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Although economic projections for California indicate a continu- ation of this trend, projections of educational attainment for the future population strongly suggest a mismatch between the level of skills the population is likely to possess and the level of skills that will be needed to meet economic projections. PPIC’s report, California 2025: Taking on the Future, highlighted this mismatch and in this issue of California Counts, we assess whether the state will be able to attract enough college graduates from other states and other countries to meet the projected economic demand. Our analysis shows that the state can do so only if it attracts college graduates in unprec - edented numbers. But judging by recent trends, it seems unlikely that a substantial number of college graduates will migrate to California. Estimates for the 1990s and the early 2000s suggest that, on net, California attracted relatively few college-educated migrants from other states, and most recently, the state has seen more college-educated residents leaving for other states than arriving. One reason for this is California’s high cost of housing, which has made the state less accessible to residents of other states. Moreover, the baby boomers, who histori- cally provided California with a large supply of college graduates from other parts of the coun- try, are beyond the young adult ages when interstate migration is most common. Summary Hans P. Johnson, editor California Counts Can California Import Enough College Graduates? Public Policy Institute of California 2 To bridge the gap between supply and demand through migration, those with high skills would need to come from other countries. Hence, meeting the demand would require an intensification of current trends: Between 2000 and 2005, for the first time, immigrants to California with a college degree exceeded the number of immigrants who were not high school graduates. Large increases in the number of college graduates in other countries indicate that this trend could continue to intensify but the number of highly educated immigrants to California would still need to more than double to meet projected needs. U.S. immigration law would need to change fairly dramatically, and it seems unlikely that this will happen in the near future. Moreover, increasing global demand for highly skilled labor, including increasing demand in origin countries, makes it even less likely that California could successfully and sufficiently compete for large numbers of highly skilled labor from other countries. We conclude that it is extremely unlikely that the projected need for highly skilled workers will be met mainly through the increased migration of college-educated workers. However, increases in college participation and graduation among California’s residents could help meet these future demands. Such increases will be at least partly induced by the wage growth that will occur as highly skilled labor becomes relatively scarce. Public policy in California, a state where the vast majority of college students are in public institutions, has an important role to play in accommodating and even encouraging such increases. To bridge the gap between supply and demand through migration, those with high skills would need to come from other countries. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 3 Introduction P PIC’s report, California 2025, highlighted the potential mismatch between the skill levels that will be needed in Califor- nia’s increasingly highly skilled economy and the skill levels the future population is likely to possess (Hanak and Baldassare, 2005; Johnson, 2005; Neumark 2005a).1 Only 33 percent of the state’s working-age adults were projected to have a college degree in 2020, but 39 percent of jobs in the state’s economy were projected to need a college graduate worker. That analysis assumed that past trends in population change would continue into the future. In particular, past trends in patterns of college graduates moving into and out of the state were used to gauge future patterns. In this issue of California Counts, we assess whether the state might be able to attract even more college gradu- ates from other states and other countries to meet the projected economic demand. We begin with a discussion of the context: California’s relatively highly skilled economy and the role that domestic and interna- tional migration has played in fueling economic growth. We then examine the projected skills gap in the absence of the migra- tion of college-educated workers to gauge how many such workers the state would need to attract by 2025. In the final sections, we consider the likelihood of bridging the skills gap through migration. We focus on the skills gap in college graduate workers—an important focus of the California 2025 study. However, we do not intend to imply that a policy focus on college graduates is the only way, or even the most important way, for California to prepare the future workforce. Certainly, other forms of workforce training, includ- ing vocational education, are important to consider in address- ing the skills gap. Throughout the report, when we refer to skill needs or requirements, we mean the worker education levels that would be needed to meet eco- nomic projections. In 2025, as in any year, worker supply will equal worker demand in the sense that the education of Californians who work will be the same as the education of workers in Califor- nia jobs. If the education levels of the population do not increase substantially more than projected in the California 2025 study, then the California economy will be less highly skilled than projected. Context C alifornia’s economy has long been characterized as relatively skilled, one that demands large numbers of college graduates. Moreover, California’s economy has become more highly skilled over time, as has the economy in We conclude that it is extremely unlikely that the projected need for highly skilled workers will be met mainly through the increased migration of college- educated workers. However, increases in college participation and graduation among California’s residents could help meet these future demands. