Education in America was never intended to produce laborers. In fact, the "liberality" of those arts which form a traditional university curriculum doesn't refer to their tendency to attract war protesters, communists, or critical theorists: these "liberal" arts are the arts of free men (free as in speech, not beer, yada yada), who would need a deep understanding of history and culture to prepare them for participation in political life. Historically, this freedom was enjoyed only by clerics and aristocrats. The hope of democratic societies is to extend political agency to ever broadening sectors of society, and to base political agency upon merit, rather than social caste. Universal education, it was argued, would produce the citizens that a large democracy would need, which would compensate for the fact that receiving such an education reduces one's available time for labor. One might recall that summer vacations were conceived to alleviate the imposition that schooling represented on a families ability to avail themselves of the labor of their offspring [1].
Now would be a reasonable time to point out to me that political agency and economic welfare aren't exactly cleanly seperable goals, and that I'm still actually just splitting hairs, and that jobs are important by golly! Point taken. But here's the punchline: I would argue that out confusion about the purpose of higher education has caused us as a society to waste a huge amount of effort 'fixing' universities to accomodate the needs of industry, rather than investing in new strategies - I think that a concerted effort to create an apprenticeship system for training IT workers (and probably other kinds of workers too) would better suit the needs of businesses, as well as the tastes of more restless students, at a vastly reduced expense. Freed from the pressure to teach industry-ready but highly transient skills, universities could be preserved as places to learn deep, ready for students who have a knack for academic work, or have become interested in the theoretical aspects of their practical work. As it stands, the standoff between vocational and traditional perspectives is undermining our ability to teach both theory and praxis.
It's also led to the illusion that the quality of an education can be more or less straightforwardly quantified using crude economic heuristics. Maybe nobody actually believes that this is a good way to evaluate education, but the demand for such quanititative measures nevertheless persists -- to the great detriment of students and faculty. Since no individual element of a University experience can be easily correlated with these "measurements" of educational excellence, the approach by business-oriented administrators seems to be something like "let's see how much we can cut without making people too angry [2]." Of course, neither the constant cutting of less 'profitable' programs, nor the withering wages of the underclass of adjuncts has stopped the university administrations from availing themselves of the near-infinite price elasticity afforded them by the finincial aid system -- after all, it is all about the bottom line, isn't it?
[1] Everything about this paragraph is pretty drastically oversimplified. For a fuller exposition of these ideas as they were expressed in the relevant historical period, check out John Dewey's Democracy and Education, published in 1916.
[2] I don't mean to imply that University administrators are moustache-twiddling evil capitalists out to suck the education system dry. It's just that, faced with the task of administering a complex system with difficult-to-measure outputs, people who are trained in business and generally encouraged to view their task in business terms seem to settle into this approach.