Risky Business
With the economic future of the U.S. tied to our public education system, business leaders are scrambling to push for change.
By James Daly

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Imagine that two-thirds of the packages FedEx absolutely positively promises to deliver by tomorrow morning never arrive. Imagine that one-quarter of all new iPods can't play music recorded after 1999. Imagine that Gap advertises to the masses but sells its clothes only to rich customers.

Now you have imagined the business equivalent of the U.S. system of public education.

Despite being the wealthiest country on Earth, America maintains a public education system in which 30 percent of high school students don't graduate, one out of every four reads below basic grade levels, and, compared to students from more affluent backgrounds, few of their low income counterparts are adequately prepared for college.

The dismal state of public education has become standard cocktail party chatter among parents (and references to shifting one's progeny to a private school as a means of dodging the problem are often part of the conversation), but business leaders, anticipating the far-reaching impact of such grim statistics, realize that something darker may be in store. If the U.S. economy had the same success rate with its products as our public educational system has with its students, they believe, our days as an economic powerhouse would be numbered.

"Education has many responsibilities other than aiding economic development -- developing moral citizens, civic responsibility, and self-realization," says Chris Dede, a professor at the Harvard Graduate School of Education (and a member of The George Lucas Educational Foundation's National Advisory Board). "But all those responsibilities are possible only if education provides the foundation for a prosperous future. Right now, that seems uncertain."

There's good reason to be nervous. The world economy is experiencing the largest laborforce migration in history. Driven by an environment that includes rapid technological change, instantaneous global communications, and sudden shifts in corporate fortunes, companies are moving jobs and money overseas. Some observers predict that in just a few years, millions of vacant positions will require workers with technical backgrounds. If they can't be filled here, they will be farmed out overseas.

"We are no longer a big fish in a small pond," says Navi Radjou, an analyst who covers innovation and the changing American economy for Forrester Research. "We are a medium-size fish in a big pond, and some of the other fish are sharks."

If America's economic power can be measured by the comparative skills of our students in international competition, recent results are worrisome. For example, in the 2003 Trends in International Mathematics and Science Study (TIMSS), U.S. fourth graders were compared to their peers in twenty-four other countries in math, finishing twelfth, and twenty-five other nations in science, taking sixth place. Among those countries outperforming American students in the TIMSS study were economic competitors such as Japan, Singapore, and Taiwan. Similar results occurred with eighth graders (see charts, page 45).

"Other countries see education as an investment, but we see it as a cost," says John Gage, vice president and chief researcher of Sun Microsystems's Science Office. "We're in a knowledge economy, and we've known about that for years. But for some odd reason, we take it for granted. That's fundamentally flawed."

Test scores aside, many U.S. adolescents don't make it past twelfth grade: Only sixty-eight out of every one hundred American ninth graders graduate from high school three years later, according to the National Center for Public Policy and Higher Education.

Yet there's an astonishing dearth of national action to bring needed change. Why? Some people say it's the lack of a single calamitous moment. There has been no Pearl Harbor, 9/11, or Hurricane Katrina to shock and rally us as a nation around education. However, the longterm effect of this unfolding crisis can be just as devastating as a single disaster. Says Norman Augustine, retired chairman and CEO of Lockheed Martin, during recent testimony to Congress, "Our situation is more akin to that of the proverbial frog being slowly boiled."

With so much at stake, smart business leaders are beginning to sound the alarm, organizing both governmental and grassroots efforts to increase the skills of students. Like anyone developing a business plan, they first gained a sense of the competition.

What they learned is that the fastest-growing economies, based on total investment in research and development, include China, Ireland, Israel, Singapore, South Korea, and Taiwan. Not coincidentally, some of these countries strongly emphasize high-quality education. China, for instance, is in the midst of an effort to transform its top universities into the world's best within a decade, and it is spending billions of dollars to woo big-name scholars and build first-class research laboratories.

