities, and higher education?

The answer is very important:

First, as noted, the current educational systems of the United States and Canada are based on an increasingly outdated model of “hire” education, one that prepares the majority of young people for middle class jobs with targeted college majors and career training in traditional sectors of the economy. This worked well in a steady high-growth economy where middle class jobs were expanding.

For example, in 1945 the United States had 6% of the world’s population but produced over half of the world’s goods and services. In such an economy, the demand for workers trained by universities in career specialties was high—and pay and benefits consistently went up over time.

But since at least 2006 the demand for middle class workers receiving middle class salaries is declining in North America, and the overall economy is weak or receding. All indications are that this will continue for at least the next two—possibly three—decades. Today the middle class standard of living is shrinking, and the middle class economy is funneling its members either into the “affluent economy” or the “at risk economy.” Most middle class families will move to one or the other—affluent, or at risk—during this generational shift between 2006 and 2036.

Yet few families realize that this is occurring. Nor do they understand what it takes to choose the affluent economy, or how to do it. They are acting as if the economy hasn’t shifted—a sure way to end up in the “at risk” economy.

The Iceberg

At the same time, national debt in the U.S. is high, so the government increases both tax rates and regulations on corporations. As a result, many businesses naturally move even more operations elsewhere—further spurring a growth economy in China and India while simultaneously increasing middle-class economic stagnation in the U.S. and Canada.

North American students preparing for nationalized tests, good grades, and graduating with “good” degrees will increasingly find that there are fewer prosperous jobs for them. The demographics are what they are. For many college graduates, unless they go on to additional professional education, their options will be much more limited than those of graduates during the last 60 years. The competition for fewer jobs will be much higher, and a lot more graduates will be left in the “at risk” economy.

Since 2010 a significant number of new four-year college graduates have been unable to find the kind of work historically available to those with university degrees. Many of those who do get jobs receive lesser pay and decreased (or nonexistent) benefit packages. They also have much higher student and credit card debt than earlier generations. And this is getting worse.

Europe is a decade ahead of us on this same downward trend, and the outlook for middle class jobs (anything demanding college degrees or paying the equivalent) is bleak. (See “Young, European and Broke,” The Wall Street Journal, August 9-10, 2014) In some nations—including Italy and Greece, for example—such jobs are almost nonexistent.

This is not what most parents want to hear. But the reality is the reality. The key is to respond wisely, not to act as if nothing has changed.

Second, as many of today’s parents persist in counseling their youth to pursue college training with the goal of career advancement, they should also tell them to either go on to quality professional studies, become skilled entrepreneurs, or to study Chinese as well.

Why? The trends are clear: there will plentiful well-paying jobs for the middle class in the years ahead—in the growth economies of Asia. But not so much in Europe, North America, or Latin America.

The Asian economy is now much like the U.S. economy of the 1950s-1990s: high growth, lots of middle-class jobs, increasing pay and benefits, and universities focused on job training to support the growth economy. In contrast, the U.S. economy is increasingly like the Riviera Economy (Spain, France, Italy, Greece) of the past twenty years: with a declining growth rate, and fewer high paying middle-class jobs.

This is leading to higher debt, fewer jobs that offer middle class wages, and less security or longevity in such jobs. To deal with this, we desperately need our colleges to upgrade. Instead, many colleges today are simply arguing that with increased demand, a college degree is even more necessary.

This is technically accurate, but a bit disingenuous. With the global middle class shifting rapidly to Asia, the percentage of North Americans who will get prosperous jobs in the low-growth or negative-growth U.S. economy is decreasing.

That does make a few top jobs a higher prize, and it makes professional studies beyond college, or entrepreneurial success, necessary for many of those who really want to compete in the globalized market. But what about the masses, the majority of those who now belong to the middle class?

Below The Surface

Parents and students need to own their responsibility to seek excellent higher education that truly empowers them to thrive in the actual economy (not what worked back when the American economy was in a sixty-year upswing where the demand for middle class workers kept growing [1946-2006]).

Third, the healthcare field is (partially) an exception to this sobering news.

On the one hand, in the U.S. jobs will remain abundant in the healthcare sector. The downside is that financial compensation will be relatively much lower than during the 1970s to early 2000s. The remuneration model of pre-Obamacare medical careers is largely gone, and compensation in many parts of the new healthcare system will significantly decrease.

Fourth, entrepreneurship will be a major high-growth sector.

Few in the education industry are ready to hear this yet, partly because many education employees have carefully avoided the rough-and-tumble world of entrepreneurial competition. But like the Riviera Economy experienced during the past two decades, in the United States those who excel in entrepreneurial and business ownership will lead the middle class (and much of the upper class) from 2006 to around 2036. Most everyone else will fall behind.

In the new economic reality, nearly every sector is a growth sector—for entrepreneurs (but not for employees). There is opportunity for enterprising leadership in innovative business, education, health care, technology, service, law, accounting, manufacturing, marketing, entertainment, and many other fields. But in all of these, there will be fewer of the historical well-paying “jobs and perks,” and these will go to a few top competitors. Almost everyone else will entrepreneur or find themselves in the “at risk” economy. And—to be clear—truly successful entrepreneurs will do even better than top employees.