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 4 were born outside the state, a pat- tern that has persisted for many decades (Figure 3)—although within this group, the share born in other states has declined sharply and the share born in other coun- tries has increased dramatically. Since 1980, these two trends have mostly offset each other. Recent Trends in the Domestic Migration of College Graduates T here is some dispute about the overall level of domestic migration into and out of Cali- fornia in this decade. The U.S. Census Bureau estimates that from 2000 to 2005, the state lost 644,000 people to other states and the California Department of Finance (DOF) estimates that the state gained 173,000 people via domestic migration during that period. Those two widely divergent estimates in turn imply very different recent levels of net flows of college-educated adults. The state estimate implies that California continues to gain col- lege graduates from the rest of the United States, albeit fewer than in the past, whereas the federal estimates imply losses of college graduates.4 Annual estimates of net domestic migration from four sources (Figure 4) show that the discrepancy persists across years and is consistently in the same direction. American Community Survey (ACS) figures are closer to Figure 1. California Adults, by Educational Attainment, 1960–2005 Number of adults (millions) 1990198020051970198519751995200019651960 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey.Note: Based on adults ages 25 to 64. 0 5 6 4 3 2 7 1 College graduate Some college High school graduate Not a high school graduate Immigration has long been an important source of college graduates in California. the rest of the nation. Growth in the number of college graduates in California has outpaced overall population growth for decades.2 In 1960, when the state’s Master Plan for Higher Education was developed, only 10 percent of adults were college graduates; by 2005, 31 percent were. Between 1960 and 2005, the number of working-age adults with at least a bachelor’s degree increased more than sixfold, whereas the overall working-age population almost doubled.3 By 2005, for the first time in the state’s history, college graduates outnumbered any other education group (Figure 1). The state tends to be relatively well- educated compared to the rest of the nation; California ranks 12th among the 50 states in terms of the percentage of adults ages 25 and older who are college gradu- ates (Figure 2). Immigration has long been an important source of college gradu- ates in California. A large majority of California’s college graduates California Counts Can California Import Enough College Graduates? Public Policy Institute of California 5 Figure 2. Percentage of College Graduates Among Adults Ages 25 and over, by State, 2005 5403530252015100 Percentage Source: Authors’ calculations using the 2005 American Community Survey. Minnesota ConnecticutColorado MarylandNew JerseyVirginiaVermont Massachusetts New HampshireNew York Nebraska Rhode IslandCalifornia IllinoisKansasHawaiiUtah Washington OregonDelaware North Carolina GeorgiaUnited States MontanaPennsylvaniaMaineArizona Alaska North DakotaFlorida Wyoming WisconsinNew Mexico South DakotaMichiganMissouriIowa Texas IdahoOhio Nevada South CarolinaOklahomaTennesseeAlabamaIndiana ArkansasKentucky MississippiWest Virginia 37 30 27 17 Louisiana California Counts Can California Import Enough College Graduates? Public Policy Institute of California 6 those of the Census Bureau, and estimates from the much smaller federal Current Population Sur- vey (CPS) are more volatile.5 The latest estimates from the state Department of Finance show net domestic migration losses continu- ing to 2005–2006 (not shown in Figure 4), so there is agree- ment that the state is now losing domestic migrants to other states, although the magnitude of that loss remains in dispute. It is clear that since the 1970s, there has been a sharp decline in the share of California’s college graduates who were born in other states. This is attributable to the overall decline in migration from other states across all education 26 Figure 3. Distribution of California College Graduates, by Place of Birth Percentage 1980200520001990 3437 2933 46 21 31 64 26 66 8 353331 19701960 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey.Note: Based on adults ages 25 to 64. 