The best medicine for a COVID-19 economy? More education and training
Reading the tea leaves of a U.S. economy reshaped by COVID-19 has sent economic analysts and prognosticators into overdrive. Many see a move away from big cities and into simpler, socially distanced life in small towns. If this happens at scale, it could be a boon to heretofore “left-behind” places in the Midwest and other regions.
Others predict significant drops in demand for jobs with low education and training requirements, driven by automation and the growth of technology needed to operate socially distanced offices, warehouses, manufacturing facilities and even restaurants. A recently released analysis by the Federal Reserve Bank of Philadelphia lends support to this idea.
Policymakers can adopt policies to help improve wages and opportunities in jobs with fewer credentialing requirements, for example by helping smaller manufacturers and boosting the minimum wage. But policy also needs to directly address the need for more workers with higher skills due both to the pandemic and longer-run economic trends. In many of the new and growing jobs, these higher skill requirements can best be met by providing workers with more extensive and affordable post-secondary opportunities.
As one of us argued earlier this year in the New York Times, some industries will benefit from the COVID-19-related economic crisis, but those most likely to do so – in fields such as health care, medical devices and communications – require workers with associate degrees or short-term certifications of the sort available at community colleges. A society that moves fast to retrain its work force for these new opportunities will recover more quickly than one that does not.
Deep recessions like the one we are currently in accelerate existing trends towards automation and change the skills demanded by employers. Again, this poses a particular challenge for manufacturing-reliant regions that have been hard-hit by the coronavirus and were already home to an aging workforce lagging in rates of postsecondary education.
The U.S. needs a nationwide program that offers tuition-free education to adult workers, much like the GI Bill for returning servicemen and women after World War II. As Congress continues to debate its financial response to the COVID-19-induced recession, it is worth noting that such a program would require a relatively small investment, costing barely $5 billion over four years even if the take-up rate is very high.
In Michigan, the Futures for Frontliners program, created with federal money by Gov. Gretchen Whitmer, will cover community college tuition and fees for essential workers without college degrees. It represents one possible model, and the enthusiastic early response suggests that such initiatives would be welcomed.
The worry about diverging economic opportunities for differentially educated people and places is nothing new. The gap in earnings based on education was widening even before the pandemic and is likely now to accelerate as the digitally and educationally equipped enjoy even greater advantages in a world reshaped by COVID-19.
Ninety-nine percent of the good-paying jobs created after the last Great Recession required training past high school. The recovery from the current recession will be similar, but perhaps even more demanding of strong technical and social-emotional skills, both for managing work teams and dealing with diverse customer needs.
Demand for jobs with low credentialing requirements may recover when more people are working and earning better wages. A family with some extra money to spend will treat themselves to a meal out or decide to welcome a housekeeper back into their home. But we also need to provide opportunities for less-skilled workers to increase their human capital through education and training if they so choose. Higher skills will enable people to compete for the jobs that will emerge post pandemic, and investment in those skills is a key component of restoring both decent livelihoods and economic vitality.
John Austin directs the Michigan Economic Center and is a nonresident senior fellow with the Brookings Institution, the Chicago Council on Global Affairs and a research fellow with the W.E. Upjohn Institute. Follow him on Twitter @John_C_Austin. Michelle Miller-Adams is a senior researcher at the W. E. Upjohn Institute for Employment Research and a professor of political science at Grand Valley State University. Follow her on Twitter @mmilleradams.