Who Needs Harvard? Amazon University and Other Options

For more than a decade, ever since I served on the Spellings Commission on the Future of Higher Education, I have wondered: where is the American business community in higher education reform? Doesn’t it realize that the extremely inefficient existing way in which we certify competency for most managerial, technical, and professional jobs ultimately raises employment costs, making it less competitive in the global marketplace? I have made pleas literally in the halls of the U.S. Chamber of Commercefor greater business involvement.

College is mainly a screening device, separating those with intelligence, discipline, honesty, good communication skills and good work ethics from those with fewer of those desirable attributes. In most cases, graduates use very little that they learned in the classroom directly in their work. Given rising college costs, we need to find cheaper, better ways of certifying competence, both in identifying the best future workers, but also in training them for specific tasks.

Wage and salary data make it perfectly clear that a majority of the “human capital” that workers acquire comes from on-the-job training and experience. Companies are in the education business informally whether they like it or not. For decades, some companies have had formal training programs and some have even sponsored university-level training. In the golden age of American automobile manufacturing, for example, General Motors owned the “General Motors Institute,” which stressed engineering studies and a co-op model where students combined traditional learning with lots of practical experience. Similarly, for more than 50 years, McDonald’s Hamburger University has offered management training to thousands of mid-level-and-above managers, not offering degrees but certification that the trained individuals are knowledgeable about how McDonald’s runs its operations. Indeed, nearly all large businesses have some formal training for new entry-level workers.

Now Amazon is entering the fray, not offering college degrees (the importance of which is being increasingly questioned anyway by some in the business world), but rather practical training for ultimately 100,000 employees. The technology used by Amazon is constantly evolving, so it needs to continuously train workers in productivity-enhancing procedures. This suggests a new employment norm might evolve: businesses test potential employees to see if they are functionally literate, and also check their high school performance to see if they are likely reasonably intelligent and disciplined. Then the firm hires the worker and gives them training—sometimes a few weeks, maybe many months or even years. The employee signs a multiyear contract giving her or him some job security and the company is assured at least some return on its human capital investment. College may, or may not, be at least partially circumvented.

Alas, there are some wrinkles to be worked out if this is to be a widespread model. Most important, the use of employer testing to see who are potentially trainable workers could run afoul of the unfortunate 1971 U.S. Supreme Court decision in Griggs v. Duke Power Co. and subsequent legislation making employers fearful of using testing because it could be used to “disparately impact” minorities. Politically, the same progressive politicians who have hounded many for-profit higher education operators out of business could try to block business attempts to more aggressively enter the education business in perceived competition with allies in the university community that provide them with both intellectual ammunition and considerable financial support.

Why should employers start their own training programs? They can hire good high school graduates at salaries well below what they pay college graduates, and invest less than the salary differential into training that they offer cheaper than colleges because they don’t need umpteen diversity or sustainability coordinators, student life administrators or many of the other expensive forms of bureaucratic bloat permeating American higher education. To be sure, much college learning occurs outside the classroom, particularly on residential campuses, and also recent high school graduates are less mature and experienced in making life decisions. Still, for many jobs, the Amazon approach seems wise—offer on-the-job training on a systematic basis, perhaps having employees work part-time on simple, low-skilled tasks while they simultaneously are trained for more skilled and remunerative activities. In doing so, more people will join the growing crowd just saying no to higher education.