0 50 60 40 30 20 70 109 53 15 Born in California Born elsewhere inthe United States Foreign-born Figure 4. Estimates of Annual Net Domestic Migration Number of migrants (thousands) 2002–20032004–20052003–2004 –47 –126–128(129) 2001–20022000–2001 Sources: Authors’ calculations using Current Population Survey (CPS) and American Community Survey (ACS) data; California Department of Finance (DOF) E-6 report; and U.S. Census Bureau “Annual Estimates of the Components of Population Change,” tables for the nation and the states. –300 50 100 0 –50 –100 –150 150 –200 –250 DOF Census Bureau CPS ACS ACS and CPSweighted average 97 –108 –9 –134(114) 66 –95–79(58) 7066 –155 –213(208) 16 –181 –239 –281(260) –29 62 California Counts Can California Import Enough College Graduates? Public Policy Institute of California 7 fornia are relatively few, so that in the early part of this decade, the state experienced no net increases in the number of college gradu- ates moving to and from other states. Indeed, ACS data show that California lost some college graduates to other states, in addi- tion to the hundreds of thousands of less-educated residents who also left. This outflow—of less-educated adults—leads to a higher percent- age of college graduates among the population remaining here. In this decade, domestic migration has increased the percentage of Californians with a college degree primarily because less-educated residents are leaving. In contrast, in previous decades the state gained college graduates while losing less- educated adults (Table 2, bottom panel). Of course, if these estimates overstate outflows from the state, as suggested by California Depart- ment of Finance data, then domes- tic migration of college graduates to California is actually somewhat In this decade, domestic migration has increased the percentage of Californians with a college degree primarily because less-educated residents are leaving. groups. This domestic migration, once the leading source of popula- tion growth in California before the 1990s, now contributes little if anything to it. From at least the 1940s through the 1970s, migra- tion from other states was a far more important source of growth than international migration, but now the reverse is true. Although net domestic migra - tion overall has declined, sizable numbers of people still flow into and out of California. For exam- ple, data from the 2005 American Community Survey suggest that in 2004 and 2005, almost 500,000 people moved into California from other states but more than 700,000 moved out. The educa- tional attainment distributions of these two flows are quite different, and so domestic migration still has an important effect on the share of college-educated Californians. Those arriving from other states tend to be better educated, with a large share having graduated from college (Table 1). Between 2000 and 2005, almost half of this group of immigrants from other states had completed college. Those leaving California for other states tend to be less educated, with almost a third having no more than a high school diploma during the same time period. However, the relative sizes of the two groups are very different: Many more people are leaving the state than are mov- ing here (according to the ACS data). Domestic migrants to Cali- Table 1. Educational Attainment of Domestic Migrants Moving into and out of California, 2000–2005 Domestic In, %Domestic Out, % Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree 9.0 15.1 27.6 28.4 20.0 11.1 20.5 30.2 25.0 13.2 Source: Authors’ calculations using the 2001–2005 American Community Surveys.Notes: Respondents were asked where they lived one year before the survey. Based on adults ages 25– 64. higher. Still, it is not dramatically so, and the general pattern of greater losses of less-educated residents is undoubtedly true. It is also clear that the share of college graduates among migrants arriving from other states has increased across time. In 1960, only 10 percent of California residents ages 25 to 64 who were born in another state were college graduates; by 2005, 43 percent California Counts Can California Import Enough College Graduates? i Public Policy Institute of California 8 were (see Figure 5). This increase was more pronounced than the overall increase in the share of college graduates in the state or nation; that is, the group coming to California from other states has become even more strongly skewed toward those with high levels of education. All of this means that the net domestic flow of college graduates from other states has been quite small over the past 10 years—even turning negative in this decade for those ages 25 to 64 (but remain- ing positive if 20- to 24-year-olds are included). The state appears to be losing hundreds of thousands Table 2. Domestic Migration Flows of Adults, by Educational Attainment Domestic In-Migrants Not a High School GraduateHigh School GraduateSome CollegeCollege GraduateTotal 1985 –1990 1995 –2000 2000 –2005 120,000 79,000 118,000 220,000 139,000 194,000 377,000 276,000 350,000 461,000 475,000 612,000 1,178,000 969,000 1,274,000 Domestic Out-Migrants 1985 –1990 1995 –2000 2000 –2005 141,000 240,000 191,000 249,000 274,000 353,000 380,000 449,000 519,000 315,000 418,000 658,000 1,085,000 1,381,000 1,721,000 Net Domestic Migration Flow 1985 –1990 1995 –2000 2000 –2005 (21,000) (161,000) (73,000) (29,000) (135,000) (159,000) (3,000) (173,000) (169,000) 146,000 57,000 (46,000) 93,000 (412,000) (447,000) Sources: Authors’ calculations using the 1990 and 2000 decennial Censuses and the 2001–2005 American Community Surveys.Notes: Respondents were asked where they lived five years before the survey in the decennial Census. For 2000 –2005, respondents were asked where they lived one year before the survey and we cumulated responses across five years. Based on adults ages 25– 64. Figure 5. Percentage of Domestic Migrants with a College Degree Percentage 2000–2005 48 30 49 29 3938 1995–20001985–1990 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey.Note: Based on adults ages 25 to 64. 