"In places like China, Singapore, and Ireland, education is at the heart of their economic policy," says Dede. "What we really need to do is reverse-engineer the other countries."

It's an interesting idea, but a tricky one to execute. The U.S. education system poses some daunting organizational problems. Our fifty states are geographically dispersed, the students are racially and economically mixed, and hundreds of state and local boards of education have strong regional control -- issues unfamiliar to smaller countries whose educational systems are held up as exemplary.

For our nation to remain a player in the global economy, many observers urge that it reform its educational systems from kindergarten all the way through college and beyond. Market-based competition now comes from every corner of the world. Rising economies in Asia based on cheap natural resources and inexpensive labor have stripped the United States of its dominant role in manufacturing. Nationally subsidized research and development in Europe and Asia are eroding America's historical technological advantage. The evolution of the New Economy has led to job losses in manufacturing and industrial business and a surge of openings in areas such as services and technology. But these new jobs require different skills, many of which are not being taught in our schools.

"America's high schools are obsolete," Microsoft chairman Bill Gates said last year at the first National Education Summit, an extended gathering in Washington, DC, aimed at rallying state governors around high school reform. The Microsoft founder noted that "even when they're working exactly as designed, they cannot teach our kids what they need to know today. Training the workforce of tomorrow with the high schools of today is like trying to teach kids about today's computers on a fifty-year-old mainframe. It's the wrong tool for the times. Our high schools were designed fifty years ago to meet the needs of another age. Until we design them to meet the needs of the twenty-first century, we will keep limiting -- even ruining -- the lives of millions of Americans every year."

Dede concurs: "Our country is losing vital talent because our current educational system neither engages many students nor helps them succeed. Failure to address this problem will result in a dismal economic future."

Credit: Getty ImagesNew Skills for a New Century

Business leaders are going beyond simply mounting an enormous distress call. Some are writing enormous checks to assist in education. Gates, for instance, has put more than $700 million toward the redesign and reform of America's public high schools through a foundation formed with his wife, Melinda.

Much of the Bill & Melinda Gates Foundation's educational efforts are focused on teaching students the skills they'll need to be competitive. Many business leaders agree that education must align to a whole new economic model, one based on the new wealth creators of innovation and technological advance. In a knowledge economy, the biggest challenge for corporate management is the never-ending scramble for worker talent. These days, for employees that means having sufficient chops in science, math, and technology. The Center for International Studies argues that if the tech and math skills of U.S. students don't rise to meet the levels of their international counterparts (and future competitors) within five years, up to 7 million unanswered jobs in the United States will require some form of tech background.To most business leaders, that's a time bomb.

"The talent deficit is biggest threat to our future," says Richard Florida, a professor of public policy at George Mason University and an author of books on economic trends. "We're like the guy who has maxed his five credit cards."

Augustine, who chairs the Committee on Prospering in the Global Economy of the 21st Century, believes he has a plan that moves in the right direction. He recently unveiled a strategy called "Ten Thousand Teachers, Ten Million Minds." Its primary goal is to improve the skills of America's K-12 students in science, math, and technology by increasing the number of kids who take Advanced Placement science and mathematics courses. Among the specific steps proposed are the recruitment of 10,000 new teachers in those subjects each year through awards of competitive scholarships in math, science, and engineering that lead to a bachelor's degree accompanied by a teaching certificate -- and a five-year commitment to teach in a public school.

In his recent State of the Union address, President George W. Bush also sounded the alarm, proposing programs that would train 70,000 high school teachers to lead AP courses in math and science, and would bring 30,000 math and science professionals to teach in classrooms. "If we ensure that America's children succeed in life, they will ensure that America succeeds in the world," he said. While long on promises, however, the plan is short on specifics.

Other proposals abound. Dede, for instance, helped prepare "Transforming Learning for the 21st Century: An Economic Imperative," a white paper for the nonprofit Learning Point Associates, which calls for teachers to regularly bust out of their classrooms and visit high-tech workplaces. The document also proposes giving cash awards to teachers who help sharpen their students' tech skills, as well as a potentially tempting carrot for corporate America: the New Economy Learning Tax Credit, which benefits businesses that assist K-12 schools in helping their students prepare for the global economy.

