Americans scored well below the international averages in three skill areas in tests given to adults in 24 countries. The Organization for Economic Cooperation and Development (OECD) released the results of its first survey in early October.
You might be surprised by the results on the Program for the International Assessment of Adult Competencies (PIAAC) exam:
More about the PIAAC Exam
The goal of the Survey of Adult Skills (PIAAC) test is to provide insight into the availability of basic skills in society, as well as how they are used at work and home.
 In 2011 and 2012, OECD tested about 166,000 adults aged 16 to 65 in these countries and sub-national regions: Australia, Austria, Belgium, Canada, the Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, Japan, Korea, the Netherlands, Norway, Poland, the Russian Federation, the Slovak Republic, Spain, Sweden, the United Kingdom, and the United States.
Top performers include Finland and Japan. More than 20 percent of the Finn and Japanese testers read at high levels (Level 4 or 5 on the Survey of Adult Skills). By comparison, only 11.5 percent of U.S. test takers read at such high levels. Other top performers include the Netherlands, Sweden and Australia.
Weak performers include Italy and Spain, where more than 30 percent of those tested scored the lowest levels for both literacy and numeracy (Level 1 or below on the Survey of Adult Skills). |
- Americans ranked 16th out of 23 industrialized countries in literacy (written text).
- We scored 21st out of 23 in numeracy (numerical and mathematical concepts).
- In the "problem solving in technology-rich environments" test, the U.S. ranked 17th out of 19 countries.
Which countries scored the highest? Japan and Finland far surpassed the United States. (See right- hand box for more about various country results.)
Weak U.S. Test Scores
After reviewing the PIAAC scores, Joseph B. Fuller, a senior lecturer at Harvard Business School's Institute for Strategy and Competitiveness, paints a dismal picture of America's ability to compete in a global economy:
"The [PIAAC] results show that the U.S. has lost the edge it held over the rest of the industrial world over the course of Baby Boomers' work lives. We had a lead and we blew it. We have a substantial percentage of the workforce that does not have the basic aptitude to continue to learn and to make the most out of new technologies. That manifests itself in lower rates of productivity growth, and it's productivity growth that drives real wage growth."
Two trends in U.S. basic workplace skills are especially sobering:
- Our numeracy scores are among the lowest in the world. Almost 30 percent of Americans tested received the lowest possible scores (Level 1 or below). Worldwide only 19 percent of those tested scored this low.
- Americans entering the workforce are no more skilled than older workers.Normally, literacy, numeracy and problem solving skills peak around age 30 and decline over time, according to the OECD. The oldest age groups generally display lower levels of proficiency than the youngest. But that's not true in the United States. Improvements in workplace skills are barely apparent between younger and older generations.
In numeracy, U.S. workers performed near the global average when comparing the overall proficiency of people aged 55 to 65 years. But young Americans don't hold a candle to their global peers. Americans aged 16 to 24 years scored the lowest in numeracy among all participating countries. We also have the smallest proportion of 16 to 24-year-olds who received top scores (Level 2 or higher) for problem solving in technology-rich environments.
Our relative inferiority is not necessarily because performance has declined in the United States, the OECD notes. Instead, it's because performance has risen much faster in many other countries across generations. This trend signals a marked decline in the competitiveness of U.S. workers of younger generations compared to their peers in other countries.
Skill Distribution Gap
Results among U.S. workers varied significantly across socioeconomic and education levels, as well as across different occupations. Americans with jobs that demand high levels of literacy, numeracy and technology problem-solving skills -- including managers, doctors and lawyers -- tended to outperform their peers in other countries.
But other Americans -- even those with college and graduate degrees -- tested behind their global peers.
As middle class jobs become increasingly complex, the average U.S. worker may not have the requisite skills to fill these roles. Those left behind may wind up unemployed and collecting various government benefits that burden the national economy.
Workplace Skills and Quality of Life
Worldwide, the OECD correlates test scores with an individual's ability to earn wages and secure employment. It reports that the median hourly wage of workers with high literacy scores is more than 60 percent higher than for workers who can only read relatively short texts. Those with low literacy skills are also more than twice as likely to be unemployed.
Even worse, the OECD found that underperformers on the test tend to:
- Report poor health;
- Believe that they have little impact on political processes;
- Not participate in associative or volunteer activities; and
- Distrust others.
How Employers Can Respond
From a business owner's perspective, this study could explain why it's hard for some U.S. employers to find and retain skilled workers. You may need to think outside your immediate geographic market to improve your supply of skilled workers. For example, a high-tech company located in a rural environment might consider employing remote employees (who work from home offices) to tap into a larger labor pool. Or when hiring, consider going global, say, to Canada, where the PIAAC results show skill-levels are higher.
Also, make better use of the existing labor pool in your area. Consider people who temporarily left the workforce, such as adults who earned a college degree later in life or former stay-at-home parents. And don't forget retirees who want to work part time.
Companies that can't find skilled workers might have to create their own through on-the-job training and flexible off-site continuing education. Employers that believe in their employees and provide lifelong learning opportunities engender loyalty, improve productivity and lower turnover.
Tax Benefits for Private School
If you have doubts about the efficacy of the education system in your area, you're not alone. U.S. Secretary of Education Arne Duncan released the following statement about the PIAAC test results:
These findings should concern us all. They show our education system hasn't done enough to help Americans compete -- or position our country to lead -- in a global economy that demands increasingly higher skills.
People concerned about the quality of their children or grandchildren's education might opt for private education starting at the K-12 level. But "going private" can be costly.
There's no federal tax "voucher" for private school costs. (Many states offer tax credits to offset private school costs.) There are some possible federal tax saving opportunities:
Coverdell ESAs
Coverdell Education Savings Accounts (ESAs) can be used to pay a student's eligible K-12 expenses, as well as post-secondary expenses. A non-deductible contribution of up to $2,000 per year can be made to a Coverdell ESA.
Amounts deposited in the account grow tax-free until distributed. Distributions are tax-free as long as they're used for qualified education expenses, such as tuition and fees, required books, supplies, equipment and qualified expenses for room and board.
Contributions to Coverdell ESAs are phased out if your modified adjusted gross income exceeds $95,000 ($190,000 for married joint filers). No exclusion is permitted if your MAGI is above $110,000 ($220,000 for married joint filers).
Another Option
Grandparents and generous extended family members can pay an unlimited amount of education expenses without incurring gift taxes or tapping into their unified federal gift and estate tax exemption. The catch is that the donor must pay expenses directly to the school, rather than reimburse the parent for paying the expenses.
Child and Dependent Care Credit
Just as with public schools, the portion of private school fees you pay for before and after hours school programs may qualify for the child and dependent care credit. This credit can be worth up to 35 percent of your qualifying costs for care, depending upon your income.
You can claim up to $3,000 of the total costs if you have one qualifying child. If you have two or more, you can claim up to $6,000 of the costs. |
This 1.3 percent figure for below average performance is the same across categories, from non-exempt employees to managers and executives. This suggests one of two things.
Here are some basic questions for taxpayers about what they should do during the shutdown, along with answers from the IRS.