0 50 40 30 20 60 10 Domesticin-migrants Domesticout-migrants California Counts Can California Import Enough College Graduates? Public Policy Institute of California 9 of less-educated adults to other places in the country. From 1995 to 2005, the state lost more than one million adults ages 20 to 64 who did not have a college degree, whereas it gained just under 100,000 college graduates from other states.6 Recent Trends in International Migration F or many decades, California has been the most popular destination of immigrants to the United States. The most recent large wave of international migrants to California and the United States began in the 1970s. That wave strengthened consider- ably in the 1980s and continued into the 1990s and this decade. In 1970, only 9 percent of Cali- fornians were foreign-born; today, about 30 percent are. Many foreign-born residents of California are highly educated, although many more have low levels of educational attainment. In 2005, more than one-third (36%) of foreign-born adults in California (ages 25 to 64) had not graduated from high school, but college graduates do make up a substantial share. Indeed, foreign- born residents are only slightly less likely than California-born resi- dents to have graduated from col- lege (25% versus 29%). The share of college graduates among the state’s foreign-born population has risen steadily over time. In 1960, among 25- to 64-year-olds, only 8 percent of the foreign-born in California were college graduates. In absolute terms, the number of foreign-born college graduates liv- ing in California increased almost 30-fold, from 65,000 in 1960 to 1.8 million by 2005. The number of recently arrived highly skilled immigrants has also increased dra- matically (Figure 6). Some international immi - grants come to California as young children or young adults and complete their education in the state; others come to Cali- fornia already having completed college.7 As shown in Table 3, immigrants who have recently arrived from other countries have been the best-educated immigrants California has ever received, with one-third having graduated from college. For the first time ever among recent inter- national immigrants, the number of college graduates exceeded the number who had not completed high school. Although we have data for domestic migration flows both to and from California, we do not have good information on the gross flows of migrants out of California to other countries and so do not know the net increase in college graduates resulting from international migration; the fig- ures in Table 3 show only gross flows into the country. Both the Census Bureau and the California Figure 6. Number of Foreign College Graduates Migrating to California 0 300 250 200 150 100 350 Number of migrants (thousands)50 2000–20051995–20001985–19901975–19801965–1970 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 10 Methods” provides details of our approach. The new economic projections are consistent with the previous series used in PPIC’s California 2025 report.9 The projections cat- egorized by industry, show that the state’s economy will continue to demand more highly educated workers. This occurs as the state’s economy continues to shift toward industries that need more highly skilled workers and as skill levels increase within industries. The health and education services industry is projected to be the most important growth industry in the state, increasing from 10.8 percent of all jobs in 2005 to likely than other workers to return to Mexico. Trouble Ahead? Economic and Demographic Projections T o assess whether domestic and international migration might resolve the projected shortfall in the number of college-educated workers, we updated and extended our population projections and economic analysis from 2005 using new data. The text box “Economic and Demographic Projections Department of Finance estimate net international migration to the state when developing annual estimates of the state’s population. Combining those estimates, which are not broken down by age or education, suggests that the per- centage of people leaving the state for other countries is between 11 and 23 percent of those arriving.8 Most emigration to other coun- tries consists of return migrants— people returning to their original countries of departure after stay- ing in the United States for some time. In a study of return migra- tion to Mexico, Reyes (1997) found that less-educated, low-wage, and undocumented workers were more Table 3. Educational Attainment of Recently Arrived Immigrants, 1985–1990, 1995–2000, and 2000 –2005 Not a High School GraduateHigh School GraduateSome CollegeCollege GraduateTotal 18- to 64-year-olds 1985 –1990505,000 (45%)193,000 (17%)217,000 (19%)201,000 (18%)1,116,000 (100%) 1995 –2000424,000 (39%)186,000 (17%)190,000 (17%)286,000 (26%)1,086,000 (100%) 2000 –2005342,000 (31%)201,000 (18%)204,000 (18%)363,000 (33%)1,110,000 (100%) 25- to 64-year-olds 1985 –1990295,000 (39%)122,000 (16%)149,000 (20%)184,000 (25%)750,000 (100%) 1995 –2000253,000 (33%)118,000 (16%)127,000 (17%)262,000 (34%)760,000 (100%) 2000 –2005218,000 (28%)120,000 (15%)132,000 (17%)320,000 (41%)790,000 (100%) Sources: Authors’ calculations using the 1990 and 2000 decennial Censuses and the 2001–2005 American Community Surveys.Note: Recently arrived immigrants are those who arrived within the past five years. