Caterpillar workers at the company's recently expanded plant in East Peoria.
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At the Caterpillar factory line in East Peoria, yet another important trend of the new normal is on display: labor bifurcation. Extremely cheap workers--robots--now do much of the tedious, physically demanding welding at the plant. Other work is done by high-end technicians, many of whom need computer skills to manipulate the robots. The number of human employees hasn't actually decreased over the past few years as the firm has added robots, but their skill level has increased. Welding is no longer a job for someone with only a high school degree. It's something that requires advanced in-house training or a community-college certification.
This situation is a microcosm of the global labor market. Even as Apple recently announced it would work with its supplier Foxconn to cut hours and boost pay for laborers in its Chinese factories, Foxconn itself has plans to deploy about 1 million new industrial robots in factories across the Middle Kingdom over the next three years. Chinese workers are getting more expensive, with pay rising about 17% a year, but their productivity isn't increasing quite so fast.
That's one reason the Boston Consulting Group estimates that within five years, as many as 3 million manufacturing jobs could come back to the U.S. But they won't be old-style, cheap-labor jobs. They'll be high-skill, high-demand positions.
Indeed, 63% of U.S. jobs will require postsecondary training by 2018. The U.S. economy will create more than 14 million new jobs over the next 10 years, but only for workers with at least a community-college degree. These jobs--for people like dental hygienists, electricians and entry-level software engineers--would allow millions of people to move from living on the edge to being middle class. The problem is that a low percentage of college students in the U.S.--30% at four-year colleges and 1 in 4 at two-year colleges--finish their degrees.
Some of that is about money, but it also reflects a relative lack of effort in the U.S. to connect educators with companies, particularly compared with what's being done in growth machines like Germany. The result is a mismatch between degrees and jobs that some economists, like Harvard's Rosabeth Moss Kanter, believe is responsible for as much as a third of the increase in unemployment since the Great Recession.
Tech-oriented community colleges with links to industry are an obvious solution, and the Obama Administration's latest budget proposes $8 billion to fund such institutions. But political gridlock has stalled the proposal. So businesses like Caterpillar and Siemens are taking matters into their own hands, setting up programs with local community colleges. (Cities, take note: these programs can be job magnets. Caterpillar set up an engineering design center in South Dakota because of a strong community-college system there.) High-tech service companies like Microsoft, Cisco and IBM are starting six-year combined high school and community-college programs designed to churn out qualified midlevel employees. One such program, P-Tech, a public-private partnership led by IBM, has been adopted by Mayor Michael Bloomberg of New York City and Mayor Rahm Emanuel of Chicago as part of an effort to boost employment and growth. Expect private companies to take on an even greater role in education while local leaders become major economic actors.