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Opinion, arguments & analyses from the editors of Scientific American

U.S. Falls Short in New Measure of Human Capital

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A female worker adding protective coverings to new Pinot Noir plantingsBusinesses in Switzerland, Finland and Singapore milk the most economic value out of their workers—and the U.S. lags pretty far behind them. According to the World Economic Forum’s new Human Capital Index, in which researchers attempt to quantify the factors that help a country unlock the capabilities of its workforce, the U.S. has a lot of untapped potential for economic success. And the country’s biggest obstacles to exploiting that potential may be related to healthcare.

Human capital is a measure of the economic value of each member of the workforce, but exactly how to find that value has never been clear. Saadia Zahidi, the head of the World Economic Forum’s human capital project, says the index is based on four factors: Education (not just of the current workforce, but also the quality and availability of education for the country’s upcoming generation of workers), employment (with an emphasis on the successful integration of female workers, and those who are younger or older than average), health, and “enabling environment,” or how easy the legal structure of a country makes it for people to thrive as employees and entrepreneurs. “There’s a lot of debate about quantitative versus qualitative data,” Zahidi says, “and there’s no perfect measure, but we need benchmarks to work with.”

The new index is meant to create a common understanding between policy makers and business owners. “We’re hoping this will make business owners and policy makers have a multi dimensional view of human capital,” Zahidi says, “and a common view of what needs to happen to improve it.” She hopes the new rankings will promote a “life course approach” to improving human capital, with an understanding that the best investments in workers are made early. “At some point it’s too late,” Zahidi says. “Someone without a secondary education will enter the labor force, and 10 years later it’s going to be very difficult to bring them back [to school].” Even if adults have opportunities to further their education, they might not be able to take advantage of them. Better, the report suggests, to invest more resources in keeping the next generation in school.

While the U.S. has a respectable human capital ranking of 16 out of 122 countries studied, the country ranked in 43rd place where the health and wellness of its workers are concerned. The problem, Zahidi says, is the impact of noncommunicable diseases on the workforce. Heart disease and cancer were reported by business owners to have a large impact on performance, with sick leave adding up. The country’s ranking was also hit hard by the prevalence of obesity and stress in American workers, which seem to impact day-to-day productivity significantly.

The creators of the index (which you can read or view as an infographic) hope it will inspire both short-term and long-term changes in what investments are made to improve the workforce. Countries plagued with youth unemployment, Zahidi says, need to first invest in apprenticeship programs, and then in improvements in education to help the next generation of workers. For the U.S., it seems that economic growth may hinge on improvements in healthcare.

 

The views expressed are those of the author and are not necessarily those of Scientific American.

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