A very important cover story, with great data, in the WSJ by David Wessel and Stephanie Banchero:

Throughout American history, almost every generation has had substantially more education than that of its parents.

That is no longer true.

When baby boomers born in 1955 reached age 30, they had about two years more schooling than their parents, according to Harvard University economists Claudia Goldin and Lawrence Katz, who have calculated the average years of schooling for native-born Americans back to 1876.

In contrast, when Americans born in 1980 turned 30 in 2010, they averaged about eight months more schooling than their parents.

This development already has broad ramifications across the U.S. job market: Those with only a high-school diploma had an 8% unemployment rate in March, roughly double that of college graduates, who had a 4.2% unemployment rate. Workers with bachelor's degrees earn 45% more in wages on average than those of demographically similar high-school graduates. And in today's highly automated factories, many manufacturers demand the equivalent of a community-college degree, even for entry level workers.

More serious consequences may be felt in the future. Without better educated Americans, economists say, the U.S. won't be able to maintain high-wage jobs and rising living standards in a competitive global economy. Increasingly, the goods and services in which the U.S. has an edge rely more on the minds of American workers—than on their muscle. "The wealth of nations is no longer in resources. It's no longer in physical capital. It's in human capital," says Ms. Goldin.

The reasons American education levels are no longer increasing as they once did are numerous: Despite years of effort, high-school dropout rates remain stubbornly high. College tuition is rising and the prospect of shouldering heavy debt discourages some high-school graduates from enrolling in college or sticking with it.

There is also growing skepticism among some Americans about whether a college degree actually translates into a well-paying job. Particularly during the recent recession, there have been gluts of college graduates in some industries and shortages in others.

…There is a limit to how much schooling a person can get and to how many Americans have both the ability and interest in a four-year college degree. But the U.S. is nowhere near that point.

Twenty countries have higher high-school graduation rates than the U.S.—including Slovenia, Finland, Japan, the U.K. and South Korea, according to the Organization for Economic Cooperation and Development. In the U.S., about one in five ninth-graders drop out before getting a diploma.

About 30% of American adults have four-year college degrees, and there is little evidence that is a natural ceiling. Thirty years ago, the U.S. led the world in the percentage of 25- to 34-year-olds with the equivalent of at least a two-year degree; only Canada and Israel were close. As of 2009, the U.S. lagged behind 14 other developed countries, the OECD says.

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• U.S. NEWS
• Updated April 26, 2012, 8:58 a.m. ET
• http://professional.wsj.com/article/SB10001424052702304177104577307580650834716.html

Education Slowdown Threatens U.S.

By DAVID WESSEL And STEPHANIE BANCHERO

Higher education in the U.S. has a problem: More students are getting into college, but they're not finishing. One community college in Maryland has developed a program aimed at getting students to graduation day. WSJ's Neil Hickey reports.