Analyzing the Evolving Services Industry

There are two types of jobs -- non tradable (personal services that require face to face interactions) and tradable (impersonal tasks that can be delivered electronically). Because the latter can be outsourced offshore while the former cannot, the skills needed by the US in the next 30 years will mostly be non-tradable. From 1900 to 2008, 98% of the 27.3 million added jobs were non-tradable (e.g janitors and crane operators are more immune to foreign competition, while accountants and computer programmers are not). The dividing line between the jobs that produce services suitable for electronic delivery and those that do not, does not correspond to traditional distinctions between high and low-end work. With new innovations and as information technology (IT) improves, more personal services will become impersonal.

US schooling is divided into elementary, middle, and high school. College can be Liberal Arts (LA) or Professional (P). While P classes may prepare students more effectively for jobs, it usually results in specialization and job inflexibility. In contrast, LA arguably give students more flexibility, and adaptability to the changing needs of the American economy. As effects of the coming industrial transformations are hard to predict, public policy should require all citizens to complete high school. A broad LA core should be implemented at the community college or initial college years, then P classes introduced in the final 2 years. This way, students learn to adapt to different jobs while having an area of expertise. An LA education means that one is not limited by specialization. Employers can train new hires in specialized skills on the job, but it is harder to train non tradable critical-thinking skills, problem-solving skills, and the capacity for lifelong learning that today's organizations require. These transferrable skills are vital in today's dynamic workplace; accordingly, companies plan to increase hiring liberal arts majors by 21%. However, this policy cannot guarantee protection foreign competition for tradable jobs. Factors such as foreign worker skill, IT improvements, and economic climate should be considered too.

Germany schooling follows an apprenticeship model where students divide their time between classrooms and the factory floor, acquiring knowledge on the job. At age 10, about two fifths of children are selected to go to a Gymnasium ( a secondary school emphasizing academic learning), and the rest to less academic schools for specialized training in one of 350 trades, from gardening to glass blowing. According to many company bosses, this makes them expert and flexible. Because German jobs are fairly secure, many employees invest in learning new skills; companies invest in teaching because workers are unlikely to quit. While this has helped Germany dominate in manufacturing and exporting (e.g. largest automobile exporter), academic achievements of its school children, measured in international tests, are mediocre: a stronger general education is needed to change trades should demand for their specific expertise dry up. Early selection fails children from poor and immigrant families, who are likeliest to attend the least academic schools and miss apprenticeships, leading to higher income inequality.

The German schooling can be adapted in the US but modified to allow for job flexibility, which has strong cultural and economic value. This can be done by introducing a broad apprenticeship system where high school students intern or shadow mentors for 3 companies across different companies over the summer breaks for technical job exposure. Students will have opportunities to explore their interests while learning real business operations; host companies are provided an effective way to recruit. To address early apprenticeship selections and below average OECD test scores, yearly mandatory nationwide apprenticeship tests should be held to place all students in a ranking, where the top students will have priority choosing apprenticeship companies. Apprenticeships will serve as incentives for students to study well, while low income students will also participate. Students should also be well informed on tradable and non-tradable jobs and ultimately given the choice which job category to pursue.