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Enhancing U.S. Education and Competitiveness

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During his trip to Asia last November, U.S. President Barack Obama sat down to a working lunch with South Korean President Lee Myung-bak in Seoul. In the space of little more than a generation, South Korea has developed one of the world's best-educated work forces and fastest-growing economies -- and President Obama was curious about the South Korean miracle. "What is the biggest education challenge you have?" he asked Lee. Without hesitating, Lee replied, "The biggest challenge I have is that my parents are too demanding."

That anecdote usually makes Americans chuckle -- and wince. It highlights how U.S. students are falling behind their peers in advanced nations in the global race for economic competitiveness. Most South Korean parents, even the poorest, insist that their children learn English starting in elementary school. As a result, South Korea has had to bring in thousands of foreign-language teachers. I wish the United States shared South Korea's challenge. Americans have good reason to be concerned: young adults in eight other nations, including South Korea, are more likely to have college degrees than those in the United States.

Yet the relationship between education and international competitiveness is a subject rife with myth and misunderstanding. There is a paradox at the heart of the United States' efforts to bolster international competitiveness: to succeed in today's knowledge economy, the United States will have to become both more economically competitive and more collaborative. For too long, policymakers, lawmakers, and voters have treated competitiveness as a zero-sum game, in which another nation's gain is necessarily the United States' loss. In fact, enhancing educational achievement and economic viability -- at home and abroad -- is more a win-win game, one with enormous benefits for the world and for the United States.


The belief that another country's gain in economic competitiveness is the United States' loss is a remnant of the Cold War mentality, a protectionist ethic, according to which prosperity depends on a state's ability to preserve a finite amount of goods and human capital. As former U.S. Secretary of Education Richard Riley put it, "For much of the last 50 years, international education was often defined by Cold War imperatives." Rival nations' education programs were often seen more as national tools for winning hearts and minds than as mutually beneficial engines for economic growth and democracy.

In the last decade, international competition in higher education and the job market has grown dramatically because, as the New York Times columnist Thomas Friedman would say, the world has "flattened": companies can now digitize, automate, and outsource work to the most competitive individuals, companies, and countries.

The information age has wrought ubiquitous and irreversible changes. In 2008, the Commission on Growth and Development reported that since 1950, 13 economies around the world had grown at unprecedented average annual rates of seven percent or more for 25 years or longer -- a feat made possible, the commission argued, "only because the world economy is now more open and integrated."

In practical terms, globalization means that U.S. students will have to compete throughout their careers with their peers in Canada, China, India, European countries, and other rapidly developing states. As President Obama has warned, "The nation that out-educates us today is going to out-compete us tomorrow." And students in other countries are already catching up with or surpassing U.S. students, especially in the critical STEM fields: science, technology, engineering, and mathematics. This year, according to a study from the National Bureau of Economic Research, China will award more Ph.D.'s in engineering and the sciences than any other country in the world, including the United States, the current titleholder.

At the same time, international competition has increased international collaboration. In the new knowledge economy, education is a public good unconstrained by national boundaries. The U.S. economy, for example, benefits enormously from the inflow of foreign products and well-educated immigrants. Ben Wildavsky writes in The Great Brain Race that immigrants in the United States made up just 12 percent of the U.S. work force in 2000 but nearly 50 percent of the country's Ph.D.-holding scientists and engineers. From 1995 to 2005, moreover, immigrants started one-quarter of all engineering and technology companies in the United States, including half of those in Silicon Valley. One of Google's co-founders, Sergey Brin, for example, was born in Moscow and educated in the United States.

Even when products are manufactured overseas by foreign companies, U.S. entrepreneurs are well positioned to benefit through innovation. A 2007 study by the Sloan Foundation found that although Apple outsourced abroad the manufacturing of the parts that make up the 30-gigabyte video iPod, 55 percent of the product's $299 retail price was captured by U.S. companies and workers. Most of the iPod's value lies in its development and design. Apple's engineers in the United States were the ones who figured out how to combine the device's 451 parts into a prized commercial product.

U.S. businesses benefit from the knowledge economy in other ways, too. The borderless nature of innovation, manufacturing, and research and development has made national economies far more interdependent than in the past. Better-educated populations overseas mean greater markets abroad for U.S. goods: the millions of young adults in China and India who complete college will demand high-status imports, such as iPods, from the United States. Ultimately, the United States will not thrive unless progress is shared worldwide. As President Obama pointed out in his June 2009 speech in Cairo, "Any world order that elevates one nation or group of people over another will inevitably fail."

