A Nation at Risk:
The Economic Consequences of
Neglecting Career Development
A Nation at Risk1
The latest Directory of State-Based Career Information Delivery Systems (CIDS) from the Association for Computer-Based Systems for Career Information (ACSCI) tells us that 6.1 million “career seekers” gained access to computer-based career systems at 13, 742 sites in the past year. They used a total of 49 CIDS in 46 different states.
Between ACSCI’s 1986-87 and 1987-88 reporting periods, the number of sites increased by 481 sites from 13, 261 to 13, 742. This is an average of fewer than 10 new sites in each state during the year. I suggest these numbers represent a colossal failure of institutions in virtually all potential target markets of these systems to take advantage of the technology members of this panel and their colleagues have created.
According to the 1988 Educational Guide from Market Data Retrieval, which is among the most comprehensive and up to date mailing list sources for the educational sector in the US, there are 72,888 Elementary schools, 41,693 Junior High Schools and 24,647 Senior High Schools in America. Therefore, a total of 139,228 schools should, all of us no doubt fervently believe, be using our systems. The ACSCI Directory says we have to date implemented our systems in only 8,075 elementary middle and secondary schools. Collectively we have impacted a mere 3.8 percent of the K to 12 education market in America in the seventy years since computer-based career systems were first introduced.
The ACSCI Directory says there are another 5, 667 sites in all other agencies to which computer-based systems have appealed. But there are thousands upon thousands of vocational and technical schools. ITFA and other adult retraining facilities, colleges, universities, employment security offices, public and private vocational rehabilitation and assessment agencies, correctional facilities and military bases n this country where people need career development assistance. Everyone in this room can name other current and potential user agencies all of us would agree should be using our systems. The fact is that we have had even less impact outside the secondary school system than our 5.1 percent success rate there.
In spite of our high tech innovations and our sincere best efforts, school dropout rates, youth unemployment and other manifestations of both youth and adult career transitions difficulties are more serious problems now than before these computer systems appeared. Even in sites using theses systems, usage is not what it should be, both quantitatively and qualitatively. In fact, the very presence of a computer system is used all too often as an excuse for not providing serious career development assistance.
The marketing and sales people of some systems even sell their systems on this basis (Here’s a system that will relieve you of the burden of career counseling, so you can focus your attention on other, higher priority counseling matters.”)
We think of ourselves as innovation leaders with computer-based solutions to help people chart their personal career paths into the labor forces of the year 2000 and beyond. At the same time young people and their parents are pleading for more assistance in career planning. I am advised that in a May 1989 ACT Student Needs Assessment Survey of 32,000 high school students the three items the students ranked highest were related to career information and planning. In fact, twelve of the top twenty items were career related. This should not come as a surprise. It is only thye most recent of dozens of needs surveys over the last two decades which show that students and their parents place an extremely high priority on career development as an outcome of the secondary school system.
Given such a strong expressed demand for the kind of service we say our systems deliver, why are we achieving such marginal success? We all regularly hear answers like “because counselors don’t have enough time to take on any more responsibilities,” or “there isn’t enough money in the budget.” I believe these, and all the other answers we typically hear, are smoke screens. The real reasons, I suggest are twofold, and entirely different.
1. While we all have an initial live understanding of some of the personal consequences of career indecisiveness, there is little, if any, awareness among counselors, educators, administrators or legislators of the economic consequences which attach themselves to this phenomenon.
2. In spite of the education of the support teams of all major computer systems, both at the “head office” and state CIDS level, in the final analysis most systems are not delivering what their end users are asking them for.
I would like to address the economic issue first. The costs associated with career indecisiveness, in both human an financial terms are staggering. They seriously threaten the future prosperity of this nation. The theme “at risk youth” is a common rallying cry these days, but I’m convinced that America is at risk. Most Americans feel somewhat uneasy as they hear about increasing foreign ownership of their economy and rising trade deficits, but they have no clearly defined sense of the crisis at hand. I would venture to bet that most labor market and career development experts in this room are thinking at this moment that I’m becoming melodramatic. Let me explain why I deliberately use the word crisis.
