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Do smart people get the best jobs? - economists David Schaffer's and Fred Pryor's book 'Who Is Not Working and Why: Employment, Cognitive Skills, Wages

Insight on the News - November 2, 1998

A new study by two politically opposing economists challenges unemployment statistics and the idea that college degrees are the only tickets to a well-paid job.

First there was Herrnstein and Murray's The Bell Curve. Now two respected economists have come along with a new book, Who Is Not Working and Why: Employment, Cognitive Skills, Wages and the U.S. Labor Market. This new effort not only provides an analysis of employment data but also overturns just about every conventional assumption about the root causes and extent of unemployment as well as economic inequality in the United States.

Though limited to an initial press run of about 2,000 copies by Cambridge University Press, the book well may generate reams of copy and its fair share of criticism over the thesis that there are more jobless people than unemployment statistics show, and that underlying cognitive skills rather than education determine a person's place in the labor force.

Perhaps sensitive to the controversy generated by Richard Herrnstein and Charles Murray's strong implications in The Bell Curve that cognitive skills depend greatly on genetics, the authors of the new book represent mixed ideological views. Fred Pryor, from Swarthmore College in Pennsylvania, is a moderate conservative, and David Schaffer, from the University of Wisconsin-Eau Claire, is a liberal. they are quick to point out that they reject the genetic angle. They believe the cognitive skills some people call intelligence play an important part in who gets the good jobs.

"Even the discouraged-worker statistics [which count those who tell government statisticians that they have stopped looking for work] mask the severity of the problem," Pryor tells Insight. "People don't want to say that they don't have work because there are no jobs they are qualified for; instead, they give survey takers other types of reasons -- they say they are sick." For the single least successful group, black male high-school dropouts, just about half of those age 25 to 50 (what the two car prime working age) don't have jobs; white males without high-school sheepskins are only a bit more likely to be employed.

Although Pryor and Schaffer hypothesize that a certain percentage of these people might support themselves through crime and other illegitimate means, Pryor tells Insight that the research on what the jobless actually do is dubious.

Instead, the two scholars highlight a series of contradictory trends. Their research shows that more working-age males are avoiding work while females are more likely to enter the workforce than before and that wages have increased for some professions, particularly for those requiring high skills, but have decreased for others. The analysts also found that the economic returns on a college degree are higher than ever, but the number of college graduates taking jobs that require only a high-school education also has increased.

Indeed, many of their central findings defy mantras about the need for increasing technical skills. "Jobs for less-educated workers have increased faster than the population with corresponding educational credentials, while simultaneously jobs for more-educated workers have increased slower than the more-educated population," they write. "Thus, contrary to arguments proposed by the popular press and technical literature, joblessness of less-educated workers is not linked to the disappearance of low-skilled jobs, a phenomenon often erroneously attributed to the impact of foreign trade or technical changes."

Nevertheless, their findings and policy suggestions, however, don't fit neatly into any ideological camp. Based on their comprehensive historical analysis of the education levels of those who enter specific types of professions -- a technically complex task that economists hadn't been able to perform until recently -- the two academics document what Pryor calls "the employment cascade effect."

For example, they say that the number of college graduates taking "high-school jobs" -- those where the average level of education is about 12 years -- have soared since the early 1970s. Today, nearly one-third of an college graduates (as opposed to one-fifth in 1970) take jobs for which a college degree isn't necessary. This, the two say, is a result of a slow increase in "mid-level" jobs that require a college education. On the other hand, high-level jobs that require graduate degrees or very well-trained college graduates have increased more quickly than the number of people with enough skills. Many college graduates, therefore, end up in low-level jobs.

"A lot of these are the college graduates with the fewest skills," says Pryor. "They go to college but they really don't learn much, and then they go out into the labor force and take jobs they are overskilled for." While these college graduates in "high-school jobs" tend to be the wealthiest and most productive members of their professions, they still earn significantly less than those who take jobs that require college degrees.

This cascade effect, Pryor says, also has profound implications for the ongoing welfare-reform efforts, a group of policies he lambastes. "The efforts to take welfare recipients and get them jobs is wonderful for the welfare recipients themselves"' Pryor says. "It closes the door on those with just a high-school diploma that are occupying those jobs right now The policy, in the long run, is totally self-defeating."

While Pryor tells Insight that he rejects the rather strict cognitive determinism that Herrnstein and Murray employed in The Bell Curve, he and Schaffer do believe that cognitive abilities cannot be discounted in analyzing who gets the good jobs and higher salaries. Indeed, at times the new book reads almost like passages from The Bell Curve. "Return to cognitive skills, independent of education, have increased," Pryor and Schaffer write.

Pryor qualifies his caveat. "The Bell Curve leaves a very strong impression that differences are genetic. We don't believe that, but we do think that cognitive skins are a hugely important factor for determining who gets jobs and who doesn't. These skills are learnable, but they can't be changed late in life." Instead of using a variety of strict intelligence tests, Pryor and Schaffer base their study on the National Adult Literacy Survey, or NALS, which is intended to measure abilities and knowledge rather than some more exotic innate level of intelligence. Scores on NALS, however, do jive with IQ test scores in some cases. In other words, people lacking in cognitive skills who manage to slog through college -- or simply warm a seat in a school given over to ideological indoctrination rather than education -- still don't see their real skills increase all that much. They do, however, earn more money than they would without college degrees. "This isn't evidence that we should keep people out of college," Pryor says. "Indeed, every piece of evidence shows that the returns to a college degree are increasing faster than ever."

Part of the change in a degree's value, however, comes from a trend that the authors decry: credentialism. "More and more employers don't care what you know," says Pryor. "They just care if you have the right sort of degree; it does nobody any good." Although they admit that scholars should conduct more research on the topic, Pryor says he believes that some employers -- banned from using many types of tests for employment purposes -- use the degrees that people have earned as a crude personality-screening mechanism. "If someone has the where-withal to finish junior college, even if they don't have any more real skills, some employers might figure that they are simply a better worker."

At the high end, the authors say that an increasing "winner-take-all mentality" has meant that even the highest-paid occupations are experiencing a partitioning into relatively high-paid and low-paid subgroups even though all members of the profession might earn significantly above-average wages.

Considering the role that gender plays, Pryor and Schaffer also show that cognitive skills can count when economists search for the reasons why women seem to displace men at the low end of the workforce. "It's pretty simple. At the low end, among high-school dropouts, women do better on most tests of cognitive skills than men do," says Pryor. "Employers simply hire women because they are better workers in a variety of low-end clerical jobs." At the high end, the two economists find that women also displace men, often out of mid-range to high-end jobs, because they tend to accept lower wages than men. "It's simply a matter that women cost less money to employ; employers are doing what's in their best interest," Pryor says. He and Schaffer also point out that women have not, on the whole, displaced men from pre-existing jobs, but rather have filled more of the jobs created by economic growth.

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