Reassessing a Decade of Reform: Workforce Development and the Changing Economy

Publication December 1999

Education reform in the 1980s and 1990s emerged from a preoccupation with productivity and economic performance. In the 1980s, the country’s education system was blamed for slowing productivity growth and weakening international competitiveness. By the end of the 1990s, the economic context has changed dramatically; unemployment rates are at historical lows, stock prices remain high, and impressive developments associated with computers and the Internet seem only to scratch the surface of the potential in that sector. Still, in education, we are implementing a reform agenda that was developed in one economic context and, according to its advocates, was designed to solve a particular set of economic problems. Thus, we want to ask whether an education reform agenda motivated to a large extent by a particular economic context is still appropriate now that that context appears to have changed.

In the first part of this report, we review the arguments advanced during the 1980s and early 1990s concerning the relationship between education and the economy and describe the education reform agenda that followed those arguments. We then review evidence about the economy and related education reforms that were developed during the 1990s. Based on this new evidence and experience, we then reassess the current education reform agenda, suggesting future policy and research directions.

Workforce Development Reform Agenda of the 1980s

The national preoccupation with the weakening international competitive position of the American economy led to extensive discussion of workforce development. The emerging literature was united by a sense of urgency and crisis. A number of reports, including A Nation at Risk and America’s Choice: High Skills or Low Wages!, claimed that profound weaknesses in the education system were undermining U.S. productivity and competitiveness. The emerging consensus was that in order to be more competitive, U.S. workers needed more education and more advanced and different skills. In addition to international comparisons, dramatic changes in the relative earnings of high school and college graduates, growth in occupations requiring higher levels of education, and the changing nature of work organization suggested that skill requirements were changing.

According to the typical arguments of the era, other countries seemed to do a much better job of preparing their workforces. Based on a favorable impression of European and Asian education systems and an understanding of the changing nature of work, a national workforce development reform agenda emerged. It included the following seven points:

  1. Skill requirements of work were rising, suggesting that workers at all levels of the employment hierarchy needed stronger academic skills.
  2. The education system needed to do a better job of teaching a set of skills, such as problem solving and teamwork, that were neither traditional academic nor vocational skills. The Secretary’s Commission on Achieving Necessary Skills (SCANS) developed a list of such skills in 1991.
  3. Education systems needed to shift from a focus on regulating the educational process to measuring and demanding standards for educational outcomes.
  4. Education could be improved through the use of innovative pedagogies such as integrated academic and vocational instruction and work-based learning.
  5. Employers needed to be much more involved with the education system through stronger advisory roles and the provision of work-based learning opportunities.
  6. Students needed to have better information on the requirements for particular occupations, and, indeed, pathways to occupations needed to be made more systematic through improvements in the use of skill standards.
  7. The transition from high school to postsecondary education needed to be strengthened, especially for students who had traditionally not continued their education after high school.

These principles were operationalized in a series of federal laws, which included the 1990 and 1998 reauthorizations of the Perkins Act, the School-to-Work Opportunities Act (STWOA), the Goals 2000: Educate America Act, and the Workforce Investment Act. The STWOA was probably the most comprehensive attempt to implement this broad workforce development strategy.

Reassessing the Workforce Development Reform Agenda

While policymakers and educators were trying to restore prosperity by reforming the education system, the U.S. economic system entered a period of unprecedented growth and low unemployment; however, improvements in the education system are unlikely to account for this apparent turnaround. These reforms remain at the margins of the U.S. education system, and there have been very moderate, if any, improvements in student performance as measured by test scores. Thus, education reform cannot claim credit for positive U.S. economic performance in the 1990s.

Yet, calls for education reform were not based only on the comparative performance of the U.S. economy. The 1980s conception of workplace skill needs that formed the basis of the current workforce development reform agenda has been confirmed by research during the 1990s. College graduates still receive a substantial premium in the labor market; jobs are shifting steadily towards occupations with more highly educated incumbents; and there is some evidence that academic and SCANS skills are increasingly important. This suggests that basing policy on those developments is probably still appropriate, despite the changes in the strength of the U.S. economy relative to its competitors.

Much of the workforce development reform agenda that was developed in the 1980s and early 1990s remains intact. The changed economic environment and international comparisons have not significantly affected the part of the reform agenda which focuses on the importance of academic and SCANS skills and educational outcomes and accountability. The changing international comparisons, however, have had a negative influence on those aspects of the agenda that were most closely tied to employers and the workplace-employer participation, work-based learning, and systems of specifically focused skill standards. As the comparative arguments lose force, we will probably see continued strengthening of the high school and college focus but with an additional emphasis on testing academic skills. SCANS skills could play a role if educators could figure out how to measure and assess them. The effect of all this is that traditional high school vocational education is fading and will continue to do so.

What is perhaps most surprising is how little we know about the relationship between education and economic performance after twenty years of education reform explicitly designed to improve that performance. Although evidence suggests that more education improves national economic growth and productivity and increases individual earnings, little is known about exactly which skills are most important and how they should be taught. International comparisons, which are useful for generating ideas about alternative policies and strategies, are often misleading, especially when only a handful of countries are being compared. Many factors other than education influence macroeconomic performance, and in any case, any educational policy could only be expected to have an effect after many years. We need to focus at a more microeconomic level, at specific workplaces and classrooms, and at the determinants of individual career progression if we want a more concrete and specific understanding of the education and skill needs of the economy.

Bailey, T., & Gribovskaya, A. (1999, December). Reassessing a decade of reform: Workforce development and the changing economy. Berkeley, CA: National Center for Research in Vocational Education.

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