Against Human Capital

A major challenge of modern education reform is that the many of the most successful reform strategies are very human capital dependent. Organizations such as Teach For America, KIPP, and other high-performing charter operators often rely on educators who are probably in the top quartile of aptitude, work ethic, and mindsets.

Attracting this type of talent may be a scalable strategy in urban areas, but our nation is not even majority urban. From what I gather, it looks like the United States public school population is roughly 30% urban, 25% rural, and 45% suburban. Even if this is off a bit, it’s clear that urban only strategies will not meet the needs of most students.

So what to do?

The Limits of Scaling Policies

Well, there are a set of policies (accountability, standards, assessment, etc.), that are not human capital dependent (in terms of achieving scale). With Common Core and teacher evaluations, we’re probably nearing the limit of what we can gain from these types of reforms.

The Limits of Incremental Human Capital Improvements

As I recently discussed, the SAT average for beginning teachers is rising. Better regulation and compensation, coupled with globalization and technology, may sustain the recent trend increasing academic performance of teachers. But even with this uptick, the educator labor pool will not be predominantly be pulled from a highly selective pool; after all, roughly ~150,000 new teacher are hired each year.

The Potential for Technology

In many industries, increased productivity has occurred when technology either substitutes or compliments existing human capital. This has yet to really occur in education, but it might. However, I don’t really see an investment or idea gap here. There’s plenty of action in the education technology sector, and there’s access to private capital, so we seem to be on course to finding whatever technology solutions may be had.

The Potential for Non-Human Capital Dependent Charter School Growth

This is what interests me the most. In the United States, our fastest growing charter operators add around ten to twenty schools a year.

I wonder if this growth could be rapidly accelerated (200-300 schools a year?) if operators adopted a non-human capital dependent strategy (when I say non-human capital dependent, I mean a strategy that does not depend on increases in quality of human capital).

The new competitive advantage would be predicated on two inputs: better operations and better instructional systems. While our public systems have ok operational and instructional system, they tend to pale in comparison to those of the best charter operators. I grew up in a relatively prosperous suburb and our schools were not nearly as well designed or run as the best charter organizations that I work with.

So the strategy would be to develop a highly sophisticated CMO central office that used strong operational and instructional systems to open schools very rapidly across the country while utilizing the same teacher pool as local districts.

Questions to Consider on Non-Human Capital Dependent Models

How big would the gains be? I’m not sure. The best urban charter schools deliver ~.2 effect sizes. It’s unclear how much of these gains are driven by human capital. But if even if a quarter of the effects were non-human capital dependent, charter operators could achieve ~.05 effects, which would be a real improvement.

Is it quality of human capital or sheer work load? I’m not sure. It could be high-performing charters reap gains in part because their teachers work longer hours. My guess is that it’s some combination of quality and quantity of hours worked. To the extent that it’s hours worked, the operational + instructional scaling strategy might have some limits.

Why aren’t there non-human capital dependent charter operators launching and scaling? Some interrelated guesses:

(1) Funders and operators are focusing on urban areas because this is where the greatest need is, so operators develop strategies that work in these environments.

(2) The lack of profit motive in non-profit charter operator incentivizes them to grow in areas where there is a lot of philanthropy (rather than where there are a lot customers).

(3) Most charter networks are led by CEOs who have little experience in growing schools in rural and suburban areas.

(4) Most charter networks are led by CEOs who have little experience in scaling organizations that are not human capital dependent at the site level.

In Sum

It’s possible that significant education achievement increases could be achieved by developing and scaling charter school models that are not dependent on highly selective human capital.

There are many financial and cultural reasons why this might not occur.

3 thoughts on “Against Human Capital

  1. Ryan Hill

    You’re missing one reason: teachers make thousands of decisions a day. Great teachers make more good decisions. Standardizing away their decision-making authority in thousands of decisions in order to make schools less reliant on great teachers would be very difficult, and could risk alienating the great teachers. But clearly many CMOs have headed down that path and through training and standardization are at least lowering the human capital requirements.

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  2. Mike G

    Great blog. To build on Ryan, a difference between top charters 2010 and top charters 2015 is precisely that there is a push towards more standardized curriculum. Seemed to begin with Common Core changing NY State Exams (making them much harder); some top charters seeing performance slip while Success Academy kids remained high; top NYC charters (KIPP, AF, US) responding with curric changes of their own; that spreading to other networks in USA.

    So those CMOs are trying to use standardization to “rebuild their achievement gain advantage” when it’s measured by new tests. Rather than to invent a new cohort of schools that don’t hire elite college grads.

    But I agree with you, Neerav: that same “curric in a box” could help other charters that rely on regular college grads.

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  3. matthewladner

    Part of the solution here has got to be to draw in more talent from mid career professionals. As awesome as TFA is/has been/will be the ponds they are drawing from have a limited number of fish. In addition, the cost per teacher placed needs to be going down but has actually been going up.

    The Tim Sass study on the academic impact of alternative certification routes in Florida hints at an interesting route forward:

    http://jaypgreene.com/2012/03/07/abcte-teachers-outgain-the-competition/

    If the TFA type groups would study the ABCTE methodology for high-bar academic exams and online training, a path might open to expand the universe of available human capital.

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