A new book declaring the end of the golden age of economic growth has set the wonky world of economics aflame. Robert Gordon’s The Rise and Fall of American Growth juxtaposes the world-altering impact of 19th century inventions with a disbelief that today’s digital transformation might foster growth on the same scale as refrigeration, aviation or the birth of telecommunication.
A digital skeptic, Gordon argues that byte-based developments aren’t likely to dramatically improve our standard of living. But as Gordon also points out, innovations often manifest themselves in unanticipated ways. The impact of refrigeration on the meat-packing industry and nutrition was clear; its role in boosting iron productivity by reducing moisture in blast furnaces, less obvious.
We’re currently seeing a similar phenomenon in higher education. When we look back on the innovations of the early 21st century, online learning may not warrant more than a footnote. However, the convergence of new forms of learning with unprecedented labor market data may prove to be an engine of economic growth on par with Gordon’s favorites.
Economists like Gordon are fond of criticizing China for its top-down misallocations of physical capital, but few think deeply about the misallocation of human capital — and potential for realignment — within our own economy.
In recent history, unemployment/under-employment has been an economic anchor. The challenge has several facets: matching workers with jobs, aligning workforce capacity with employer demand and creating pathways for training that enable the workforce to adapt and recalibrate over time.
Hiring has been an art more than a science, with signals like degrees and social networks distorting a market already starved of objective data. As a result, employers still hire candidates who are a poor fit and fail to improve, and job-seekers over-invest time and money in education programs that are unlikely to lead to a desirable employment outcome.
But that is beginning to change. Skills bootcamps in high-growth areas like web development and digital marketing are already helping thousands of learners develop skills — and land high-paying jobs. Universities are abandoning vestigial constraints on time, like the credit hour, and are developing programs more tightly coupled with employer demands.
The skill gap between what our education systems produce and what employers demand is a data problem.
These signs are a precursor to a more fundamental shift. At its core, the skill gap between what our education systems produce and what employers demand is a data problem. Real-time data on the actual skills of job seekers doesn’t exist. Employers haven’t been able to express the competencies they actually require, and educational institutions haven’t demonstrated the competencies they impart.
Today, nearly 70 percent of all job openings are posted online — close to 4 million new job openings are posted online every quarter. Natural language processing and the semantic web means that resumes, transcripts, test results and job descriptions are increasingly online and machine-readable.
Employers can evaluate whether a job candidate has mastered the competencies required for a job. Job-seekers can assess the skills employers value and identify the most direct path toward their acquisition. And by tracking the performance of new hires by competency profile, job descriptions and qualifications are getting more specific and exact.
The human capital revolution becomes a powerful new force for economic growth when we begin to see marketplaces for competencies that pair a candidate’s skills and abilities with increasingly sophisticated analytics capabilities of employers.
Employers will sift through terabytes of data to identify candidates who may be a match and begin engaging them early on, perhaps with internships or projectships. Or candidates will identify and enroll in competency-based educational options to achieve target competencies for dream careers.
This is not the stuff of science fiction. Just recently, CareerBuilder CEO Matt Ferguson announced that the largest online job site in the U.S. would begin to share real-time, labor-market intelligence with Capella Education Company. Together, they plan to develop sub-$1,000.00 accelerated courses that offer students the chance to upskill and compete for high-paying tech jobs.
According to LinkedIn CEO Jeff Weiner, the Internet giant is already creating such a marketplace for the 40 million college students and recent graduates on its platform. In the not too distant future, he explains, LinkedIn will have a “profile for every member of the global workforce, a profile for every company in the world,” and a “digital representation of every job and every skill required to obtained those jobs offered through those companies.”
Their acquisition of Lynda.com was just a start. Weiner’s plan calls for the creation of a massive course catalog, of sorts, to include an ecosystem of higher educational organizations or universities that might enable one to obtain relevant skills. In doing so, he argues, LinkedIn “will lift and transform the global economy.”
It is a fair bet that employers will be enthusiastic at the prospect of data-driven-based hiring, rather than relying on opaque degrees in order to qualify candidates.
Employees will celebrate, as well. For the first time, they will have a GPS for their own human capital development. Students will be able to ascertain which educational programs are likely to pay off. Those that don’t, will fail.
Equally important, as they progress in their educational program, they’ll understand their evolving zone of proximal development, which might cause them to veer in a direction that will make them more productive, happier and wealthier.
Better-off employers and employees signals higher productivity and stronger economic growth. Let’s hope that Gordon needs to make some amendments and corrections in a few years when the next edition of his book comes out.