Penny-wise, pound-foolish.  This expression seems to describe well the discussion about American jobs.  While there is an ongoing debate about immigrants taking low-paying jobs that most Americans don’t want to do, a large number of high-paying jobs are going to India and other countries because companies can’t find enough people with the right knowledge, skills and education to perform these jobs in the US.  A college education is becoming more inaccessible to the average American each day, but this crisis is mostly being ignored.

About a year ago Microsoft announced that it was investing $1.7 billion over a period of four years to expand operations in India.  Oracle announced his year that it was expanding its work force to 10,000 in India.  Both IBM and EDS announced around the same time that they would be employing thousands more in India, as they cut jobs in the US.  Similar announcements were made by many large American high-tech companies.  So why are these companies creating jobs in India instead of offering jobs in their home base?  It is because of a very simple economic concept called supply and demand.

It is true that labor is much cheaper in India, and obviously this is a factor that influences the decision to create jobs there.  But this is not the only factor.  India is home to a very large, talented, skilled, and highly educated workforce. That is what attracts these companies.  The tendency is for the cost of labor to increase in India as their standard of living increases.  But even as the low-cost advantage starts to become less significant, India will continue to be attractive to employers for the very simple reason that they have a large supply of highly talented and educated people which meet the needs of these companies, while the supply of similar skills in the US is getting lower every year.  Ask any American CIO about the challenges of finding Information Technology talent in the US, and you will realize the magnitude of the problem.  How can this problem be solved?  The answer is education.

CNN reported on a warning by the National Conference of State Legislature that there is a crisis in American higher education that is being largely ignored by the nation.  Access to a higher education is shrinking and this has significant implication for the country because other countries are starting to catch up. The bipartisan group of legislators described the problem as follows: “The American higher education system no longer is the best in the world. For every 100 ninth graders who enter high school, only 18 finish college within six years.”  The report says that due to its increasing cost, college is becoming more inaccessible, especially to those students that are in the low income ranges.  It highlights that the poorest individuals in the US only have an 8% chance of obtaining a college degree.

According to the College Board, college tuition has risen 35% in the last 5 years, more than twice the rate of inflation.  Yet, Pell Grants which used to cover the entire cost of a public education barely cover one third of the cost these days.  Why is the cost of a higher education rising at twice the rate of inflation?  Professors certainly are not getting large pay raises every year.  USA Today reported recently that firing football coaches can cost colleges millions.  Alabama’s firing of Mike Shula before the end of the season will cost the school $4 million to buy out his contract.  Is this a clue to what may be going on in the schools? Are university funds being disproportionately spent on hiring and firing coaches instead of focusing on education?  Are schools turning into athletic clubs, and worrying more about winning football trophies than preparing young people for the future?

The CNN report stated that the legislators recommended that states and the federal government need to increase public funding for higher education, rather than continuing to shift the cost to students and their parents.   Lou Dobbs concluded:  “The idea that only 18 out of 100 students entering high school make it through college over a six-year period, that’s so astounding. The very idea that with all of these great state-funded and taxpayer-funded universities and colleges across this country, that we can’t do better than that is shameful.”  Public funded universities need to do a better job of managing their cost and stop this never-ending cost increase insanity that is robbing young people from an opportunity to get an education.

Why is this crisis that is so critical to America’s future mostly being ignored?  It seems that many people prefer to believe in illusionary fairy tails rather than face reality. 

We can’t build walls to keep high-paying jobs from going overseas.  In a global economy, and with the power of the internet, the only safeguard against loosing high-paying jobs is to be ever more competitive, strengthening the skills of the workforce so that companies like Microsoft and Oracle will choose to offer more jobs domestically instead of searching for talent elsewhere.  Any country that wants to compete in the global economy must invest in and recognize the value of education. Anyone who falls for the illusion that doing well in school is irrelevant in putting the future at risk.  Education is the key to success, both at the individual level as well as for an entire nation.