1. America’s Perfect Storm
Irwin Kirsch ETS
National Press Club
Washington, D.C.
February 5, 2007

2. Three Forces Are Changing Our Nation’s Future
Inadequate literacy and numeracy skills among large segments of our student and adult populations
An ongoing shift in the demographic profile of our population, powered by the highest immigration rates in nearly a century
The continuing evolution of the economy and the nation’s job structure, requiring higher levels of skills from an increasing proportion of workers
Research we’ve conducted here at ETS allows us to track the progress of the storm and project that it will gather strength over the next quarter-century if existing trends continue.
Far from being a transitory phenomenon, it will continue to feed on itself, threatening the nation with widening inequality and a reduced standard of living
And if left unchecked, this storm could transform the American Dream into an American Tragedy
The good news is that storm we are describing here this morning differs in one crucial respect from the one described by Sebastian Junger in his 1997 book, The Perfect Storm. This storm is not being driven by unstoppable forces of nature. By recognizing the magnitude of the threat that it poses, we could muster the political and economic will to take the decisive actions that are needed to moderate its impact.
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3. what will happen, but give us the determination
Let us not be content to wait and see
what will happen, but give us the determination
to make the right things happen.
— Horace Mann
What I like best about this quote from horace mann is that even though it was written more than 150 years ago it is just as relevant today because today we find ourselves standing at a crossroads where we can stand by and wait to see what will happen or we can muster the political and social will to take decisive actions that can help mediate its impact
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4. Inadequate Skill Distributions
Skill distributions play a prominent role in this presentation not only because they are strongly associated with key social and economic outcomes, but also because they are associated with these outcomes over and above the effects found for educational attainment alone. In fact, one can argue that foundational skills such as reading and numeracy which enable an individual to learn across the lifespan and, thus, to adapt to changing work conditions and societal demands are the most critical.
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5. National Adult Literacy Survey (NALS, 1992)
Literacy surveys conducted by ETS have represented literacy along scales divided into 5 levels. National and international committees have judged that skills in Levels 3 and higher are needed for participation in modern societies.
National Adult Literacy Survey (NALS, 1992)
A number of large-scale national and international surveys of adults have been conducted over the past two decades using both the framework and methodology developed here at ETS. These surveys present literacy along several continua each having five levels.
Less Proficient
More Proficient
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6. Literacy skills are related to highest level of educational attainment.
350
336, graduate degree
322, 4-year degree
308, 2-year degree
Level 3
300
294, some college
270;268, HS Diploma; GED
Level 2
250
231, 9-12 years of schooling
Level 1
200
177, 0-8 years of schooling
< Level 1
150
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7. Adults in Levels 3 and higher had a better than 90 percent chance of passing the GED.98 88
Percentage Passing GED 58 27 **
Level 1
Level 2
Level 3
Level 4
Level 5
SOURCE: The Literacy Proficiencies of GED Examinees: Results from the GED-NALS
Comparison Study. (1995). Baldwin, J., Kirsch, I., Rock, D., & Yamamoto, K.
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8. Percentage of Adults 16-65 Years Old at:
Half of America’s adults lack literacy skills needed for the 21st century.
All Adults
Asian
Black
Hispanic
White 35 30 20 14 41 13 9 3 17 28 33 49 12 32 44
100 80 60 40
Percentage of Adults Years Old at:
Level 1
Level 2
Level 3
Levels 4/5
National surveys of our adult population indicate that large percentages of our nation’s adults, 16 years of age and older, do not demonstrate sufficient literacy and numeracy skills needed to fully participate in an increasingly competitive work environment. These skills are also needed to function effectively in our complex society with its large bureaucratic institutions and its complex legal, health care and retirement systems.
Equally disturbing is the fact that these skills are not evenly distributed across groups defined by race/ethnicity, nativity, and socioeconomic status. In fact, there are substantial differences in the distribution of proficiencies among these groups that impact their social, educational, and economic opportunities. For example, Black, Hispanic and Asian adults are significantly more likely to perform in the lowest level on the prose scale when compared with White adults. The percentage of Hispanic adults who demonstrate proficiency in the lowest of the five literacy levels is four times that for White adults (49 compared with 12 percent). Among Black adults, this ratio is 2.8 times, while for Asian adults it is 2.3. Not surprisingly, therefore, much smaller percentages of these three racial/ethnic groups demonstrate skills in the highest two levels on the prose scale. Here we see 17 percent of White adults perform in Levels 4/5 compared with only 3 percent of Black and Hispanic adults and 9 percent of Asian adults. (Chart 2 in presentation)
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9. High school graduation rates peaked at 77% in 1969 and have remained in the 70% range since 1995.
