In a closed-door meeting at a Manhattan mansion, executives outlined changes to controversial software that was implicated in two crashes.Aerospace & Defenseread more
The one-to-eight stock split would mean the current number of ordinary shares — which stands at 4 billion — will increase to 32 billion. It comes ahead of a reported Hong Kong...Asia Marketsread more
Current and former Tesla employees working in the company's open-air "tent" factory say they felt pressure to take shortcuts to hit aggressive Model 3 production goals,...Technologyread more
Minutes from the Reserve Bank of Australia's monetary policy meeting in July showed the central bank was ready to adjust interest rates if required.Asia Marketsread more
The findings by McKinsey and Company come amid a year-long tariff fight between the U.S. and China, which has spilled into areas such as technology and security.China Economyread more
President Donald Trump and the RNC are picking up key supporters in the business community who did not back him as a candidate in 2016.2020 Electionsread more
Amazon workers in Minnesota and Germany are striking as Prime Day kicks off, in a stand against working conditions and wage practices. The action in Minnesota represents the...Retailread more
Treasury Secretary Steven Mnuchin is raising red flags ahead of Facebook's proposed cryptocurrency launch.Marketsread more
Beto O'Rourke's campaign for the 2020 election raised just $3.6 million in the second quarter of this year, putting him in the lower tier of candidates who have struggled to...2020 Electionsread more
Epstein is accused of sexually exploiting dozens of underage girls from 2002 through 2005 at his New York and Florida residences. He is a former friend of Presidents Donald...Politicsread more
When you think of Prime Day, you might be thinking about deals on Instant Pots and Amazon Echo devices — not half-off dresses and designer heels. But the market for apparel...Retailread more
Additional trade schools, and not four-year college degrees, may be a better bet for U.S. workers, according to new economic research.
The amount of vocational training available relative to the size of a country's manufacturing sector may reduce income inequality, and improve the fortunes of workers earning below the top 10 percent of household incomes, the data show.
"Pushing more students to B.A. granting colleges may no longer be the most efficient way to deal with the challenges caused by the decline in manufacturing employment," wrote Joshua Aizenman, the economics chair at University of Southern California. He did the research with academics at New Zealand's Victoria University of Wellington.
And declined it certainly has.
In September 1977, about 18.3 million people, or more than 18 percent of the U.S. labor force, worked in U.S. manufacturing. Forty years later, that number has since slipped to 12.4 million, or less than 8 percent, even as the general U.S. population has surged to 326 million, U.S. Census figures show.
US workers in manufacturing (in thousands)
Source: U.S. Bureau of Labor Statistics
But while one might suspect that fewer workers would mean decreased output, real gross domestic product (GDP) manufacturing has actually risen over the past two decades, leading to a popular conclusion that machines have simply replaced labor in the workplace.
Real GDP: Manufacturing (millions of dollars [chained to 2009])
Source: U.S. Bureau of Economic Analysis, retrieved from FRED
Also of note: Manufacturing's share of GDP trickled downward, as automation spread and the economy shifted toward service.
Manufacturing share of total GDP
*The value added of an industry, also referred to as gross domestic product (GDP)-by-industry, is the contribution of a private industry or government sector to overall GDP.
Source: U.S. Bureau of Economic Analysis, retrieved from FRED
It has long been assumed that a college degree leads to higher average income, what some might call the college premium. But even with this hypothetical edge, some students will earn less than average. And they might even lose money if the burden of college debt undermines the income boost that comes with a bachelor's degree.
"There are serious questions about the future trends of the college premium," Aizenman told CNBC in an email. "Providing cheaper and better vocational education and re-training will provide the marginal workers with useful options."
After studying data from the World Wealth and Income Database, OECD and Eurostat, the researchers concluded: "As manufacturing sector becomes more important in a country's income, relatively unskilled laborers benefit from access to vocational education, thereby narrowing the income gap with skilled labor."
To answer how that conclusion can be applied in the U.S. given manufacturing's decline as a percentage of the labor force and share of GDP, the researchers did a case study of manufacturing industries in the U.S. and Germany.
Source: OECD, Aizenman et al.
Manufacturing employment has fallen in both countries, yet in Germany, manufacturing's value added has stayed around 22 percent in the last 20 years.
Of note: The share of workers with upper secondary education in Germany exceeds that of the U.S. by about 15 percent. However, the share of workers with post-high school education in the United States exceeds that of Germany by about 17 percent.
Germany's education system, the researchers said, better fits the needs of modern manufacturing, which requires more upper-secondary and vocationally trained labor.
In the U.S., on the other hand, "there are too many four-year colleges serving too many students, and too few institutions with greater focus on vocational education and training," Aizenman said.
"Chances are that better vocational education access and its quality in the U.S. would increase the income of the workers that are in manufacturing, and probably would reduce the overall income inequality in the US," he added.
Note: Working papers have not been peer-reviewed or been subject to review by the NBER Board of Directors that accompanies official NBER publications.