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Ira Smolowitz, Ph.D. Professor of Finance and Dean, Bureau of Business Research and Program Development at the American International College, Springfield, MA.

The Outlook for American Competitiveness

By Ira Smolowitz, Ph.D.

Change does not necessarily assure progress, but progress implacably requires change. Education is essential to change, for education creates both new wants and the ability to satisfy them.
            Henry Steele Commager ¹

American competitiveness, in my opinion, will be threatened by a better-educated foreign work-force. Consider the observation made by Jim DeMint who represents South Carolina’s 4th District in Congress:

American businesses are having difficulty finding qualified job candidates for skilled jobs. Almost 80% of today’s jobs require some postsecondary education and training, and 80% of the top 50 fastest growing occupations require education beyond high school. Unfortunately, our education system is failing to meet these needs. An estimated 25% of America’s young people don’t even complete high school. In South Carolina, the percentage is about 50%. And while the state has improved average SAT scores, it still ranks near the bottom nationwide.²

Consider too, a report issued by NAAL (National Assessment of Adult Literacy):

The Assessment shows a 25 percent drop-off in reading proficiency on the part of college graduates since 1992, with only 31 percent of those classified as “formally educated” attaining what is deemed a high level of decoding text. While there is some good news (modest literacy gains among African- Americans and Asian-Americans), we must face up tothe fact that some 40 million American adults (as the Christian Science Monitor put it) “can’t read much beyond ‘See Spot run.”

Researchers involved in these studies continue to repeat what we have heard before: less reading and more watching television and surfing the Internet is helping to facilitate the decline in literacy of our college graduates.

The implications of decreasing literacy competencies for our college graduates are great: individuals who have below basic English literacy skills are more likely to be unemployed than individuals in the intermediate and proficient literacy categories. There is a $28,000 difference in the annual earnings of a below basic reader and a proficient reader.

... Poor literacy is having a direct impact on the American job market. Last summer Toyota Motors chose to build its newest North American manufacturing plant with 1,300 jobs in Canada, despite the fact that several U.S. states offered Toyota more than double the Canadian incentives.

Why did Toyota choose Canada rather than the United States? The president of the Automotive Parts Manufacturers Association said that "Toyota hoped to avoid the expensive training faced by Nissan and Honda, which had to use pictorials when training workers to use high-tech equipment in their U.S. plants.” ³

Given the highly-disciplined, highly-educated workforce in India, China, etc., the U.S. competitive position does not look promising. Manufacturing is on the decline in the U.S. A knowledge-based, work-process is vital. This, in turn, requires a well-educated work-force. It is becoming abundantly clear that the American work-force is losing its competitive advantage.

How many cashiers in this country would be hard-pressed to give a customer the correct change without an electronic read-out on the register? Even routine car maintenance such as changing spark plugs require the ability to interpret a computer print-out by the associated mechanic.

The decline of the educational attainment and associated skills by the American work-force does not bode well for the American global competitive position.

In a subsequent article I plan to assess various proposals to restore the American competitive position.

Footnotes
1. Downloaded 1/4/06 from http://www.Wisdomquotes.com/cat_education.html.

2. Downloaded 1/4/06 from http.//jimdemint.com/demint_contents/issues/jobs/summary.html.

3. “Declining Literacy in American Graduates” downloaded 1/4/06 from http://blog.nodvin.net/ p. 135.

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Articles printed with the permission of Dr. Ira Smolowitz, Professor of Finance and Dean, Bureau of Business Research and Program Development at American International College, Springfield, MA.