Graduates as a Percentage of 17-Year-Old Population
One might argue that while concerns about current gaps in literacy and numeracy are understandable, the present focus on educational improvement, the institution of national and state standards, along with increased spending on K-12 education ensure that the gaps are closing. Unfortunately, recent reports on high school graduation rates, as well as on performance in reading and mathematics suggest otherwise.
The percentage of high school graduates as a percentage of our 17-year olds peaked at 77 percent in 1969, fell back to 70 percent in 1995 and has stayed in this range into the current decade. The graduation rate for disadvantaged minorities is thought to be closer to 50 percent. A recent report by the OECD indicates that the U.S. ranked 16th out of 21 OECD countries with respect to high school graduation rates.
Note: Graduates are of regular day-school programs. Source: U.S. Department of Education, National Center for Education Statistics
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10. Average achievement gaps in both reading and math have remained stubbornly unchanged.
1984
1994
2004
White-Black
Age 13 26 31 22
Age 17 32 30 29
White-Hispanic 33 24 27
Math
1986
1996 28 19 25 23 21
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11. U.S. Rank Among 29 Countries
The U.S. is not among the world’s leaders in any area of educational achievement.
Math
Reading
Science
U.S. Average Score
483
495
491
OECD Average
500
494
U.S. Rank Among 29 Countries
24th
15th
20th
Looking beyond our borders, international surveys like PISA show that in no area of achievement is the US among the world’s leaders in terms of average educational output or yield at age 15 despite the fact that we are among the world’s leaders in per-pupil spending.
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12. Shifting Demographics
The second force involves sweeping demographic changes. The population of the U.S. is projected to grow from nearly 300 million in 2005 to more than 360 million in Over this period, our population will become increasingly older and more diverse, with immigration and birthrates having a significant impact on the composition of the workforce, as well as of the general population.
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13. America’s labor force will grow more slowly over the next 20 years, with almost none of the growth expected to come from native-born workers.
Growth
Growth
Natives, 25-54, All races
26.7
0.0
Natives, 55+, All races
2.7
13.3
Immigrants
9.3
6.0
TOTAL
38.7
19.4
America’s labor force is projected to grow more slowly over the next 20 years than it did between 1980 and 2000, with almost none of the growth coming from native-born workers of prime working age.
Note: Numbers represent millions of adults.
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14. Immigration is projected to account for more than half of our population growth between now and 2015.
Time Period
Population
Growth
(millions)
Net
International
Migration
Net Immigration as a
Percentage of
Population Change
April 2000-July (Actual)
15.0
6.3 42
Projected
13.4
6.7 50
Projected
7.1 53
During the 1980s, international migration accounted for some 21 percent of our nation’s population growth with its contribution rising to 31 percent in the 1990s. Between 2000 and 2015, the U.S. Census Bureau expects net international migration to account for more than half of our nation’s population growth.
Source: U.S. Census Bureau, web site,
Note: (1) Sum of net international migration is for the period only since new immigrants
in 2005 are included in the population count for that year.
(2)Sum of net international migration is for the period only since new immigrants in 2010
were included in the population count for that year.
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15. Immigration patterns have changed dramatically over the past 100 years
Immigration patterns have changed dramatically over the past 100 years. New immigrants to the U.S. are quite diverse with respect to their country of origin.
100%
80%
Asia
Central/South America
60%
Proportions
Canada
Europe
40%
Australia and New Zealand
Africa
Not surprisingly, new immigrants to the US are quite heterogeneous. As reflected in this graph immigration patterns have changed dramatically over the last 100 years. Not surprisingly perhaps, immigrants are also quite diverse with respect to both their educational backgrounds and English language skills.
20% 0%
1820–1940
1951–60
1971–80
Years
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16. Educational Attainment
Between 2000 and 2004, new immigrants entered the U.S. with a broad range of educational backgrounds.
Educational Attainment
Number (millions)
Percentage
1-12 years, no diploma
1.7 34
high school diploma or GED
1.1 23
13-15 years .8 15
Bachelor’s degree 17
Master’s or higher degree .6 11
Total
5.0
100
Among new immigrants 18 and older living in the US in 2004, approximately 1/3 lacked a high school diploma while another 28% held a Bachelor’s degree. Among Hispanics the distribution was considerably different. 62% of the immigrants from Mexico and Central America lacked a high school diploma compared with only 9% of those from Europe. In contrast, 46% and 56% of new immigrants from Europe and Asia respectively held a BA or higher degree compared with only 6% of those from Mexico and Central America.