Not surprisingly, interdependence also comes with a slew of global challenges. Reducing poverty and disease, developing sustainable sources of energy, controlling nuclear proliferation, fighting terrorism, curbing global warming and air pollution -- the United States cannot meet any of these challenges without collaborating with other countries. These partnerships will require U.S. students to develop better critical thinking, cross-cultural understanding, and language skills.

U.S. President Barack Obama and U.S. Secretary of Education
Arne Duncan talking to students at the Dodge Renaissance Academy in Chicago, December 2008


Not everyone will share equally in the benefits of the new knowledge economy. Those with the most to gain will be college-educated workers. Over the last 35 years, the share of jobs in the U.S. economy that require a postsecondary education rose from 28 percent to 59 percent, and that figure is expected to rise to 63 percent by the end of the decade, according to Georgetown University's Center on Education and the Workforce. The widening gap between the economic fates of workers with college degrees and the fates of those without underscores that knowledge today is an international public good.

Wage trends for well-educated workers offer still more evidence of this shift. If innovation and human capital were finite resources limited by national borders, one would expect the huge expansion of college-educated workers around the world to depress the wages of highly educated workers in the United States compared to the wages of less-educated workers everywhere. In fact, the opposite has occurred. Data compiled by the Organization for Economic Cooperation and Development show that in most OECD countries, where more students are completing college than ever before, the difference in earnings between college graduates and nongraduates is growing. As the OECD analyst Andreas Schleicher points out, a dramatic global increase in the supply of knowledge workers "does not necessarily lead to a decrease in their pay."

U.S. workers will be comparatively better off if they lead the world in educational attainment, but advancing education everywhere brings benefits to everyone. Education has immeasurable power to promote growth and stability around the world. Educating girls and integrating them into the labor force is especially critical to breaking the cycle of poverty. It is hard to imagine a better world without a global commitment to providing better education for women and youth -- including the 72 million children today who do not attend primary school. It would be a safer world, too. As several cross-country studies have shown, low educational attainment is one of the few statistically significant predictors of violence. Ultimately, education is the great equalizer; it helps overcome differences in background, culture, and privilege and opens up economic opportunities.

OECD countries, including the United States, benefit from increased educational skills as well. Earlier this year, the economists Eric Hanushek and Ludger Woessmann asked what would happen if students from the OECD countries scored higher on the Program for International Student Assessment (PISA), which tests 15-year-olds in reading, mathematics, and science literacy. They found that if scores increased modestly from the current average of around 500 to 525 over a 20-year period, the aggregate gdp of these countries would rise by $115 trillion over the lifetime of the generation born in 2010. More than one-third of that increase -- $41 trillion -- would accrue to the U.S. economy. Even allowing for the uncertainty of long-term economic projections, the effects of a sustained bump in student performance could be huge, dwarfing the swings of the regular economic cycle. And a better-educated work force would be more resilient in economic downturns. Education, in short, is the new game changer driving economic growth. The United States must educate its way to a better economy.


A generation ago, the United States had the highest proportion of college graduates in the world. Now, it ranks fifth among developed nations and is tied for ninth for rates of college completion among those aged 25 to 34. Although 58 percent of South Korean young adults and 56 percent of Canadian ones have earned at least an associate's degree, only 42 percent of young adults in the United States have achieved the same milestone. And unlike in many other developed countries, where the proportion of young adults with associate's or bachelor's degrees has soared over the last decade, the figure has flatlined in the United States. Young Americans have almost identical college completion rates as their parents.

This stagnation could cripple the U.S. economy and limit the chances of success for millions of U.S. workers and their families. With that in mind, President Obama, speaking at a joint session of Congress in February 2009, called for the nation to set the goal that "by 2020, America will once again have the highest proportion of college graduates in the world." Reaching this benchmark is the objective that guides and aligns the rest of the Obama administration's education reforms.

This goal is ambitious: to meet it, an additional eight million people will have to graduate from higher-education institutions in the United States over the next nine years. But it is also crucial for U.S. economic competitiveness. In June, the Center on Education and the Workforce projected that by 2018, the U.S. economy will need about 22 million more college-educated workers but that, at current graduation rates, it will be short by at least three million. With not enough Americans completing college, the center warned, the United States is "on a collision course with the future."

