Our calculation of the expenditures Michigan businesses make in order to address the lack of basic skills is based on a survey of 113 employers.13 Those 113 businesses employ 118,840 workers in Michigan, representing 4.1 percent of the 2,896,268-employee statewide workforce, according to the U.S. census. To encourage participation and honest responses, employers were promised anonymity. However, we can disclose that the respondents included a wide variety of Michigan businesses, some with more than 10,000 employees and others with fewer than 10.
Those businesses reported spending a total of $1,637,817 teaching their workers basic skills such as reading, writing, and arithmetic during their most recent fiscal year. This works out to an average of $13.78 per employee, including senior-level management with advanced degrees and workers with years of experience with the companies. While the amount spent teaching each new hire is considerably higher, dividing the total amount of money by the total number of employees allows us to generalize from our sample. If we extrapolate this rate of spending to the entire state we arrive at a total figure of nearly $40 million spent per year by Michigan businesses to teach their workers how to read, write, and perform basic math operations.
Businesses report spending much more on technology to make up for their employees' lack of basic skills. For example, many businesses buy cash registers that make change for customers because those businesses cannot rely on employees to be able to subtract accurately. Some fast-food chains buy cash registers with pictures of the food items so that employees do not have to be able to read or remember the prices of the products. Businesses use technology in so many ways to make up for the lack of skills among employees that it is quite probable our survey respondents did not even think of all of the technologies they purchase for this purpose. Our cost estimates are therefore likely to be too low.
The businesses in our sample spent a total of $7,466,700 on technology during the most recent fiscal year to address the lack of basic skills among their employees. If this average of $62.83 per employee can be generalized to all Michigan businesses, then a total of almost $182 million is spent each year on technology to make up for the inability of workers to read, write, and do arithmetic. If we add the amount spent on instruction to the amount spent on technology, Michigan businesses spend about $222 million each year correcting the shortcomings of their workers who leave high school without having acquired basic skills.
To convey the depth of the problem as Michigan businesses see it, we asked the respondents to rank the quality of their new hires on a five-point scale, with 1 representing very poor and 5 representing very good. The average response was 3.3. We also provided our sample businesses with a statement from Michigan's Career and Employability Skills Content Standards that describes what all students educated in Michigan public schools should be able to do. The statement says Michigan public school students should be able to:
"Apply basic communication skills (e.g., reading, writing, speaking, and listening), apply scientific and social studies concepts, and perform mathematical processes in work-related situations."
"Understand complex systems, including social and technical systems, and work with a variety of technologies."
"Work cooperatively with people of diverse backgrounds and abilities and contribute to a group process with ideas, suggestions, and efforts."
"Communicate ideas to support a position and negotiate to resolve divergent interests."14
We asked businesses to report the percentage of their new hires who possessed these skills. The average answer was that 61 percent of new employees at the businesses we surveyed had the skills that the Michigan public schools said they should have. In other words, in the estimation of their employers, almost 40 percent of these new hires, not counting applicants who were rejected for employment, were lacking the skills the state of Michigan believes its public schools are imparting to students.
perform at an 11th-grade level. As the employer put it, "possession of a high school diploma is no guarantee" that graduates have learned basic skills. A health-care company with under a thousand employees reported that "lower-level employees lack the ability to read and write." Another company with several thousand employees said, "We reject 70 percent of applicants due to not having basic skills of math and reading at an 8th-grade level."
Even more common than complaints about the lack of basic academic skills were complaints about the lack of work ethic and basic moral and social skills among new employees. A health-care company reported that "absenteeism and tardiness" were common problems among new employees. Another business with about 500 employees echoed that new employees did not reliably arrive "at work on time and show up everyday." A small energy company expressed concern about "the trustworthiness, principles, and values" of new employees. A large hotel company reported that new employees are "not customer service-oriented." A restaurant chain complained that new workers did not know "how to fill out an application . . . how to conduct themselves in an interview, budgeting, working with a cash register, and even proper dress."
In short, businesses appear to have even more concerns about whether their employees will show up for work on time, be honest, and be courteous to customers than they do about whether those workers can read, write, and add. And while tests can show whether students need remediation in cognitive subjects such as grammar and math, they are largely unable to capture students' social and ethical competency.