The majority of students in the eighth and ninth grades have not established even tentative career goals, whether they think they have or not. Yet they must make tough decisions regarding the courses they will pursue at high school, decisions which directly impact their career options. About twenty five percent of secondary students nationally drop out of school before high school graduation. The rates are significantly higher with minority groups. Lack of specific career goals for which students’ secondary school courses have perceived relevance is usually a contributing factor.
Very few drop outs have developed long range career plans. Indeed, few high school graduates have developed clear goals. The Gallop Poll sponsored by the National Career Development Association, the National Center for Research in Vocational Education and the National Occupational Information Coordinating Committee, and released in May 1988, tells us that sixty two percent of all workers now in the labor force, whatever educational route they followed to get there, say they had no career plan at all when they began their first full time job.
Drop outs must make immediate decisions which are likely to impact a significant segment of their careers. The majority of high school seniors have still not established firm career goals. They too must make immediate decisions concerning post-secondary career preparation options or jobs. Roughly fifty percent of youth nationally do not go on to post-secondary studies from high school. Many of those who leave the educational system at this point encounter difficulties securing employment, as evidenced by high youth unemployment rates, again particularly among minority groups.
Of those who successfully enter the labor market directly from secondary school, either as dropouts or graduates, the median duration of first job holding is less than a year. The reason given by the majority of those voluntarily leaving thei8r first jobs whether by walking out, or deliberately getting themselves fired to quality for UI is essentially, “It wasn’t what I hoped it would be, and it certainly isn’t the kind of work I want to do for the rest of my life.” They have learned a lesson in terms of what they do not want to do. They have learned little or nothing new about what they do want to do.
Most go on to other jobs eventually, often after jobless periods during which many are recipients of unemployment insurance, payments and benefits from welfare and other social programs. Young people in these circumstances tend to hold several jobs during the first ten years after leaving school. Throughout this period they develop various survival and coping skills, and rudimentary job-seeking skills, but few develop the skills required to make thoughtful, systematic and truly appropriate career decisions. Indeed, in drifting from one job to another, all that most seen to learn well is that of the 120 million jobs in th4e US today, there are a handful they don’t want. They have not come any closer to finding the powerful needle in the labor force haystack.
Many young adults “stabilize” in a particular occupation in their middle to late twenties and because they have found one they truly like, but because mortgage or rent payments and domestic responsibilities restrict their freedom to continue drifting. The majority find themselves in what amounts to a “rut one in which many will spend most of their careers.
Of those who pursue post-secondary educational options, fifty percent will not graduate. The majority of students now attending colleges and universities do not have clearly defined career goals. Many do not seriously consider their post-college options until they are in their final months of studies. “major-hopping” is widespread. Seventy percent of university graduates will not be in occupations directly related to their majors five years after graduating.
Young people who possess the academic wherewithal and motivation to complete post-secondary studies in many cases simply defer career decisions. They are in post-secondary programs but in pursuit of specific career goals, but because they have been conditioned, like we were, to believe it is a necessary hurdle in achieving success in any career which may eventually appeal to them. When post-secondary students enter the labor force, wither as graduates or dropouts in their early to mid-twenties, they tend to make career decisions in a manner not unlike those who proceeded them into the labor force directly from secondary school. They tend to stabilize in an occupation or career path towards their late twenties or early thirties for similar reasons.
There are costs associated with this ineffectual transitioning process from school to work which must be borne by both the individuals concerned and society in general. It is estimated that it costs, on average, $25,000 to recruit, select and train someone to full productivity in a job. The cost is obviously higher for astronauts and physicians than for short order cooks and general laborers. For example, ATT advises that in 1988 they spend an average of $10,000 to recruit every engineer they hire. They still have to be trained over an extensive period before they reach full productivity, and the burden of training them will negatively impact the productivity of many others in the organization. ATT estimates a cost of $600 per day to have someone in training.
For now, let us focus on the $25,000 average figure. We learned earlier that the median duration of first job holding for young people is less than one year. Then they move on through a succession of “experiments” as they seek their niche in the labor force. It only takes 40 people changing jobs once to add up to $1,000,000. Four thousand equate to $100,000,000. Do you think there may have been 4,000 people here in St. Louis in the past year who switched jobs after trying one for a year or less and finding they did not like it? Or 2,000 who switched jobs twice? Dr. Kenneth B. Hoyt, University Distinguished professor at Kansas State University, reported at the 1988 SOICC Conference in Charleston, South Carolina that private sector employers alone spend $30 to %50 billion per year formally training workers and another $180 billion on informal training. It is estimated that at least $35 billion is lost annually on employees who leave soon after they are trained.
