Higher Education and Economic Mobility

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WASHINGTON--With the national unemployment rate at 9.8% and over 15 million Americans out of work, students about to leave high school are wondering if they will be able to get jobs that will allow them to move up the income ladder. For many of these students their best bet is to enter programs at their local community college.

A new study released by the Economic Mobility Project of the Pew Charitable Trusts shows that community colleges have the potential to help students of all academic abilities and family income levels. Enrolling in a community college and earning a two-year degree or certificate in high-return fields such as health care, computer science, or building trades, can open a pathway to well above-average-and rising-earnings.

The 1,200 community colleges in America now enroll 11.5 million students, according to the American Association of Community Colleges, or 46% of all undergraduates and 41% of first-time freshmen. Moreover, community colleges offer a wide range of career-enhancing and academic courses at bargain prices which average $2,400 a year.  This is far less than what public and private four-year colleges charge, plus community colleges are open to students of all educational backgrounds; most notably those who lack the credentials needed to enter four-year colleges.

The new study, by this writer and economists Louis Jacobson and Christine Mokher of CNA, a think tank providing analysis and solutions to address civilian and military problems, examines 84,000 students in Florida over the period 1996 to 2007, using individual data on education and earnings.

In a phone conversation, Mr. Jacobson declared, "This project is vitally important in a period when even the best educated college graduates are having difficulty finding well-paid jobs. Policy-makers are looking for new ways to ensure that all students, especially those from low-income families, receive the education they need to enter careers with advancement opportunities."

We conclude that community colleges can play a major role in increasing economic mobility, especially for young adults who did poorly in high school. It is widely known that well-prepared high school students excel in both two-year and four-year colleges, and, until recently, they were able to find good jobs. Many well-prepared low-income students start out at two-year colleges out of economic necessity and then transfer to four-year colleges.

The challenge is to give a boost to students who did poorly in high school - students who typically do not attend college at all or who do not attend long enough to gain career-enhancing or academic skills that provide entrée into well paying fields. Our study shows that community colleges provide career-enhancing skills for many low-performing students, but too many fail to take advantage of these opportunities.

Students who earn As and Bs have higher earnings not only because they are more likely to complete their college degrees, but because they choose courses in high-return fields. Only 25% of C students gain credentials in these fields, compared to 40% of A and B students. This suggests that with better information and support C students could identify high-return programs that they could complete, in fields that would be of interest to them.

The study shows that getting a two-year associate degree or a credential in a health care field such as nursing, medical imaging, or physical therapy is doable for low-performing high school students and offers them high starting salaries alongside excellent advancement opportunities. Students with health-related concentrations earned by far the highest median salaries among all fields: $46,000 initially and $60,000 after seven years

What can be done to empower more students - especially those with poor high school records - to enter high-return fields?

First, improve the academic preparation of entering students, so that they are capable of completing tougher courses of study. Although this is not easy, some programs, such as the Knowledge is Power Program (KIPP) in elementary and secondary charter schools have succeeded in raising math and reading levels.

Second, give students more career counseling, so that they know what courses are suitable to their mix of skills, what courses they are likely to complete, and what courses will lead to good incomes when they enter the job market. Many low-performing students do not know much about the world of work and do not have mentors to inform them.

Third, make sure that students know what financial assistance is available, and how to get it. Financial-aid rules are so complex, and the application processes so onerous, that they discourage those who most need help and more education. Students who would like to transfer to four-year colleges need special financial counseling.

Finally, increase incentives for community colleges to provide career counseling and support services. Why not reward community colleges for increased course and program completion in high-return fields? Why not shift resources to fields such as health care where courses currently are oversubscribed? Increasing the number of slots in high-return courses would be tremendously beneficial to low-income, low-performing students.

Many economists predict that the recovery in employment will be slow and unemployment will be permanently higher. If that forecast is true, it is low-performing, low-income students who have the most to lose. Now is the time to focus on training them so that they can look forward to productive careers, rather than irregular employment and weak earnings.

Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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