The recent move to allow
certain community colleges to produce bachelor degrees was in part driven by
the argument that by the year 2025, the California economy will need an additional
one million workers with BAs. The research behind this
claim appears to come primarily from the Public Policy Institute of California’s
(PPIC) report, “Meeting California’s Need for College Graduates.” In this study, we are
told that “Two
strong forces are already at work in constraining California’s gradually
increasing share of college graduates in the working population: the retirement
of the large and relatively well-educated baby-boom cohort—adults born between
1946 and 1964—which will occur over the next 20 years, and demographic shifts
toward groups that have historically low rates of college attendance and
graduation.” The first half of the argument is a purely demographic projection
of the future production of workers with bachelor degrees, and it makes the
important point that we are now seeing a generation of people with a relatively
high level of degree attainment replaced by a new generation, which suffers
from a decrease in degree attainment.
One of the driving
forces behind this generational shift is the constant state defunding of higher
education in California. There is also a
growing divide between the older, whiter workers who have college degrees and
the younger, non-white workers who have been victims of several economic
downturns and discriminatory educational practices. The PPIC reports that “In 2006, California ranked
23rd among states in its share of 25- to 34-year- olds holding at least a
bachelor’s degree, down from eighth position in 1960. California colleges and
universities,
both public and private, award relatively few baccalaureates,
given the size of the state’s youth population: California ranked 43rd among
states in the ratio of bachelor’s degrees awarded in 2006 to high school
diplomas awarded five years earlier.” In what we can call the “Fall of the
Master Plan,” California has moved from being one of the most educated states
to being one of the least.
According to the PPIC,
one of the results of this fall is the following: “we project the size of the
education skills gap in 2025 and identify scenarios that could help close the
gap. If current trends persist, California will have one million fewer college
graduates than it needs in 2025—only 35 percent of working-age adults will have
a college degree in an economy that would otherwise require 41 percent of
workers to have a college degree.” One big question is how do these researchers
know what jobs will require workers with bachelor degrees, and here is where
things get very murky. The PPIC makes
the following claim: “Over the past 26 years, the share of college graduates in
the state’s workforce has increased from 25 percent to 34 percent (Reed, 2008),
but projections suggest that the state’s workforce demands will continue to
increase and that 41 percent of jobs in 2025 will require a college degree.” The
first thing to point out is that a college degree is here interpreted as a
bachelor degree and not an associate degree, and so the entire realm of the community
colleges is excluded. The other major
issue is the meaning of the phrase “jobs that require a college degree.”
It turns out that there are two main ways of interpreting the meaning of
jobs that require a college degree. Some
labor economists use this phrase to describe jobs that are currently being held
with people with certain degrees and other economists use the same phrase to
indicate jobs that traditionally require a particular degree. The difference between these two
interpretations is huge and plays a major role in determining our educational
and employment practices and policies.
The PPIC tries to finesse these opposing definitions of jobs requiring
degrees in the following way: “For example, from 1990 to 2006, the share of
workers with a college degree increased from 25 to 34 percent; our projections
indicate that this trend will continue at about the same pace, so that by 2025,
41 percent of workers will need to hold a college degree if the workforce is to
meet the demands of the California economy. This projected increase will occur
partly as the state’s economy shifts to occupations and industries that require
more highly educated workers but also as employers demand more highly educated
workers within industries and occupations (Reed, 2008).” So we do not
know if the need for more people with bachelor degrees is being driven by the
supply of more high-skilled jobs or by the employer demand for more degrees in
occupations that do not traditionally require degrees.
To answer this question, we must go to the cited source, Deborah Reed’s
“Will There Be Enough College Graduates.” The first big move
that Reed makes is to distinguish between her method for defining jobs that
require degrees from the Bureau of Labor Statistics: “Our projections of demand
for college-educated workers lead to very different conclusions than do
estimates of employer needs derived from employer “education and training
requirements” from the Bureau of Labor Statistics (BLS). According to BLS estimates
of employer education requirements by occupation, the share of college-educated
workers needed in the California economy in 2025 would be only 27 percent. The two
measures are conceptually different. The BLS-based approach considers whether
employers need college-educated workers to staff positions. Our measure
considers whether employers are choosing workers with bachelor’s degrees.” What Reed stresses is that what matters is
not which degrees are required to do the job but which degrees employers can
demand. In other words, in a buyer’s
market, employers can pick and choose whom they want to hire, and they often hire
people with the higher degrees.
One of the effects of this labor system is that occupations with the
highest level of growth and demand for people with bachelor degrees turns out
to be janitors, cleaners, carpenters, waiters, office clerks, bookkeepers,
retail sales people, manufacturers, and secretaries. Reed argues that this is
not a case of over-trained or over-educated workers because employers are
paying more for workers with bachelor degrees, and rational employers would
only do this if they knew they were getting their money’s worth. In fact, in these occupations, which once did
not require a college degree, we find that employers are willing to pay workers
much more money if they have a college degree.
What Reed does not reveal is how much of the difference in pay between
workers doing the same jobs but with different degrees is due to the depression
of wages for people without college degrees.
According
to a Federal Reserve study, in 1980, a worker with a BA degree or higher
averaged $52,000 a year (in 2008 dollars), while the same group’s average in
2008 was $56,000. In contrast, the
average worker with only a high school degree made $45,000 in 1980, and in 2008
made $32,000. So if the college premium
in 2008 was $20,000, the part due to the reduction of wages for the person
without a college degree was $13,000 or 65%.
What we are seeing then on both a state and national level is that
employers are able to demand degrees from workers for jobs that do not
traditionally require college degrees and the effect is to increase the wages
for some workers with degrees but also decrease the wages for workers without
degrees.
The point here is not that we do not need to increase state funding
to produce more people with college degrees; rather we have to find a way to
both increase the number of good middle-class jobs as we decrease the financial
cost of individuals pursuing degrees. We
also have to question the notion that degrees produce jobs, and the only reason
to fund public higher education is to increase an individual’s earning
power. Educational policy does not replace employment policy, and both should work together.
