Are Cognitive Workers in Oversupply?

Make sure you go to college—because these days, you may well need a diploma to flip burgers.

That is the picture drawn in a working paper by Paul Beaudry and David Green of the University of British Columbia and Benjamin Sand of York University in Toronto. “After two decades of growth in the demand for occupations high in cognitive tasks, the U.S. economy reversed and experienced a decline in the demand for such skills,” they write. This reversal happened more than a decade ago, around 2000.

They add that all of this has rippled down the skills chain, affecting low-skilled workers by “pushing them out of jobs that have been taken up by higher-skilled workers displaced from cognitive occupations.” In other words, although it doesn’t take a college education to be a sandwich maker, those openings are now going to applicants with a college degree.

According to a story in Bloomberg Businessweek, the study was to be examined this week by economists at the National Bureau of Economic Research. “If it stands up,” the magazine averred, “a lot of economists and policy makers will be forced to rethink their assumptions about the role of education in fixing unemployment.”

Peter Drucker felt that shifts in population dynamics often created this sort of trouble. “We face a growing mismatch between jobs and available labor supply,” he observed in Frontiers of Management, published in 1986. “Both are changing, but in different, often opposite, directions. As a result, the job openings increasingly do not fit the available people. In turn, qualifications, expectations and values of people available for employment are changing to the point where they no longer fit the jobs offered.”

For much of Drucker’s career, many unskilled American workers made nearly as much as skilled workers, but, for all that, Drucker never wavered in his confidence that education pays off.

“There will…be no permanent oversupply of educated people,” Drucker asserted in his 1957 book Landmarks of Tomorrow. “On the contrary, the more there are, the greater should be the demand for them. … The development of educated people is the most important capital formation, their number, quality and utilization the most meaningful index of the wealth-producing capacity of a country.”

What do you think: Has the demand for knowledge workers really peaked?