Saturday, August 30, 2008

Memo to Art Rothkopf: Charles Murray Is Right

By Richard Vedder

In Going Broke By Degree, published in 2004, I argued that the rise in college costs is unsustainable and would lead to lower price alternatives, including new ways of certifying competence --such as vocational examinations. Charles Murray pushes that argument further in his great book Real Education.

Unquestionably the largest single reason for the excessive demand for higher education in the U.S. is the information cost factor. Costs to employers of learning about the skills of potential employees is potentially quite high, particularly given the declining quality of American education occasioned by mediocre secondary school standards, and given the fact that employer testing for cognitive skills has been reduced dramatically by Griggs v. Duke Power and other judicial and legislative mandates. A college diploma denotes that a potential worker probably has at least minimal levels of cognitive abilities, has some degree of motivation and responsibility, etc. The costs to the diploma to employers are zero (in a direct sense), but are very high to the potential employee. But the diploma serves as a decent if highly imperfect screening device, separating the highly competent from the clearly incompetent.

As Murray points out, those information costs can decrease dramatically by developing certification tests -- measures of of competence-- applicable to most vocations. Just as the CPA exam tells who understands accounting concepts, and Microsoft and others have tests on skill in using certain software they produce (reducing sharply the number of computer science majors at one time), so other tests can be developed: a hotel management examination, for example, or a general managerial skills test that includes some basic math and other foundational questions along with some questions that a good manager should be able to answer. Murray estimates that a large majority -maybe 70 percent --of jobs that current require college degrees are amenable to this approach (much learning, of course, occurs on the job). Employers, of course, would still need to interview candidates to get a sense of some interpersonal skills not easily measured by written testing. Job interviews are merely a form of oral examination.

Students with a good high school education in terms of basic math and written communication skills could take specific courses designed to meet vocational needs prior to taking the certifying tests. Organizations like the Educational Testing Service, the ACT, or others would devise tests. Kaplan, Princeton Review and other for profit providers would rush to develop cram courses designed to help pass the exams. As that great proponent of free choice, Chairman Mao, used to say: let a thousand flowers bloom. And they will.

This brings in my friend Art Rothkopf, senior executive at the U.S. Chamber of Commerce in charge of higher education matters, and a former president of Lafayette College and Spellings Commission member. Art could convene groups of business executives and sell them on the advantages of the approach.

The big question: what is in it for the businesses? They are not the ones paying the college bills, although they indirectly pay more than they think through their taxes and charitable contributions. By moving towards an examination approach, potentially employers can greatly increase the pool of competent persons, potentially lowering the costs of hiring workers. They also will get a better screening device, ending up with employees more clearly competent to meet their needs. This approach would impact on the type of instruction and learning workers get --a common complaint is "we have to spend a fortune training these college grads after they come to work for us." Etc. etc. It really is to their advantage. Everyone gains --except some colleges with great prestige but doing little instruction in anything practical, and some truly mediocre students attending the upscale schools whose graduates command high wages.

Maybe I should have another big conference at the American Enterprise Institute on "New Ways of Certifying Employee Competence," with Charles, myself, Art, and maybe one or two other industry people and academics. Any thoughts?


Ol' Blue said...

Great idea. Great post.

Collin Hitt said...

Hold the conference. In Chicago. And invite me.