Kevin Peterson, who helped General Electric Co. (GE:US) redesign a tool to speed up the disassembly of gas turbines last year, is listed on the patent application as one of the inventors. Now, at the age of 20, he is working on a rocket-launch system in Alabama for Boeing Co. (BA:US)
Peterson, a rising senior at Virginia Polytechnic Institute and State University in Blacksburg, is one of the hottest new products in corporate America’s supply chain: a kind of futures contract on high-skill labor.
Faced with a wave of retiring engineers and scientists and the need for precise expertise, U.S. companies --including GE, Boeing, United Technologies Corp. (UTX:US) and Microsoft Corp. (MSFT:US) -- are reaching into colleges to make contact with students far earlier than they ever have. Their involvement extends to advising and shaping curricula so graduates can plug into jobs faster with less training time and cost.
Universities “need to provide our students with hands-on, real-world practical application from day one,” said Rick Stephens, senior vice president of human resources and administration at Boeing in Chicago. “So when they show up at the first job, not only can they find information, not only can they develop it, they can actually do real work.” Many schools “are getting that message.”
The corporate initiatives will help resolve a skill mismatch that’s contributed to persistently high unemployment since the 18-month recession ended in June 2009. The jobless rate has stalled above 8 percent for 40 consecutive months, rising to 8.2 percent in May from 8.1 percent in April, and U.S. employers created only 69,000 jobs last month, the fewest in a year. The unemployment rate for youth between the ages of 16 and 24 with a bachelor’s degree or higher has averaged more than 9 percent annually since 2009.
When the Labor Department released the jobs data on June 1, Treasuries rallied, driving 10-year yields below 1.5 percent for the first time. That’s a sign that long-term fixed-income investors see scant evidence of wage-driven inflation as the labor market fails to match workers with jobs -- a trend that’s contributing to a loss of the dynamism for which U.S. employment has long been known.
The stronger focus on applied learning in public universities such as Virginia Tech and Georgia Institute of Technology in Atlanta also is driven by the harsh economics of state budget constraints.
Despite alarms raised by policy makers about the need to develop a more educated American workforce, state legislatures aren’t coming up with the cash.
Taxpayer funding in Virginia has fallen 11 percent during the past five years per full-time equivalent student after adjusting for inflation, while enrollment has climbed 21 percent, according to data from the State Higher Education Executive Officers association in Boulder, Colorado. Funding in Georgia is down 23 percent in the same period, while enrollment is up 32 percent.
As taxpayer backing shrinks, costs shift to parents and students, who pay higher tuitions and take on more debt -- which makes the goal of monetizing education with a solid job more urgent.
Tuition and fees for in-state students at public four-year colleges and universities have climbed in the past decade at an average annual pace of 5.6 percent beyond the rate of inflation, according to the College Board. Student-loan debt jumped to $904 billion in the first quarter of this year, the highest in records going back to 2003 tracked by the Federal Reserve Bank of New York.
Steep payments for education loans hurt the economy, partly because they mean less consumer spending on purchases such as houses, President Barack Obama told an audience of students, faculty and local officials at the University of Nevada-Las Vegas on June 7.
American companies are standing up to help with money, advice and positions for job-seeking graduates. In return, they want schools to take a more active role in training and skill formation.
“We do see employers who are interested in having students who can come in and be productive right away,” said Ralph Mobley, director of career services at Georgia Tech. “Small to mid-sized companies, and even some larger ones, don’t have budgets for training like maybe they once did. They are looking to save some of that cost.”
While companies have for decades funded research and recruited at institutions of higher learning, they now are more involved in what students do in some four-year technical programs. They are making recommendations on curricula and influencing students’ skills as early as sophomore year, said Amy Slaton, a professor of history at Drexel University in Philadelphia.
“In the last five to eight years” industry and academic cooperation “has taken another notch up,” Slaton said. Bachelor’s-level engineers “are coming out with a more focused, practical education that serves industry really well.”
United Technologies partners with about a dozen U.S. universities and contributes about $5 million annually. The money may be in the form of a donated jet-engine part or cash that funds a lecture series. The Hartford, Connecticut-based company recruits at schools such as University of Connecticut and Pennsylvania State University for more than 1,000 internships a year.
“I want more than my fair share” of engineering talent, Louis Chenevert, chairman and chief executive officer of the aerospace and building-products manufacturer, said in an interview when asked about the return he gets on this investment. “We offer the best jobs in America to these people,” he said, noting that young engineers get a chance to work on “exciting stuff,” such as the Black Hawk helicopter, made by the company’s Sikorsky division.
While Slaton says she worries universities are becoming too vocational -- with “much of what we see getting produced as knowledge in the schools” starting from “an industry-related focus” -- students interviewed for this story weren’t complaining.
Peterson, the Virginia Tech student, said he structured his course work toward specializations that Boeing and GE need. When he graduates with a mechanical-engineering degree in 2013, he will have not only experience working at the two companies but also hands-on involvement with some of their top projects.
He says he sometimes wishes his classes took time to focus on the theoretical underpinnings of engineering. Still, “it makes sense for universities to prepare their students the best way they can for the workforce,” he said, adding that he knows of graduates from other schools who aren’t getting offers.
The number of U.S. job openings rose to 3.7 million in March, the most since July 2008, even with 13 million people out of work, according to Bureau of Labor Statistics data -- a sign that some of the unemployed may not have skills that fit employers’ needs.
Georgia Tech helped start the trend toward more corporate input into curricula in 2002, when the university hired Richard DeMillo, Hewlett-Packard Co. (HPQ:US)’s chief technology officer, as its dean of the College of Computing. He reorganized the curriculum between 2002 and 2005 with the intent of producing students better fit for industry.
The previous course load generated graduates who were less suited to jobs in entertainment, health care and computer security, he said. The new program allows students to choose “threads” that allow them to mix computing with literature or animation so they might be attractive to movie or gaming companies such as Walt Disney Co. (DIS:US) and Electronic Arts Inc. (EA:US)
“It was really a conversation with lots of Georgia Tech stakeholders, though mainly firms, about what would you like to see,” said DeMillo, now a distinguished professor of computing at the university. Microsoft, Intel Corp. (INTC:US), Hewlett-Packard and International Business Machines Corp. (IBM:US) executives all offered advice. “I really deconstructed conversations I had had with fellow CTOs over the previous three or four years about what was going on in academia and what would be helpful.”
Jennifer Tour Chayes, managing director of Microsoft’s computer-science and software-engineering research facilities in Cambridge, Massachusetts, said “the attitude has really changed” as universities become more receptive to corporate input. She has urged colleges to provide students with both technical skills in computer science or mathematics plus expertise in an unrelated field, such as sociology, economics or biology.
“The training is certainly better today,” she said. Some graduates in the past “were not prepared for the kinds of jobs we had to offer.”
For some students, the firmer handshakes between companies and colleges are paying off. Aurel Lazar, 21, changed his focus from academic research when he learned more in his Georgia Tech classes about the computer industry. After graduation, he took a job with Microsoft in March.
“The major tech companies will come to the school and talk about their research almost every week,” he said. “Microsoft and Google are practically part of the College of Computing.”
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