U.S. colleges and universities must do a much better job of getting students to graduation day. The United States still has one of the highest college enrollment rates in the world -- nearly 70 percent of U.S. high school graduates enroll in college within one year of earning their diplomas. But only about 60 percent of students who enroll in four-year bachelor's programs graduate within six years, and only about 20 percent of students who enroll in two-year community colleges graduate within three years.

Even with progress on this front, postsecondary institutions will not be able to reach President Obama's 2020 goal unless more adults with little or no college education complete college and more students graduate from high school. Currently, about one-fourth of ninth graders fail to graduate high school within four years. Among the OECD countries, only Mexico, Spain, Turkey, and New Zealand have higher dropout rates than the United States. Most U.S. students who do earn high school diplomas, moreover, are unprepared for college-level work; college entrance exams suggest that merely one-quarter of graduating high school seniors are ready for college, and 40 percent of incoming freshmen at community colleges have to take at least one remedial class during their first semester.


In this globalized economy, how well U.S. students perform compared to their peers in other high-achieving nations is a critical yardstick. Unfortunately, just as the United States falls behind these nations in college attainment rates, the academic achievement of younger U.S. students is also mediocre by comparison.

In a 2006 study of 30 OECD nations, 15-year-old Americans ranked 23rd on the PISA test for math and 25th on its assessment for science. Fifteen-year-old Canadians were on average well over one school year ahead of their U.S. peers in these subjects. U.S. students fared better in the 2007 Trends in International Mathematics and Science Study (TIMSS), which assessed the performance of secondary school students in 48 countries: eighth graders in the United States tied for sixth place in math and tenth in science. Still, the United States is nowhere near the top of the pack.

Some try to downplay U.S. students' lackluster performance by noting that the United States has a disproportionate number of low-performing, disadvantaged students. The 2007 TIMSS scores of eighth graders in Massachusetts, a high-performing state, would have tied for first in science with students from Japan, Singapore, South Korea, and Taiwan. U.S. students compare well as a whole with their OECD peers in elementary school, but once in middle school and high school, they slip behind their OECD counterparts. Instead of reducing achievement gaps between advantaged and disadvantaged students over time, public schools in the United States widen them.

These disparities are not primarily a matter of money. With the exception of Luxembourg, the United States spends more on a student in his or her elementary school years than any other OECD nation. As for secondary education, only Luxembourg, Norway, and Switzerland spend more per student. At the college level, U.S. spending per student (from both public and private sources) exceeds that of any other nation in the world.

Yet those developed nations that spend less per student than the United States typically channel more of their spending toward the most challenged students and to providing incentives to attract the best teachers to the most difficult classrooms. In the United States, in contrast, school funding is contingent in part on local tax levies that reflect the wealth of the surrounding community.

Public schools must do much more to reduce achievement gaps, both to enhance U.S. economic competitiveness and to fulfill education's promise as the great equalizer. There are more examples of schools closing achievement gaps today than ever before. But most schools in impoverished districts have not adopted the practices of high-performing schools. Isolated pockets of achievement are not enough. Success across entire districts needs to become the norm.


While the challenges to making U.S. public-school students more competitive are considerable, the American system of higher education is still in many respects the envy of the world. Its blend of top-ranked research universities, liberal arts colleges, comprehensive state universities, and a robust community-college system provides unparalleled access to students of all socioeconomic backgrounds.

In addition, the tradition of research universities was perfected in the United States, where they are leading centers of medical, technological, and scientific advancement. Unlike in many Asian and European countries, research funding in the United States is typically awarded to universities through a competitive peer-review process that is relatively free of political interference. The culture of academic freedom helps incubate the knowledge economy. It is no coincidence that major tech companies -- Cisco, Yahoo!, and Facebook -- began on U.S. college campuses. University graduates, moreover, provide the new economy's professional work force, and graduates of community colleges and technical schools fill jobs in high-demand fields, such as nursing, information technology, medical technology, Web design, and alternative energy development.