Each of these plans also involves making parents more aware of the economic consequences for their kids should these lofty goals fall short. That's a smart move, say analysts. "We have to focus on aggressively marketing specific education tracks, with both the students and the parents," said Forrester Research analyst Navi Radjou. "Parents can have an extremely strong influence on what students are interested in and what they want to pursue as a career."

The Minnesota High Tech Association, for instance, encourages all students to take advanced mathematics and science classes. In a brochure, the group recently detailed how failure by their children to take those courses, especially algebra and physical science, would limit their career opportunities. The final kicker: Jobs with those skills pay significantly better than those without. Information-technology (IT) salaries, for example, pay an average of $65,000 a year, nearly 50 percent more than the real median U.S. household income of $44,389.

That's some of the driving allure behind Cisco's Networking Academy Program, an online-learning initiative providing high school students with the tech skills that bell ringers such as Gates claim they need. Cisco, working with such partners as Hewlett-Packard, offers courses on the fundamentals of networking security, Unix, and voice and video transmission. Students taking an introductory IT course, for instance, build a computer, install the operating system, add peripherals, and connect the machine to a local area network and the Internet.

Credit: Getty ImagesSchool to Career

Business leaders also are planning for the here and now. Cisco announced in October its 21st Century School Education Initiative (also called the 21S Initiative), a $40 million program that will help build state-of-the-art schools in areas crippled by Hurricane Katrina. Cisco CEO John Chambers insists that the goal of the effort is not just to rebuild the devastated schools but also to build better than before.

The company, which will begin with a $10 million investment in the Hattiesburg and Gulfport areas of Mississippi, installing wireless broadband with Internet voice, data, and video capabilities, will also help develop online curricula for several classes. Newly installed networks will link students, teachers, parents, and administrators, serving as models of twenty-first-century education. Cisco is even sending some of its employees down to Mississippi to work on the initiative.

Former Netscape CEO Jim Barksdale is already deeply involved in the state's educational reform. Several years ago, he gave $100 million to establish the Barksdale Reading Institute at the University of Mississippi.

Experts agree that this type of grassroots transformation of learning is key and can be further emphasized when educators engage in strategic partnerships with local businesses. Many schools, for instance, emphasize a school-to-career track, which emphasizes integrating realword vocational training into traditional book learning. (See "Not Your Father's Voc Ed," November 2005.) Such activities work well because their learning plans and projects -- jointly negotiated by students, teachers, and work-site supervisors -- connect the work teenagers do in their placements to academic content and skills.

At Trenton Central High School, in Trenton, New Jersey, for example, students in the school's Applied Engineering and Science Academy worked directly with the local gas and electric company and with nearby Mercer County Community College to prepare for careers in the utilities industry. Others partnered with engineers at the Sarnoff Corporation and with mentors from Princeton University to design and build a working robot to enter in a national competition.

Such efforts to get kids into business communities may go a long way in keeping the interactive generation motivated. Educators must not only learn how to use the tech toys and tools so many students take for granted but must also actively apply this same gear to engage them emotionally and prepare them for a career. Teaching about operating systems and programming language, for example, won't provide the necessary skills if those jobs are going to be outsourced. Instead, some of the smarter business schools and companies are emphasizing service sciences, a potentially potent blend of computer science, operations research, industrial engineering, business strategy, psychology, management sciences, social and cognitive sciences, and legal sciences to develop the skills required in a services-led economy.

Many economic visionaries say that though current situations are troubling, the game is far from over -- and in many ways has just begun. But it can be won only if business and education don't continue to act as if they're playing for opposing sides. "Everything comes down to education," Sun Microsystems's Gage says. "It must be at the absolute center of everything we do."

James Daly is editor in chief of Edutopia.