The question we need to ask ourselves is, what skills will help workers earn the most?
In his State of the Union address, President Obama spoke directly to the need to create more high-wage jobs. “I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last," he declared. "This blueprint begins with American manufacturing."
But if Obama’s blueprint for prosperity begins with manufacturing, it can hardly end with it.
The good news is that the United States is on track to add nearly four million new blue-collar jobs between 2010 and 2020, according to projections by the U.S. Bureau of Labor Statistics. But the vast majority of these jobs, 2.7 million, will be in construction and transportation.
America will add just 357,000 jobs in “production” over the decade, as the share of Americans who actually make things is projected to fall from 6 percent in 2010 to 5.5 percent by 2020.
And, not all manufacturing jobs are good jobs - far from it. The average pay for production workers is just $33,770.
Part of the problem is that many of the manufacturers that are bringing jobs back to America have instituted two-tier pay systems in which new workers make much less than their senior colleagues.
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Overall, the economy is on track to generate more than 20 million new jobs by 2020, according to the BLS. And nearly 55 million existing jobs will open up as a result of retirements or workers changing jobs and careers.
Some seven million of those new jobs will be good, high-paying ones in the knowledge, professional, and creative class sectors – including science and technology, management, and the arts. By 2020, those knowledge, creative and professional jobs, with an average pay of $70,890 today, will make up a third of the workforce.
Not all of those jobs require an advanced degree or even a college education. While roughly three-quarters of college grads do this kind of work, four in ten knowledge workers – 16.6 million of them – do not have college degrees, according to a study by my University of Toronto colleague Kevin Stolarick and Elizabeth Currid-Halkett of the University of Southern California. Simply doing knowledge-based and creative work boosts wages by 16 percent, about the same as another 1.5 years of additional college, according to research by economist Todd Gabe.
The U.S. will add even more jobs, nearly 10 million of them, in much lower-wage, lower-skill service work. Two of the fastest-growing job categories – healthcare support operations, which is projected to grow at nearly three times the national average, and personal care and service occupations, which will likely grow at roughly twice the national pace – pay just $24,760 and $20,640 respectively. By 2020, nearly 80 million Americans, almost half (48.2 percent) of the total workforce, will be employed in low-wage service jobs.
The growing salary divide will only worsen America's inequality. The only real solution is providing workers with the skills they need to turn their low-wage, low-skill jobs into better-paying, higher-skill ones.
The manufacturing jobs that pay best today look a lot more like knowledge work than traditional factory work. In fact, high-paid manufacturing work – guiding and maintaining advanced machinery, engaging in problem solving, and continuous improvement with other workers and engineers – increasingly is knowledge work.
"If you look at what people are doing in manufacturing today, they are running robots, designing tools, programming computers," Judith Crocker, director of education at the Manufacturing Advocacy & Growth Network, or MAGNET, a manufacturing promoter in Cleveland, recently told a reporter from the Cleveland Plain Dealer.
This is true across the board, in every kind of job. When my colleagues and I parsed the data on the hundreds and hundreds of jobs that make up the U.S. economy, we identified key skills that matter to wages.
The first is well-known – "analytical or cognitive skill," of the sort most people associate with knowledge work. While it is certainly the case that doctors, computer scientists, and software engineers earn more money based on their cognitive skills, analytical skill has an even bigger effect on wages for both blue-collar and service workers.
But the skill with the biggest effect on wages is the "social intelligence skill." Much more than being friendly or outgoing, it includes the ability to help develop people, to organize them around goals, to recruit and lead teams and mobilize the right people for a project – the cornerstones of leadership and effective management that add to organizational productivity.
Even more than with analytical skill, social intelligence increases the wages of knowledge workers but of blue-collar and service workers as well.
President Obama is right – America does need a new economic blueprint. But it needs one that focuses on the jobs and skills of the new century – not one that looks back romantically at a category of jobs that no longer exists in substantial numbers.
A 21st century job machine will bolster the skills that lead to higher wages and better jobs. That means tapping the full creativity of every worker—not just knowledge workers, but those who man the factories, take care of our homes, prepare our food, and provide personal care.