The flood tide of American prosperity and social harmony began to ebb in the 1990s. Industrial closures swept across the United States, as companies fell victim to outdated technologies and intense Japanese, South Korean, and Chinese competition. The closures shifted to Canada and Mexico after the North American Free Trade Agreement came into effect in 1994. Women did find more jobs, but stagnant or declining incomes forced millions of families to have both parents working just to maintain their standard of living. Ethnic minorities, particularly African Americans, paid the greatest share of the cost, but so did poorly paid coal miners in the Appalachians and factory workers in uncompetitive industries. Impressions of prosperity lingered, buttressed by America’s unrelenting confidence in the free market, a preposterously overhyped dot-com boom, and an explosion of home values and fraudulent mortgages. But underneath the façade of one of the world’s least-regulated financial markets, the shiny possibilities of Silicon Valley adventurism, and hyperinflation in house prices, major cracks were emerging in the North American superstructure.
The most alarming change, with profound implications for youth prospects in the twenty-first century, was the rapid decline of opportunities for people of average ability and limited skill. With robots and mechanization replacing many factory workers, with global competition eliminating tens of thousands of jobs and crippling the effectiveness of most industrial trade unions, and with much of the country’s economic growth occurring in high technology and finance, the general-purpose industrial labourer lost access to work, income, and opportunity. There were occasional bright spots—Alaska pipeline developments in the 1970s, North Dakota and Wyoming shale gas in the 2010s, Alaska and Texas oil plays, and artificially hyped housing construction—but the overall experience was distressing. Entire towns and regions, from Ohio and Illinois to rural Pennsylvania and upstate New York, suffered through prolonged collapse, urban decay, and a massive increase in poverty among the laid-off workers. In the twenty-first century, the pace of technological displacement accelerated. The current cost of replacing a worker with a machine in the industrial sector is around $100,000. If an industrial machine can be purchased for that sum, a regular position can be eliminated. For many companies, the resulting increase in efficiency and productivity is the only way to remain competitive.
The Loss of Middle-Management Jobs
Perhaps the great challenge for university graduates is one that has attracted little attention because it evolved slowly and with little fanfare. Starting with the rapid expansion of government, industry, and the service sector after World War II, North America created one of the most impressive middle-management cohorts in the world. The USA and Canada were not alone. Japan had—and still has—one of the most successful middle-management cultures anywhere. So does England, built around the financial and insurance industries. Germany’s much-vaunted industrial establishment, like the banking sector in Switzerland, is likewise centred on a strong, educated, and conscientious middle-management layer. But consider the observation of Daniel Pink:
During the twentieth century, most work was algorithmic [described as “rules-based”]—and not just jobs where you turned the same screw the same way all day long. Even when we traded blue collars for white, the tasks we carried out were often routine. That is, we could reduce much of what we did—in accounting, law, computer programming, and other fields—to a script, a spec sheet, a formula, or a series of steps that produced a right answer. But today, in much of North America, Eastern Europe, Japan, South Korea, and Australia, routine white-collar work is disappearing; it’s racing offshore to wherever it can be done the cheapest. In India, Bulgaria, the Philippines, and other countries, lower-paid workers essentially run the algorithm, figure out the correct answer and deliver it instantaneously from their computer to someone six thousand miles away.[8]
The transition had a major impact on the prospects for North American youth. In 2015, Robert Putnam published a brilliant but depressing book, Our Kids: The American Dream in Crisis, that documented the rapid division of USA society into “have” and “have not” populations. His monumental work makes it clear that college and employment affirmative action cannot overcome deeply entrenched poverty, marginalization, racism, and trauma at the family and community level. Putnam puts words and statistics to what is obvious across the United States and parts of Canada. African Americans are doing much more poorly and have little access to the American Dream. Hispanic Americans, legal or otherwise, have suffered egregiously in educational and employment outcomes. New immigrants, for years the source of much American energy and entrepreneurship, lag well behind. It’s much the same in Canada, where immigrants struggle to have international credentials recognized and where Aboriginal peoples (as in the USA) often live with devastating poverty and community despair. Have-not regions—the Appalachians and Detroit in the USA, significant parts of the Maritimes and rural Quebec in Canada—rely on government transfers and make-work programs. The numbers are shocking: at the end of 2014, over forty-six million Americans relied on food stamps, and for three years in a row this figure included two hundred thousand people with Master’s degrees and thirty-three thousand with PhDs.[9]
Higher Education as the Answer
The problems are deep and systemic, attached to advances in technology, the displacement of labour through globalization, and the shift away from heavy industry across North America. Consider the implications, according to Derek Thompson, writing in The Atlantic, who documented the growing number of nonworking men and young people without jobs.[10]
The share of prime-age Americans (25 to 54 years old) who are working has been trending down since 2000. Among men, the decline began even earlier: the share of prime-age men who are neither working nor looking for work has doubled since the late 1970s, and has increased as much throughout the recovery as it did during the Great Recession itself. All in all, about one in six prime-age men today are either unemployed or out of the workforce altogether. This is what the economist Tyler Cowen calls “the key statistic” for understanding the spreading rot in the American workforce. Conventional wisdom has long held that under normal economic conditions, men in this age group—at the peak of their abilities and less likely than women to be primary caregivers for children—should almost all be working. Yet fewer and fewer are.
Starting in the 1980s, with industrial work eroding quickly, governments, parents, and high school counsellors turned to promoting college or university admission as the best path forward. The evidence was clear, displayed in the career and life experiences of those who opted for post-secondary education in the three postwar decades. The wage and income gap between high school graduates and those with college degrees was becoming steadily larger. What was missed in the celebration of the economic “success” of college graduates was the fact that, “The gap has increased mainly because of the collapse of wages for those who have less education, and not because of any dramatic increase in the earnings of college grads, especially new grads. The reason that fact about the gap matters is because it could well be that college grads do far better than high school grads and still do not earn enough to pay back the cost of their college degrees.”[11] The bonus for spending three or four years in post-secondary education, forgoing income during that time, and paying tuition and living expenses was nonetheless impressive and well worth the effort. Get a Bachelor’s degree and earn $1 million or more over a career than a community-college graduate, and much more than a mere high-school-diploma holder. Get a Master’s or professional