For all their strengths, however, U.S. postsecondary institutions will need to adapt to cope with new demographic realities. The days of the storied four-year residential college experience -- filled with dorm living and fraternity keggers -- are fading fast. Today, greater numbers of older students are pursuing retraining or lifelong learning, and most students work at least part time. At community colleges, almost half of the students are over the age of 24, and more than 40 percent work full time. And today's students, who grew up with cell phones, Kindles, iPads, and laptops, will seek technology-rich learning environments, online classes, distance learning, and electronic instruction. If U.S. postsecondary institutions can meet these demands, they would strengthen U.S. competitiveness in educational technology and electronic curriculum use, the STEM fields, and preparedness for the multicultural, multilingual economy. But many institutions have struggled to modernize and adapt, especially when it comes to assisting low-income students.

Technology has a vast untapped capacity to improve higher education and the K-12 system. The use of online courses, on-demand learning, digital simulations, three-dimensional modeling, visual aids, team teaching, and videoconferencing is expanding in U.S. schools, notably in community colleges. High-quality online instruction and tutoring, which are available to anyone in the world with an Internet connection, will break down silos among postsecondary institutions, expand personalized learning, and dramatically increase access to college-level education. One day, a young man on an impoverished reservation in Montana and a young woman in a remote village in Pakistan will both be able to access -- for little or no fee -- the same course in civil engineering.

To take advantage of new technologies, higher-education institutions will need to revamp a number of policies. The century-old practice of awarding degrees based on seat time in a classroom, rather than on demonstrated competence in a subject, is at odds with a world in which the Internet offers perpetual opportunities for learning. Many of the United States' four-year institutions, particularly the most selective, still rely too heavily on traditional academic practices. Few institutions give professors incentives to share teaching notes, lectures, research, or other pedagogic tools online. In western Europe, by contrast, a program called eTwinning pairs schools in different countries to facilitate peer-to-peer learning. A class in Germany studying French might be paired with one in France studying German. This is a classic example of how competitiveness can create mutually beneficial situations, since both France and Germany will gain from greater collaboration.


Few reforms are more necessary for reaffirming the United States' role as the world's engine for scientific discovery and technological innovation than strengthening education in the STEM fields, and President Obama has set a goal for U.S. students to move from the middle to the top of international rankings in science and math over the next decade. High school seniors in the United States are already earning more STEM credits than a decade ago, and many more college students are matriculating in these fields than 15 years ago. Last year, one-third of all white, Asian, black, Hispanic, and Native American full-time first-year college students reported that they planned to major in one of these fields, compared with less than one-quarter two decades ago. Still, students who indicate a desire to major in STEM disciplines are less likely to graduate than other students. And minority students in these fields have especially low success rates: only about 20 percent of black and Hispanic first-year students at four-year colleges who plan to major in a STEM field graduate with a related degree within five years.

Just as boosting the scientific and technological knowledge of students is an important step, strengthening their communication skills, creativity, and problem-solving capability is crucial. Employers repeatedly report that they seek college graduates with the ability to adapt, innovate, synthesize data, communicate effectively, learn independently, and work in teams. Just as regularly, they complain that U.S. postsecondary institutions fail to adequately develop these skills in students.

One such necessary skill is the ability to work with colleagues who speak other languages. Developing multicultural understanding requires students to study a well-rounded curriculum in history, the arts, and foreign languages -- and not just concentrate on English, math, and science.

In many developed countries, college students are fluent in two or more languages. In the United States, foreign-language instruction is inconsistent and on the decline. (The study of Chinese and Arabic languages is expanding but from a small base.) Only one in four elementary schools in the United States currently offers foreign-language instruction of any kind, and foreign-language study is a requirement for high school graduation in only ten states. Low-income and minority students in the United States particularly lag behind their peers abroad in their knowledge of languages, geography, and culture.

Even if public schools sought to offer foreign-language courses, a dearth of qualified instructors would hinder their efforts. During the 2007-8 school year, three-fourths of U.S. states reported shortages in foreign-language teachers. Teacher preparation programs at postsecondary institutions are failing to train enough new foreign-language instructors. In 2007-8, only 136 bachelor's degrees, 188 master's degrees, and 14 doctorates were awarded in foreign-language instruction nationwide.

"If you talk to a man in a language he understands," Nelson Mandela has said, "that goes to his head. If you talk to him in his language, that goes to his heart." U.S. schools and universities are doing far too little to teach students how to speak to the hearts of foreign neighbors and prepare them for work with colleagues from diverse cultural backgrounds. In 2002, just months after 9/11, U.S. postsecondary institutions nationwide awarded only six bachelor's degrees in Arabic language and literature. By 2008, the total had risen to 57 -- still far short of the nation's needs.


