Keating: An Alternative Path to a Good Income

June 14, 2020

by Maryann O. Keating

The first lesson to be learned in economics is that there is no such thing as a free lunch. Those who have internalized this lesson cringe on hearing press reports about “free” school meals, haircuts, backpacks, tuition, diapers, etc. Someone is either donating voluntarily or being taxed to pay for these items. Then, the student of economics has to ask him or herself, “Have I developed into an insufficiently empathetic person?”

Many of us recall distressful times when perhaps our families needed an extension on property taxes or rent. We may have become eligible for food stamps, public assistance, or needed to apply for utility assistance. Worst of all, we will never forget the shame experienced in having to swallow our pride and ask Aunt March for a few hundred dollars.

Fortunately, for at least 95 percent of Americans, illness, family disruption, job loss, recessions and pandemics were temporary events and did not represent a life pattern. The question we ask ourselves in these times is, “What happens when individuals working at jobs posted at the low end of the pay scale are unable to advance to earning a respectable mid-level standard of living over the course of their careers?”

The roughly 20 million jobs lost in the aftermath of the coronavirus have amplified the economic gap between college graduates and other workers. Workers with the least education were usually the first to be let go and typically the last to be rehired. The Census Bureau reports that 51 percent of high school graduates had lost work income because of the outbreak. That is compared with only 39 percent of college graduates. Advanced education has become increasingly vital to household prosperity; yet, nearly two-thirds of Americans do not hold a college degree (Josh Boak, “Pandemic Shows the Value of a Degree,” South Bend Tribune, June 2, 2020, A8).

Income gaps result when a significant percentage of the population lack technical skills or experience. Hence, they cannot command the income necessary in maintaining the lifestyle which most Americans enjoy.

It is difficult to determine if college graduates earn more either due to subjects mastered or to the discipline of having had to jump through the hoops required by 40 different academic instructors. For whatever reason, firms presently prefer college graduates who are screened and trained at someone else’s expense.

But what about 18-22 year olds who choose at this point in their lives not to take an academic route? The solution is not to award more college degrees, or subsidize those who have little inclination to attend college. In fact, college graduates are finding that, since the pandemic struck, fewer postings require a college degree. The general solution is to find ways for young people, with or without a college degree, to develop the entry level skills enabling them ultimately to support themselves and their families well.

The process through which an individual young person discerns his or her vocation remains a mystery, filled with twists, turns and many surprises. Yet, parents have a vested interest in always being on the lookout for institutions, programs, and persons that can provide suitable training for a particular child. In the coming decade, this may involve a traditional college curriculum or it might alternatively involve attaining certification in a particular field.

For example, proficiency in coding can be demonstrated with a certification leading to well paid positions in technology. Training in cross-country trucking is widely advertised. Here, in Indiana, one- and two-year programs in financial services, hospitality, health related fields and security services are available.

Firms often excel in providing experience and training; however, they need to anticipate financial loss when employees jump ship to be rehired by competitors. However, businesses, if legally permitted, might be willing to offer apprenticeships to selected persons willing to accept below market wages initially and knowing that they could be dismissed for failing to meet expectations.

Colleges cannot guarantee success in fulfilling middle-income aspirations; they can at best offer a sound curriculum pointing students in a certain direction. And in colleges, as in any occupational program, there is misinformation, fraud and obsolescence.

Schools serious about training students in the trades, business, analytics, engineering, law and medicine quickly realize how expensive it is to hire competent instructors willing to share their skills in return for an academic salary. The story goes that a certain master plumber would send apprentices out to fetch tools at “odd” times rather than reveal his hard-earned trade secrets. Even well intentioned tutors find it arduous to work with reluctant trainees when they could earn more practicing themselves.

However, if a society is serious about addressing the income gap between affluence and persistent poverty, it must be successful in transmitting marketable skills to the next generation through whatever means possible. This requires that young people choose to put their shoulder to the wheel either in college, in gaining certifications, or in on-the-job training.

Maryann O. Keating, Ph.D., a resident of South Bend and an adjunct scholar of the Indiana Policy Review Foundation, is co-author of “Microeconomics for Public Managers,” Wiley/Blackwell.


Leave a Reply