Which brings us to “Titanic Education.” Put simply: with a non-growth or negative-growth middle class economy, why do U.S. and Canadian parents keep educating for a high-growth economy that doesn’t exist any more? And why do many colleges and majors do the same?

Answer: most people don’t understand the difference, and they don’t realize the reality of a shrinking portion of the world’s middle class in North America. They see the economy struggling, but they don’t do the math.

Educating the current generation of youth and children for a shrinking market share based on middle-class careers in North America is like training farriers (who shoe horses) and coopers (who hand-make barrels) in the 1930s. Yes, there will be jobs in these fields during the 1950s thru the 2010s—but not as many as before, and they won’t pay nearly as well. As for benefits and perks, forget it.

New realities bring new forms. We need to educate today’s young people to succeed and flourish in the “affluent” economy of the 2020s and 2030s, not in what once worked during the middle class growth economies of the Eisenhower, Kennedy, Reagan, Clinton and Bush years.

Moreover, we should educate them for success in growth sectors, not sectors in decline. Yet most high school level teaching and university career training is still channeling students into declining sectors and roles.

Sinking

Seriously. Look at a typical university catalog, find the list of majors, and study it. As you think about each major on the list, ask yourself if those who work in the corresponding field are typically affluent in the newly emerging economy.

Then go deeper. Most of the sectors listed will have fewer resources to go around for at least the next twenty years, meaning either fewer jobs or lower paying jobs. Or both. To get the affluent careers in these sectors, young people will either need to distinguish themselves in professional education well beyond four years of college, or in entrepreneurial successes in the same fields.

The reality in all this is simple, and it’s worth repeating several times: A lower percentage of people will enjoy middle class wages in a slow- or no-growth economy. That’s the reality. With this increased global competition, quality higher education is more important than ever. And its importance is increasing.

There are at least three (3) excellent ways to get a superb higher education, as outlined in PART I of this report.

But global trends and increased economic competition have raised the bar. Those who rely on a level of college learning that passed for acceptable during the last sixty years, without reaching higher and achieving the new standard of quality higher education, or who stick with the old middle-class career/”hire” education system in declining-sector majors, will resemble the famous quip: “Arranging deck chairs on the Titanic.” It may keep them busy, but it’s not going to work out well in the long term.

Americans who remain attached to the increasingly outdated 20^th Century model will see their communities and families fall further and further behind economically. They’ll blame the system. They’ll blame Washington or Ottawa. They’ll wonder why someone doesn’t help them. They’ll blame their alma mater. But the decline will keep happening until their family embraces an education/career model that actually works in a flatter, non-high growth economy.

As these changes occur, too many Boomer and Gen X parents, grandparents, and advisors are “fiddling on the Titanic.” Despite the mixed metaphor, the truth is important: Many adults today are funneling their youth into a situation where they’ll eventually have to scramble for a place on the economic lifeboat. Meanwhile, the system itself is sinking.

The Raft

Sticking with “Titanic Education” isn’t a very good idea. Higher education matters now more than ever! Get a great one. Find truly high quality four-year and graduate programs, or great internships/apprenticeships, or working directly with great higher education mentors. Don’t settle for anything less. And focus on majors, internships, or mentors in high-growth sectors. Higher education makes all the difference.

And, again, higher education is very different than “hire” education. The first is part of the affluent economy, and the second is increasingly part of the paycheck-to-paycheck economy. Yes, a “hire” education will help many graduates get a larger paycheck than most of those with only a high school-level education, but it still isn’t going to be enough to make an effective path to the “affluent” economy for most people. It worked during the high-growth economy of the 1950s to the early 2000s, but the reality has shifted.

This is a major change to the middle class environment, and families/students who don’t realize it are in for a very unpleasant economic surprise in the 2016-2036 economy. Recommendation: Stop believing that the “Titanic” model will work. Right away.

But even more is needed. Get a higher education that will actually work in the new economy.

How? Let’s reiterate the three major paths to career/economic success in the increasingly global competitive 2016-2036 market:

1) Study hard in college, then go beyond four-year college and get a quality professional education as well. Then—and this is the key—add Affluent Economy skills using a post-school advanced internship (such as clerkships for law school grads or interning after medical school). Learn the vital entrepreneurial skills as part of this real-world internship.

2) Study hard in college and simultaneously apply the kinds of Affluent Economy supplemental study and skills acquisition covered in the ebook 19 Apps. Doing the 19 recommendations in this little book will very effectively upgrade your college training to top Affluent Economy preparation. Note that a great way to do this is to attend a college with an excellent entrepreneurial training emphasis—and immerse yourself in it.

3a) Work directly with a mentor or in an internship-based program that offers the same (or higher) level of education as a traditional university and also delivers the Affluent Economy skills, knowledge, and lessons.

3b) Or do an entrepreneurial apprenticeship with a proven entrepreneurial leader and simultaneously get an Affluent Economy education using the 19 Apps or equivalent. With the right mentor(s) or program, 3A or 3B can be incredibly effective.

Whatever you do, get off the Titanic, and get on a path that will thrive in the new economy.

(Click here for the final installment, Part III: Two Ways to Go Deeper, of the TJEd & College Report!)