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17. 80% of new immigrants without a high school diploma report that they do not speak English well or at all.
Educational Attainment
Only
Speaks
English
(%)
Very Well
English Well
Does
Not Speak
Not Speak English (%)
1-12 years, no diploma 6 9 32 47
High school diploma or GED 16 19 36 21
13-15 years 30 24
Bachelor’s degree 14 28 17 5
Master’s or higher degree 11 48 27 12 3
Total 10 22 26 23
Of greater concern is the fact that educational attainment is correlated with English language skills. For example, almost 80 percent of immigrants without a high school diploma report not speaking English well or at all. This compares with only 22% having a BA degree and only 15% have a Master’s degree or higher. In addition, they score on average more than a full standard deviation below their native born counterparts on recent assessments of literacy and numeracy.
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18. Educational Attainment Master’s or higher degree
44% of births to women under 30 are out of wedlock. The majority of these births take place among women with either no high school diploma or no postsecondary education.
Educational Attainment
Total
Births
Out-of-Wedlock
Percentage Out of
Wedlock
<12 or 12, no diploma
563,288
350,847
62.2
12 years, diploma or GED
743,151
381,060
51.3
13-15 years
666,328
242,920
36.7
Bachelor’s degree
268,238
33,669
12.6
Master’s or higher degree
62,313
2,691
4.3
All
2,298,318
1,011,077
44.0
Trends in family formation in the United States also play a role in the observed inequality in education and family income. Findings from the 2004 American Community Surveys indicate that at least 44 percent of all births to women under age 30 were out-of-wedlock. Among African-American mothers in this age group, this proportion reaches almost 77 percent. The vast majority of these out-of-wedlock births have taken place among women with either no high school diploma or with no post-secondary education.
Source: 2004 American Community Surveys; public-use files; tabulations by authors.
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19. A Changing Economy
The third force comprises the seismic changes in our economy that have resulted in new sources of wealth, novel patterns of international trade and a shift in the balance of capital over labor. These changes have been driven by both technological innovation and globalization, resulting in a profound restructuring of the workplace. Indeed, the labor markets of today are markedly different from those of earlier decades.
For example, In 1950, manufacturing’s share of total employment was 33.1 percent. By 1989, it was down to 18.2 percent and by 2003, it was 10.7 percent.
In the future, the formidable challenge facing our country will be obtaining access to higher earning opportunities as opposed to just finding or obtaining a job.
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20. change in millions of adults
Jobs associated with college-level skills and education accounted for two-thirds of the job growth between 1984 and 2000.
Occupational group
1984
millions
2000
Absolute
change in millions of adults
Percentage
change
All 16+
105.0
135.0
30.0
29.0
High literacy
34.0
54.0
20.0
57.0
Moderate literacy
70.0
80.0
10.0
14.3
High skilled:
Professional
Managers, executives and management support
Technical
Sales
High level
Low skilled:
Sales Lower level(2)
Administrative support
Service workers
Farm, forestry, fishing
Precision production, craft/installation, repair
Production workers and transport operatives
Laborers, helpers, cleaners
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21. change in millions of adults
Jobs requiring high levels of education and skills are projected to account for almost half of the job growth over the next decade.
Occupational group
2004
millions
2014
Absolute
change in millions of adults
Percentage
change
All 16+
146.0
165.0
19.0
13.0
High literacy
49.0
58.0
9.0
18.0
Moderate literacy
97.0
107.0
10.0
High skilled:
Professional
Managers, executives and management support
Technical
Sales
High level
Low skilled:
Sales Lower level(2)
Administrative support
Service workers
Farm, forestry, fishing
Precision production, craft/installation, repair
Production workers and transport operatives
Laborers, helpers, cleaners
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22. Comparative differences in the annual earnings of U. S
Comparative differences in the annual earnings of U.S. adults have widened for those with higher levels of education and higher levels of skills.
Year
HS grad to
HS dropout
Some college
B.A.+
top skills to
top skills
avg. skills
low skills to
low skills
1988
1.38
1.20
1.58
1.69
1.01
1.14
1997
1.31
1.81
1.68
1.35
1.18
2001
1.17
2.01
2.22
1.47
1.29
One important consequence of this shift in the composition of jobs in our country has been the increasing economic returns to schooling and skills. For example:
The average earnings of young adults with 16 or more years of schooling in 1988 were just 58 percent higher than those of high school graduates. By 2001, adults with 16 or more years of schooling were obtaining average earnings that were twice as much as their peers with a high school education.
