More Education Alone Won’t Fix Flat or Declining Wages, But Appropriate Compensation and Stable Job Markets Can 
Make College Worth It
by Dean Prigelmeier, President of Proactive Technologies, Inc.
Having several degrees myself, I can say that I am a strong believer in higher education. I sometimes take issue with the quality and relevancy of courses or degree programs, but I would always encourage an individual to consider the value of acquired knowledge to their life plans and the additional doors it may open.
I say this even though many of us who have achieved a higher degree silently questioned how much of their degree really mattered, or how much was forgotten for lack of application when an opportunity to apply it came along too late.
click here to expandAll said, two major trends influence my need to add a caveat to my encouragement to pursue higher education. First, be aware of the endless increases to the cost of higher education and, second, be cognizant of the instability of target job classifications and careers that not only renders a two or four-year degree irrelevant but, today, may leave the graduate empty handed and swamped with student loan debt. Even if the graduate is able to find a job it their expected field, the shock of unexpectedly low and flat wages may harness them to an unfulfilling job for life and sliding backward with all-consuming debt.
According to the Huffington Post, the cost of a college degree in the United States has increased “12 fold” over the past 30 years, far outpacing the price inflation of consumer goods, medical expenses and food. Referencing a Bloomberg study, college tuition and fees have increased 1,120 percent since records began in 1978. Using a chart to explain its findings, Bloomberg reports that the rate of increase in college costs has been “four times faster than the increase in the consumer price index.” It also notes that “medical expenses have climbed 601 percent, while the price of food has increased 244 percent over the same period.” Additionally, according to the National Center for Education Statistics, since 2013 the tuition costs continued on its upward path.
While education costs have skyrocketed and with student loan debt reaching $1.5 trillion, wages for graduates have continued to stay flat or decline. While it is still true that advanced degrees have a tendency of leading to higher starting wages and higher wage caps for the field, the number of fields this still holds true for are dwindling as these jobs are redefined, relocated or staffed with foreign workers invited to work for less. This makes working out of student loan debt slow, laborious in itself and often impossible. Read More
“Realistic Job Previews” Can Be a Useful Tool for Measuring a Prospective Employee’s Transferable Task-based Skills
by Stacey Lett, Director of Operations – Eastern U.S. – Proactive Technologies, Inc.
The hiring process can be difficult for both the employer and the prospective employee. A wrong decision can cost each party a lot of time, money and opportunity. An unwanted outcome based on the employer not providing an accurate picture of the job, work environment and work expected to be performed can be avoided with a “Realistic Job Preview.” (“RJP”).
Wikipedia points out that “Empirical research suggests a fairly small effect size, even for properly designed RJPs (d = .12), with estimates that they can improve job survival rates ranging from 3–10%. For large organizations in retail or transportation that do mass hiring and experience new hire turnover above 200% in a large population, a 3–10% difference can translate to significant monetary savings. Some experts (e.g., Roth; Martin, 1996) estimate that RJPs screen out between 15% and 36% of applicants.
click here to expandWhen RJPs are less effective, “According to researchers there are four issues that challenge RJP:
1. Recruiters do not share RJPs during interviews. (Rynes, 1991). Read More
Education-Employer Partnerships That Work
by Frank Gibson, Workforce Development Advisor, retired from The Ohio State University – Alber Enterprise Center
A lot is being said these days about “employer-responsive” worker training programs. I think all educational institutions want to believe they have all the answers to all of the challenges employers face. Although I have found that we had many of the answers for many disciplines, it was important to realize our limitations and either find other resources to fill the gap or be truthful with the client so that they might look elsewhere for those answers and solutions.
While a program manager for The Ohio State University – Alber Enterprise Center, which I worked at since its early beginnings in 1996, I learned the value of listening to the employer and providing them what they needed. The Center was founded on the premise of providing educational and technical consulting services to business enterprises throughout the region to help them grow and prosper. Whether to help them train their workers to the latest in technical skills or train their management on the latest management theories and best practices, the Alber Center assembled an extensive network of institutional and private training providers to meet their needs and continued to expand their network to help employer-clients maintain their competitive best.
click here to expandWhile we felt The Center did a good job of providing foundation skills for all levels of an operation, we recognized that an educational institution cannot, and really should not, provide employer-specific, task-based training. It is not economically feasible for The Center to maintain the staff and expertise to service every small, medium and large enterprise in our region on processes that are unique to each. It takes a high level of maintained excellence to perform the necessary job and task analysis, develop the employer-specific training materials, train the employer’s staff to effectively implement structured OJT and mange this “systems approach” to build on the foundation our other programs provide.
The Alber Center realized it could partner with such an organization, Proactive Technologies, Inc., early on in 1996 to provide that level of service to its customers in a partnership that provides “turnkey” project services to employers. This approach combined related technical instruction provided by OSU-Alber Center and its network of specialists and structured on-the-job training provided by Proactive Technologies and its staff. Employers that The Center worked with over the years had been not only receptive, but some clients had continued to utilize this approach for over 20 years. And today, many of these visionary employers realize that they were among the first to embrace and implement an approach for which other employers still to this day only wish and hope to experience.
I retired from the Alber Center in 2016 but continued to partner with them on projects of mutual interest as I began my own consulting business. The Ohio State University made the decision to close the Alber Center in 2020.
Today, I continue to help employers, and local and regional government agencies, with workforce development projects, often partnering with Proactive Technologies, Inc. Their approach to worker development may be unique in its comprehensiveness, but its practicality and efficiency is still a “no-brainer” for CEOs and General Managers. Read More
Appreciating the Value of Labor
by Dean Prigelmeier, President of Proactive Technologies, Inc.
For expanding and improving businesses that have the capital for the investment in new equipment or processes, attempting to become or remain competitive, the level of investment is not as important as the return on that investment. This consistent practice of determining where to best place capital for the highest return should apply to labor. What is “paid” for labor is not as relevant as the value it adds to the operation and, ultimately, profit; the return on worker investment.
The lack of appreciation for the difference between a “training cost” and a “training investment” is understandable because it is rarely contrasted. The college textbook entitled Financial Accounting: An Introduction to Concepts, Methods and Uses, defines “direct labor cost” as the “Cost of labor (material) applied and assigned directly to a product; contrast this with indirect labor cost.” Indirect labor cost” is defined as, “An indirect cost of labor (material) such as supervisors (supplies).” There is no mention of an expected return on investment. Generations of cost accountants have been taught that there is no good that comes for higher labor costs, which to them is determined by the level of staffing and wage levels. There is no differentiation between strategic labor costs and uncontrolled labor costs.
click here to expand“The profit from, and value of, most worker’s labor comes from task-based work, so all inputs that drive workers to high-performance, high-capacity output are investments.”
As discussed in many articles in past issues of the Proactive Technologies Report, although labor costs are considered direct costs from an accounting standpoint, they should be more importantly considered as an investment in the operation’s overall level of competitiveness. Operations may vary as to the level of return on investment from labor, but each worker’s cumulative expertise gained while employed becomes an asset to the operation akin to intellectual property and, therefore, wages and compensation paid to develop a worker are an investment.
As many operation managers have found out, drastic moves like reducing the wage rates by 20%, 30% or more, while expecting to maintain the same output quantity and quality, chases off the workers with the gained technical expertise…because they can leave. Read More
Read the full March, 2021 Proactive Technologies Report newsletter, including linked industry articles and online presentation schedules.
Proactive Technologies, Inc.®; PROTECH; Human Resource Management for Tomorrow...Today!® and logo;