In the coming decade, the United States has a unique opportunity to reverse its declining economic competitiveness. The American Recovery and Reinvestment Act of 2009, the stimulus package enacted by Congress in February 2009, included nearly $100 billion for education, the largest investment of its kind by the U.S. federal government in history. It also granted the secretary of education more than $5 billion in competitive discretionary funding -- more than the total of all such funding provided to the Department of Education since it was established 30 years ago. Discretionary monies fund programs such as Race to the Top, Investing in Innovation, and School Improvement Grants, which help boost K-12 student achievement and readiness for college and careers and help turn around the nation's lowest-performing schools. The Obama administration has also sought unprecedented funding for STEM education. The 2011 budget proposed investing $3.7 billion in federal STEM education programs, including $1 billion for improving math and science achievement among K-12 students -- a funding increase of over 40 percent.

By ending subsidies to banks that had brokered student loans, the Health Care and Education Reconciliation Act of 2010 freed up more than $40 billion that will go to the Pell Grant scholarship program, which provides need-based grants to low-income undergraduates. This is the biggest increase in student aid since the 1944 GI bill. The act also granted $2 billion to community colleges to help them produce millions more graduates.

In addition to better funding, another transformational reform is the voluntary adoption by at least 35 states and the District of Columbia of the Common Core State Standards, which measure K-12 students' readiness for college or careers. For the first time in history, rigorous, internationally benchmarked standards for math and English will be applied to more than three-fourths of all U.S. public-school students. This will end some states' notorious practice of dumbing down academic standards to make students who are far from ready to enter college or start a career appear proficient.

But the federal government cannot revitalize U.S. education and the United States' economic competitiveness alone. More than 90 percent of spending for primary and secondary school education typically comes from state and local governments. They, along with businesses, higher-education institutions, and philanthropists, must all do their part to prepare U.S. students to compete in the knowledge economy. State policies and institutional practices in higher education are especially ripe for reform. Postsecondary institutions can no longer blame low graduation rates of minority students solely on socioeconomic factors when graduation rates for similar cohorts of minority students vary widely among institutions. For example, black first-year students at community colleges in Maryland are twice as likely as those in Louisiana to earn an associate's degree within three years. Demography is not destiny.

More than anything, strengthening the United States' economic competitiveness will require a sea change in the prevailing mindset among the politicians and voters who treat international competition exclusively as a threat. Economic competition should be a healthy inducement to learn from and collaborate with other nations. One of PISA's most encouraging lessons is that, over time, other nations have significantly narrowed achievement gaps and boosted educational achievement nationwide. Two generations ago, South Korea had the economic output of Afghanistan today and, if PISA had existed, would have ranked 24th in educational attainment among the OECD nations. Today, South Korea has the highest college attainment rate in the world among young adults.

In truth, the United States has much to learn from foreign competitors. Dennis Van Roekel, the president of the National Education Association, has noted that other developed nations are more successful at recruiting talented teachers, providing first-rate teaching preparation and professional development, and honoring the teaching profession. Unlike in the United States, in South Korea teachers come from the top ten percent of graduates -- and those who teach are viewed as making an important contribution to building their nation.

Learning from high-achieving countries is a two-way street. Chinese officials, frustrated with the relative lack of Nobel Prizes and patents obtained by Chinese, are seeking to emulate the creativity and innovation of U.S. institutions of higher education. The American tradition of free inquiry and peer-reviewed research is itself a winning advertisement overseas for American education and a tool for spreading democracy. As Tony Wagner, an education professor, points out in The Global Achievement Gap, there is a happy "convergence between the skills most needed in the global knowledge economy and those most needed to keep our democracy safe and vibrant." Asking good questions, solving problems, seeking to understand cultural differences -- all these civic traits are prized by employers, too.

The economic future of the United States rests not only on its ability to strengthen its education system but also on citizens in other states raising their living standards. Thinking of the future as a contest among states vying to get larger pieces of a finite economic pie for themselves is a recipe for protectionism and global strife. Instead, Americans must realize that expanding educational attainment everywhere is the best way to grow the pie for all. The virtuous cycle, not the vicious cycle, is the pathway to prosperity.

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