The premiums accruing to a particular level of educational attainment (e.g. high school diploma, bachelor’s degree) are substantially larger for the individuals at that level with higher cognitive skills, indicating that both education and skills each contribute to individual opportunities. These opportunities include not only higher paying jobs but also the chance to enhance and broaden their skills over their working lives through employer-sponsored training.
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23. Wage and salary earnings reflected a shared prosperity through 1975
Wage and salary earnings reflected a shared prosperity through Between then and now we have seen a growing inequality.
Percentage Change in Earnings Since 1961
Tabulations of annual March Current Population
Survey Data, by David Ellwood, Harvard University.
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24. What might the future look like?
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25. Distribution of Literacy Scores Found in the National Adult Literacy Survey (1992)
70 million adults
in Levels 1/2
A number of large-scale national and international surveys of adults have been conducted over the past two decades using both the framework and methodology developed here at ETS. These surveys present literacy along several continua each having five levels.
Less Proficient
More Proficient
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26. Average literacy scores are expected to decline between 1992 and 2030, with an increase in the amount of inequality.
70 million increases
to 119 million
in 2030
When we combine demographic projections with current skill distributions, we estimate that by 2030 the average levels of literacy and numeracy in the working age population will have decreased by about 5 percent while inequality will have increased by about 7 percent.
Over the next 25 years or so, as better-educated individuals leave the workforce they will be replaced by those who, on average, have lower levels of education and skill. Over this same period, nearly half of the projected job growth will be concentrated in occupations associated with higher education and skill levels.
Tens of millions more adults will be less able to qualify for better paying jobs. Instead, they will be competing not only with each other and millions of newly arrived immigrants but also with equally (or better) skilled workers in lower wage economies around the world.
The formidable challenge for Americans will not be finding jobs, it will be finding ones that pay living wages and provide opportunities.
Less Proficient
More Proficient
Less Proficient
More Proficient
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27. Average earnings of men years of age have decreased for all except those attaining the highest levels of education, resulting in greater inequality.
1973
1989
2004
% Change
ALL
$27,618
$22,852
$20,700
-25
Education
<12 yrs, no diploma
22,686
15,998
16,000
-30
HS diploma/GED
30,819
22,854
21,000
-32
13-15 years
28,018
26,756
25,000 -9
Bachelor’s degree
35,390
36,565
35,000 -1
Master’s or higher
40,826
38,088
45,000 10
Note: Earnings are in 2004 dollars.
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28. Percent among adults who are now 36-43 years old
Reading and math scores in high school have a strong influence on the likelihood of completing 16 or more years of schooling.
Percent among adults who are now years old
Decile
All
Men
Women
White
Black
Hispanic
Total
26.46
25.77
27.18
30.25
14.92
14.57
2nd
2.20
1.73
2.72
0.67
4.26
2.60
4th
8.84
6.40
11.04
6.26
15.07
12.94
6th
15.35
9.01
20.95
13.61
26.54
19.91
8th
32.75
31.49
33.98
33.05
44.13
10th
76.15
75.76
76.72
76.53
72.13
79.47
Once consequence of the perfect storm is that education, skills, and economic opportunities are more closely tied together.
The uneven growth of educational and economic outcomes threatens both our economic potential and our democratic ideals.
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29. Divergent Skill Distributions Demographic Shifts Changing Economy
We have reached what in my opinion is a crossroads which brings us back to the quote from horace mann. We can either stand by and wait to see what will happen or we can take decisive actions to make the right things happen.
Unlike the storm written about by Sebastian Junger, this one is not being driven by unstoppable forces of nature. By recognizing the magnitude of the threat that it poses, we could muster the political and economic will take serious actions that will be needed to moderate its impact.
If we fail to take decisive actions now, neither our economy nor our society faces imminent collapse. However, we are likely to witness a more subtle danger, in which we find ourselves slowly losing ground relative to other countries while becoming more socially and economically divided in the process. And, if this happens, more than our nation’s standard of living will be at stake. In his book The Moral Consequences of Economic Growth, Benjamin Friedman links our economic well being to the fabric of our society. He reasons that individuals and societies are more trusting, more inclusive and more open to change when they see their futures and those of their children as bright and secure.
Changing Economy

30. For more information contact: Irwin Kirsch ETS Princeton, N.J. 08541
Office: (609)
For Media Inquiries contact:
Tom Ewing
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