These costs are paid by employers at least twice. They pay to get the person initially, then they pay again to replace him or her. Is it any wonder employers are reluctant to hire young people who aren’t sure what they want to do with their lives? You may not feel too much sympathy for the employers. A common view is that they can afford this inevitable risk of doing business. But don’t forget that as consumers, we ultimately pay the bill. It is passed on to us in the price of the goods and services companies produce. And in an increasingly glo9bal trading economy, these costs also represent a tremendous competitive disadvantage for American companies trying to sell their goods and services abroad.
Add to this the cost of unemployment insurance payments to people between jobs as they “browse” in the labor market. The total cost of U.I payments in America for the year ending on September 30, 1988 was $13.9 billion dollars. The Actuarial Division of the Employment and Training Administration provided this total earlier this week. Unemployment figures are analyzed in most countries in terms of several categories, like seasonal, chronic, cyclical, frictional and others. Frictional unemployment is associated with the browsing activities described above. I have been unsuccessful to date in obtaining details on costs attributable to this element of the total U.I. bill for the U.S. in the past year. In Canada, it accounts for about one fifth of the $2.4 billion total of U.I. payments to recipients between the ages of 16 and 24 years of age, or well over $400 million. If the ratio is similar here, American tax payers will pay close to three billion dollars this year to support the career browsing activities of people trying to find their place in the working world without assistance and typically without success, since most will try again in the near future.
Consider the cost of voluntary dropouts from government sponsored training programs. I’m thinking of those trainees who have the ability to complete the course, but drop out two or three weeks into the course because they decide this isn’t what they really want to do. That cost this year in Canada is projected to be about $256 million or sixteen percent of a total training budget of $1.6 billion. The Employment and Training Administration of the Department of Labor apparently does no in-depth tracking of drop out statistics. However, with over $2 billion in Job Training Partnership Act Title IIA, and a further $825 million in Title IIB and Title III funds having been allocated in program year 1987. It is likely that over $300 million is lost annually in this country because not enough attention is paid to the task of getting the right people in the training seats available. These and the U.I. costs discussed earlier, well over $3 billion this year, are borne directly by tax payers.
Other costs, while harder to quantify, are equally real and perhaps a greater burden on society. The personal cost, for example of encountering one failure after another in trying to find a satisfying job Consider the impact on people’s physical and emotional health (and indirectly that of their families) of spending fifty percent of their conscious hours, week after week, month after month, in working environments which they dislike. By the time they arrive home at the end of a day’s work many have little positive energy left for their families and communities, let alone for pursuing opportunities for personal growth and self-fulfillment.
Lost productivity is surely the greatest economic cost of career indecisiveness. People who derive a sense of accomplishment from their work and enjoy what they do, produce more than those who are simply putting in time. What percentage of workers in this country would you say are truly satisfied in their jobs? Are you? Sixty-four percent of workers in the Gallup survey cited earlier said if they could start over they would want to consider other career options. Over fifty percent admitted they ended up in their current jobs through chance circumstances or they advice of others. Incidentally, the Gallup survey also showed that only 2.2 percent of employed adult workers reported having ever used a computerized career system, and fewer than one in five reported having sought career development assistance from school or college counselors.
The majority of people in the labor force today do not feel they are in the best jobs for them. Most believe they could have been more satisfied and productive today had they learned how to make better career decisions along the way. From personal experience, most of us would rate our output in some jobs we’ve had considerably higher than in others.
The Department of Commerce’s third quarter estimate for the Gross National product of this country for the fiscal year, which ended in September, is four thousand, eight hundred and ninety-nine billion dollars. Like imagining what is beyond the end of the universe, that number is so large it is difficult to truly comprehend. An infinitesimal one tenth of one percent increase in productivity across the United States would result in an increase of $4 billion 899 million in goods and services produced in a single year. A better mechanism for helping people identify specific jobs and career paths for which they are truly suited would have immense ramifications through the very fabric of American society. It would allow more people to achieve the all-too-elusive American dream, and assure America’s leadership position among the community of nations into the twenty-first century and beyond.