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Unlock Potential: Don't Let a Shortage of College Graduates Impoverish the State

By Hans Johnson, associate director of research and senior fellow, Public Policy Institute of California

This opinion article appeared in the Riverside Press-Enterprise on May 10, 2009

A college degree has never been more valuable. Workers who have one do much better in a recession than those who do not. In March, the unemployment rate for college graduates in California was 6.3 percent — less than half that of high school graduates. And the benefits aren't limited to recessions: Over the past few decades, wages of California's college graduates have risen far more than those of other workers, so that today their earnings are almost twice as high as those with only a high school diploma.

The future looks to hold more of the same. That's grim news for the students who fail to complete college and for the state's economic prospects. Projections recently developed by the Public Policy Institute of California show that the state is not producing enough new college graduates to keep up with long-term demand. If current trends persist, the state will have a shortage of 1 million college graduates by 2025.

The situation is even worse in the Inland Empire. In 2008, only 39 percent of Inland Empire high school graduates went directly to a state college or university, compared to just over half in the rest of the state. Most of these students from the Inland Empire and the rest of the state will not earn a bachelor's degree.

We need to do better.

The good news is that with relatively modest investments, we can. The education skills gap —between the number of graduates the economy needs and the number it can produce — can be cut in half with modest improvements in college attendance, community college transfers, and college graduation rates. Past increases in graduation rates in the public higher education system and the experience of other states provide evidence the goal can be achieved. The scenario calls for improvements in three educational pathways.

Graduation from the California State University and University of California systems: Although about four of every five University of California students graduate within six years, only about half of students in the much larger California State University system do so. Raising the CSU graduation rate from 50 percent to 62 percent and increasing the UC graduation rate by 4.8 percent to 85 percent could increase the number of college graduates by more than 200,000 by 2025.

Transfers from community colleges to four-year institutions: Because of the sheer size of California's community college system — 1.6 million students in 2007 — relatively small changes in transfer rates could lead to significantly better college graduation rates. Here, considerable room for improvement exists. More than 70 percent of all public higher education students in the state attend a community college, but only 20 percent to 30 percent of those who want to transfer to a four-year institution manage to do so. Increasing the transfer rate by 22 percent would add more than 100,000 new college graduates by 2025.

College attendance: California ranks 40th among the states in the share of high school graduates who go directly to college, with only 55 percent going on to any college the following year. Gradually raising the first-time college attendance rate to 61 percent — the national average — would increase the number of college graduates by more than 100,000 by 2025.

Even if the state and its students are able to achieve these objectives, we would still fall short of the projected demand. Other forms of postsecondary training, such as career technical education offered at community colleges, can play an important role in fully closing the gap.

How would we achieve these goals? Improving financial aid and students' academic preparation would help a great deal. At a time when total annual expenses for students who live on a UC campus are about $25,000, college presents a financial hardship for many families. Other research shows that improved financial aid increases the likelihood of students staying in college. We also need better ways to assess whether students are ready for college-level work and strategies to help them if they are not.

Planned cuts to the state's schools and colleges will only worsen the future skills gap. But concerted effort by state legislators and decision-makers could create a more prosperous future for California and its younger residents.

Related Publications

Closing the Gap: Meeting California's Need for College Graduates

California's Future Workforce: Will There Be Enough College Graduates?

PPIC Statewide Survey: Californians and Education, April 2009

Related Policy Areas

Employment and Income

Other Work By

Hans Johnson