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Will All Taxi Drivers Soon Have College Degrees?


More college grads than ever are now working as taxi drivers, firefighters, and bartenders. And this underemployment problem is likely to get worse before it gets better. That’s because, as Peter Orzag contends in Bloomberg, the market demand for cognitive skills associated with higher education has been in decline for 13 years. He borrows from an economic research study, which found that

such change has been driven by a decline in the demand for highly skilled work—the opposite of the conventional wisdom about such demand. The employment rate in “cognitive” occupations—managerial, professional and technical jobs—increased markedly from 1980 to 2000…but it has since stagnated, even as the supply of skilled workers has continued to grow.

Orzag points to automation as the culprit for this sudden reversal of demand:

Many jobs that once required cognitive skill can be automated. Anything that can be digitized can be done either by computer or by workers abroad. While the “winner take all” phenomenon may still mean extremely high returns for workers at the very top, that may be relevant for a shrinking share of college graduates.

This is undoubtedly true. Technology has always displaced the need for certain jobs as it advances. But we are hesitant to tag this as the beginning of the end of skilled labor, for even as technology displaces old jobs, it paves the way for new ones. Just as the end of the agricultural economy led to the rise of the industrial economy, the end of the manufacturing economy will lead to the information economy, which will create new jobs in the service sector. The jobs market will scream for life coaches, entrepreneurs, personal financial analysts, and ballet teachers—all of which require cognitive skill.

The real problem, as Tyler Cowen points out, is that the skills colleges teach are outdated. The higher education model no longer matches the demands of the jobs market. The modern college system was designed to train people to work in the corporate and government bureaucracies of the 20th century, which required a large number of educated people to process information. This is exactly the kind of work that is now being automated, yet colleges haven’t adjusted their curriculums to prepare students for life in the service economy. We still need educated people, but they need to be the kind who are resourceful enough to identify which jobs the market is hungry for.

High schools and colleges need to stop preparing students for a world that no longer exists.

[College quad image courtesy of Shutterstock]

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  • Kavanna

    Orzag’s analysis is very questionable. College education in many areas is still valuable and separates one from the non-college educated.

    The real problems are two. One is that many colleges no longer teach useful skills, leaving its economic value questionable. Alternatively, you could state it in terms of students picking absurd majors.

    The other is that more and more students are being pushed into colleges who do not belong there, at least not at age 18. Some can benefit from college at somewhat older age, like mid-20s.

  • Andrew Allison

    Could it be that the the market demand for “the cognitive skills associated with higher education” has been static while the number of graduates has increased?
    The suggestion that taxi driving, firefighting and bartending don’t require cognitive skills is elitist, ridiculous on its face and counterproductive. VM has long argued that not every job requires a college education, and that not every high school graduated will benefit from one: the place to start is by attacking the ridiculous notion that a college degree is a requirement for any job.

  • Dan King

    This post, entitled Getting Richer While Feeling Poorer, is relevant.

  • ljgude

    My grandson is going to college this fall already employed part time through ODesk, the internet employment agency that gets contract workers together with businesses needing certain jobs done like Web design and maintenance, A techy Task Rabbit, if you will. Because his father taught him how to do the often picky web maintenace work that can’t be automated (for now), he has a way to earn rather than borrow. He may be doing entirely different kind of work by the time he graduates, but the point he is already swimming in the 21st century job market. There is nothing stopping any kid with college level ability operating in this kind of market, but it will not occur to many of them…or their parents. There is nothing precocious or even very geeky about my grandson – he has gotten interested in computers rather late, but he has seen the opportunity and reacted with enthusiasm. I think that used to be called ‘an eye for the main chance’.

  • Jim__L

    To answer the title’s question:

    Of course. Taxi drivers will have degrees in Computer Science and Electrical Engineering, and one team of “drivers” will produce (and maintain / debug) the software and hardware that will run thousands upon thousands of “driverless” taxis.

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