In the current economy, education is one of the major sectors that individuals are making their investments in. This is evident from the fact that both the parents and the government are investing huge sums of money into the education sector. This has made education to be considered a long-term investment for most people. The objective is that education would result in a significant economic outcome for its recipient. Currently the global economic situation is in a recession. This has negatively affected the desired economic outcome of the education. The discussion of this paper seeks to illustrate how educational outcomes are not comparable to economic outcomes due to the current global economic situation.
Ordinarily there should be a positive relationship between education outcome and the economic outcome. This means that an individual’s level of education should be proportional to his or her earnings. This is due to the fact that education is considered to be an agent that enhances economic development and growth of a particular country. In line with this the individual employees who contributed to the economic growth and development through the application of their educational skills should be proportionately rewarded. This means that there should be equity in the distribution of the economic outcomes to the individual workers (Kevin p.1). In the current economic situation, this is not the case. According to a study that was conducted in US on education by National Assessment of Educational Progress (NAEP), the survey indicated that approximately 33% of the students do not meet the intended level of competence while also 33% have just basic level of competence. It is only one-third of the students who are proficient (Kevin p.2).This depicts the education sector of the economy as being very inefficient. The repercussions of this are felt by the students in that they do not have the required competence to enable a comparable return on their investment in education.
On the other hand, employees seek individuals who apart from having the educational qualification have got some peculiar skills. This may be a result of failure of the educational systems in their instructional strategies. Some of these skills are innate to an individual. This means that the individual will be productive in the firm and the employees are prepared to reward them. This is because the firms perceive a higher economic value in such an individual. This is evident in some situations where there are employees who have lower qualifications than others and yet they earn a higher level of income than those with higher educational qualifications. This shows that there is a change of trend within the economy with regard to the relationship that exists between educational qualification of an individual and the income that he or she earns (Bhaskhran & Warren para.7).
The attainment of higher level of education is meant at increasing the chances of an individual being employed. Currently the global economy is in a recession which has resulted in increase in the level of unemployment. This means that the chances of even the educated getting the employment are minimal. Ordinarily, the educated should be able to prevail in their employment even during the recession period. Currently this is not the case since the slow economic growth has resulted in firms retrenching their employees. This is due to the fact that they cannot be able to sustain the high level of wages.
There are a high number of students who will graduate during the current economic recession. Very few of them will be able to get jobs in their specific area of specialization. This means that there is a possibility of them lacking a bargaining power when it comes to employment which will make them earn very low wages. According to Kahn, this effect of minimum wages may be felt even in the long term (Para. 2).This is due to the fact that as the economy continues to deteriorate there is a possibility of that individual remaining in that employment for a long duration.
Upon comparing the rate of unemployment between those who are educated and those who have not gone to school, it is evident that unemployment rate is high amongst the unemployed. In the recent past the economic situation has resulted in a rampant rise in the rate of unemployment even amongst the employed. This illustrates that comparable educational outcome does not automatically translate into comparable economic outcome.
The labor market is also characterized by intense competition. This has made it very difficult for qualified individuals to penetrate the labor market. According to Bhaskhran & Warren, in the recent past, it was very easy for an individual with a bachelor’s degree to be absorbed into the labor market but the trend has changed (Para. 6). This is due to the fact that due to the current economic situation, the economic growth is very slow. This discourages investors from making their investment which results in minimal job creation. This limits the available jobs in the job market while the number of competent graduates increases annually (Kahn para.3).
In the labor market, the earnings of employees are determined by an index in the labor market. This index seeks at determining the value of the employee. If the cost of hiring him or her is high, then his services will not be required. This shows that educational qualifications are not mostly considered in the determination of an employee’s level of earnings.
The economic outcome also depends on the industry where the individual is employed. Some of the sectors are very volatile to economic changes. This means that higher educational qualification does not directly translate into improved economic outcomes for the individual.
In conclusion education is a major investment both by the parents and the government. The objective of this investment is that it should result in higher economic outcomes for the individual. Despite this there are forces within the economic environment that hamper the outcomes. This means that comparable educational outcomes do not directly result in comparable economic outcomes.
In the recent past, the global economy has experienced economic recession. This has a negative impact on the labor market. This makes the qualified individuals not to be absorbed into the job market upon graduating. This has a long-term effect on their economic life since they are absorbed into other sectors that are not of their interest. The result is that they are paid low wages. Their mobility within the job market is reduced since they do not gain relevant skills within the job. The rate of investment declines which means that there is competition for the few jobs.
Comparable educational outcomes do not also result in comparable economic outcomes since most the employers seek peculiar skills in an individual which might be innate. This means that these individuals will be paid a higher rate of income compared to individuals who are educationally qualified and yet they do not have the required skills.
The determination of wages in the current economy is being standardized by using a market index. This means that despite an individual’s educational qualification, his or her wage will be subject to other determinants in the labor market.
Most of the firms are undertaking retrenchment strategies since they cannot be able to meet the employee’s wages. This has even affected those with high educational qualifications while in ordinary circumstances they should prevail even in bad economic times.
Works cited
- Hollenbeck, Kevin ‘Education and the economy’ W.W Upjohn institute for employment research, 2001.
- Lisa, Kahn ‘The consequences of graduating in a bad economy’. Journal of economics, vol. 4, 2009, pp. 5-6.Wales: University of Wales, 2009.
- Nair, Bhaskharan & Smart, Warren ‘ How does investment in tertiary education improve outcomes of New Zealanders ‘Social policy Journal of New Zealand. Vol. 31, 2007, pp. 3-6. Web.