Investing in education and training

THE FEDERAL GOVERNMENT HAS BEEN a vital partner in education for more than 200 years. Even before the Constitution was adopted, the Ordinance of 1785 set aside a section in every township in the new territories west of Pennsylvania to support a school. In 1862 the first Morrill Act authorized Federal land grants to States for the establishment of colleges. As World War II came to an end, a grateful Nation offered the G.I. bill, which eventually served nearly 8 million returning veterans—and fundamentally changed the educational landscape of the country. Today, Federal educational loans and grants open the doors to college for millions of students who could not otherwise attend, and Federal grants to low-income schools help more than 6 million children learn to read and to do math. Learning is a lifelong process, not limited to those between the ages of 5 and 25. From early childhood education to college to training for the unemployed, this Administration has sought to complement the efforts of State and local governments in responding to the new demands of the labor market. The Nation is in the midst of an educational renewal, and families, teachers, local school districts, colleges, States, employers, and the Federal Government all have a role to play in the transformation. The renewed Federal interest in education and training is in part a response to the two challenges outlined in Chapter 1: the slowdown in the growth of productivity and the increase in earnings inequality. Education and training policy is one of the few policy levers available to address both problems simultaneously. One of the most dramatic changes in our economy during the past 15 years has been the increased economic payoff to skills, as reflected in the increased inequality in earnings between high school and college graduates. In 1979 full-time male workers aged 25 and over with at least a bachelor’s degree earned on average 49 percent more per year than did comparable workers with only a high school degree. By 1993 the difference in wages had nearly doubled, to 89 percent. To the extent that this rise in the payoff to education reflects an increase in the value of skill, improving our schools and expanding access to postsecondary training stimulate economic growth. Based on estimates from the Bureau of Labor Statistics, the rise in the average educational attainment of the