For many decades, most Americans could count on the strength of U. S. industry to make them increasingly prosperous throughout their lifetime. Even those people who never finished college--three ef every four adults--were able to enjoy high-paying jobs, usually in manufacturing. But the American dream isn't coming true for young people today. Families with breadwinners under 30 earn less than similar families did in 1973, after inflation is taken into account. Worse, they face the dispiriting prospect of never matching, much less surpassing, the lifestyles of their parents. If that happens, they will be the first generation of Americans to fall behind their parents (page 80 44 ).
The causes of the malaise stretch back over decades, so solutions can't be implemented overnight. A major problem is that many American companies are not creating the high-skilled jobs that would allow them to pay a decent wage. In manufacturing, stiff international competition has forced companies to clamp down on pay. Now, employers are realizing that quality is a key to regaining U. S. competitiveness against global rivals. But to achieve that competitiveness, companies must increase their skilled work force, which is increasingly hard to come by. The U. S. lacks the kind of formal training and apprenticeship systems that countries such as Germany use to help workers not bound for college. Companies and government officials have been making some progress on this score in recent years. But a much more intensive effort is needed to help young workers make it in today's new manufacturing environment. Experts say that private industry should be spending anywhere from 3% to 6% of payroll on training, compared with the 1.4% average that companies now spend.
The problem is more subtle, and hence even tougher, in services, where three-quarters of all jobs are found. Here, measurement is difficult, but the available numbers suggest that productivity is stagnant. Because service industries produce little more per worker than they did 30 years ago, employers can't afford to pay wages that keep pace with rising living costs. Again, the quality of the work force is key. But for most service jobs, it's a high-quality education, rather than technical skills, that is important. This means U. S. schools play a crucial role in Americans' economic prowess. Educational reform has been a growing issue since the mid-1980s. But the efforts so far are largely piecemeal. If Americans don't want to condemn young people to a declining standard of living, they must get serious about fixing their school system.
The good news is that the time couldn't be better for such solutions. Many economists expect the labor and skill shortages that began in the late `80s to reappear after the recession and to continue throughout this decade. Employers won't be able to rely on a surplus of workers to fill jobs. Even service companies will be forced to find some way to produce more with fewer people. This gives the U. S. a unique window of opportunity. If America can supply workers who are sufficiently trained or educated, employers will be able to use them--and pay them more.