Human Capital: Merely Buying Time
Published 7:00 am Saturday, April 4, 2015
The fact that the 2015 legislative session is drawing to a close with the status quo having been maintained may be viewed as a victory of sorts – but alas all indications are that it may be only a temporary reprieve. Just prior to the beginning of the current legislative session Senior State Economist Dr. Darrin Webb was interviewed by the Northeast Daily Journal of Tupelo. He was asked the question what is the biggest problem faced by Mississippi? His answer was simple yet profound and arguably quite accurate – the status of human capital in Mississippi.
There was a time prior to Dr. Webb’s comment when human capital was viewed as a term fit only for the policy wonks. If we give it a simple working definition the term human capital begins to make sense. If we define human capital as the value of a human being as he/she steps up to the pay window on Friday we open the door to consider all of the things that contribute to that worth or better yet that enhance the potential for an increase in that value. Certainly such a list would begin with education, health care, nutrition, housing adequate transportation and other items that would make for a robust employee. The cumulative value of human capital has everything to say about the nature of Mississippi’s workforce as we move forward in an increasingly more high tech world. The alarm bells are sounding in the night, however.
Consider the following conditions and predictions. Wall Street has been consistent lately in raising its estimates of the number of jobs that are going unfilled for lack of highly technical trained workers to fill them. That figure approaches 5 million now. Yet another prediction holds that by around 2040, forty-seven per cent of the manufacturing jobs now held by humans will be done by machines. The human who hold jobs will be those who invent and build the machines. How prepared is Mississippi to create this type of workforce?
Consider the following sampling of recent studies and rankings. The latest assessment of employment of the Pew Charitable Trust shows that Mississippi and Alaska were the only two states in the union to experience a net loss of jobs in 2014. Then there is the recent Standard and Poor assessment that the much discussed income inequality gap is “dragging the economy of Mississippi to a halt.” The Organization for Economic Cooperation and Development , as reported in the Washington Post, recently assessed the economic health of the states. Mississippi was in her customary last place among the 50 states ranking 49th as a state in which to earn a living, 50th in internet access, 50th in health care, 50th in job opportunities and the 49th most educated state. This OECD report was followed shortly by the largely conservative business periodical Forbes Magazine where Mississippi was ranked 50th as a state in which to do business. Indeed the crux of the Forbes criticism was centered around their perception of the lack of potential for the development of a capable workforce for the future wave of high tech manufacturing. But perhaps the most disheartening report of all was by the Schott Foundation which examined and compared high school graduation rates for African-American and Caucasian male students. Mississippi ranked 50th with an astoundingly anemic high school graduation rate of 51% for African-American males and a rate of only 63% for Caucasian males. In other words, 49% of African-American males and 37% of Caucasian males fail to graduate from high school in Mississippi. Enough of such depressing stories.
With the data alluded to above as a back drop there is little wonder educators and advocates of education funding recoil in horror at the news of efforts to pass major tax cuts at the state level. The reaction is similar when Mississippi policy makers join the chorus demanding major federal budget cutting in order to balance the federal budget whose revenues comprise over 40% of the Mississippi budget. Since Mississippi receives between $2.75 and $3.00 in federal dollars for every dollar we send to Washington, a combined major reduction in revenue generated at the state level with a significant cut in federal dollars headed to the states is a legitimate reason for panic by those concerned with enhancing the value of human capital in Mississippi. Indeed and ironically the only set of circumstances that would make these massive revenue cuts survivable would be a major expansion of human capital and hence a broadly increased value of Mississippi’s workforce.
Such cannot be accomplished until the task of climbing off of the bottom is underway. Development begins with early childhood and includes education, healthcare and so much more and it won’t be cheap or easy. The 2015 Mississippi legislature slowed the free fall but the train is gaining speed as it leaves the station. The new legislature in 2016 will have its work cut out for it.
Dr. Marty Wiseman is Professor Emeritus of Political Science and Public Administration and Director Emeritus of the The Stennis Institute of Government at Mississippi State University. His email address is email@example.com.