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 11 Economic projections. Projections of the educational demands of the future workforce follow the methods developed in Neumark (2005b). We use economic projections by industry from the California Department of Transportation (2005). For each industry, we calculate the education of California workers in 2005 using the Earner Study of the Current Population Survey from the U.S. Census Bureau. We project the education needs of the industry in 2025 assuming that the worker education changes occurring from 1995 to 2005 will continue (using linear extrapolation). For example, for health and education services, we estimate that the share of workers with a college degree increased from 36.7 percent to 42.6 percent from 1995 to 2005. Continuing this growth for two additional decades leads to a projection of 54.4 percent for 2025. Our pro- jections reflect a continued upgrading in worker education within industries consistent with California’s experience since 1980. Our approach, a continuation of recent trends, is also consistent with the approach used for the demographic and industry employment projections. Neumark (2005b) considers a “static” alter- native projection whereby education needs within each industry remain at current levels. When combined with static demographic projections (i.e., people within each demographic group maintain current education levels; see Johnson, 2005), the projections also lead to a shortage of college-educated workers, although a smaller shortage than is implied by the projections here. Demographic projections. We use a cohort component model to develop population projections by edu- cational attainment. In this model, age-specific mortality and migration rates are applied to a base year population broken down by age to project subsequent year populations. In our model, because we want to develop projections in the absence of migration, we set migration rates equal to zero. We disaggregate our populations and mortality rates by age (five-year age groups up to 90 and older); by six mutually exclusive ethnic groups (white, Latino, African American, American Indian, Asian and Pacific Islander—referred to as Asian—and multiracial); by two nativities (U.S.-born and foreign-born) and two genders; and by five educational attainment categories (not a high school graduate, high school graduate, some college, bachelor’s degree, and graduate degree). Because we set migration to zero, the model is fairly straightforward. For example, the number of U.S.-born Latino males ages 55 to 59 with a bachelor’s degree in 2025 equals the number of U.S.-born Latino males ages 35 to 39 with a bachelor’s degree in 2005 times the probability of surviving (one minus the mortality rate for that group) over the 20-year period. We also make an adjustment for education completed after age 30 based on recent trends in educational improvements by cohort. Our base population is the 2005 American Community Survey population broken down by the categories listed above. Fertility does not affect our projections because we focus only on the age range 25 to 64 in 2025. Mortality rates are age-, ethnic-, nativity-, and gender-specific (but not education-specific). Thus, we do not allow mortality rates to differ by educational attainment. Our base rates for mortality are from 2000 values calculated by combining administrative vital statistics data with Census counts of the state’s population. We allow mortality rates to decline by 1 percent for each five-year period. For younger cohorts (e.g., those ages 5 to 9 in 2005 and 25 to 29 in 2025), we project completed educational attainment based on parents’ edu- cational attainment. We use our own previous estimates of the relationship between parents’ education and children’s eventual levels of education by ethnicity and nativity. See Reed et al. (2005) for our method. Economic and Demographic Projections Methods California Counts Can California Import Enough College Graduates? Public Policy Institute of California 12 13.2 percent of all jobs in 2025.10 In this industry, 43 percent of workers in 2005 held a bachelor’s degree and, if trends over the last decade continue, that share is expected to grow to 54 percent by 2025. The second most important growth industry is projected to be professional services, which includes legal, engineering, and computer services, among others. The share of workers in this indus- try is projected to grow from 14.7 percent to 16.4 percent. The com- position of this industry has been changing rapidly and the share of workers with a college degree is projected to grow from 35 percent to 54 percent in 2025. The manu- facturing industry, where only 30 percent of workers have a college education, is projected to be the one most in decline, falling from 10.8 percent to 8 percent of all jobs. These economic projections suggest that by 2025, two of every five jobs (41%) will require a col- lege graduate, an increase from less than one-third of all jobs in 2005 (Table 4). In absolute terms, the total number of jobs is projected to increase by 4.5 mil- lion. The vast majority of this net increase in jobs will be due to job growth at the high end, with 3.5 million additional jobs for people with either a bachelor’s or graduate degree. Job growth is expected to be weakest for high school graduates and for those with some college but no degree. In those categories, the number of jobs is expected to grow less than 10 percent over the entire 20-year period. In contrast, there will be a 68 percent increase in jobs requir- ing a graduate degree and a 78 percent increase in jobs requiring a bachelor’s degree. How many college graduates would reside in California in 2025 if the state experienced no migra- tion? Our projections show that if current trends continue without a major change in college-going and in college graduation, the proportion would remain essen- tially unchanged, with about three in 10 working-age adults having graduated from college, both in 2005 and in 2025 (Table 5). How- ever, the ethnic makeup of these college graduates is expected to show some shifting, with some increases projected among Latinos and Asians. Among Latinos, the group least likely to graduate from college, younger cohorts will see especially strong increases. For example, among 30- to 34-year- olds, 18 percent are projected to be college graduates in 2025 compared to only 11 percent in 2005. This increase is due both to a greater share of U.S.-born Lati- nos in this cohort in 2025 than Table 4. Skill Needs of Jobs in California (All Ages), by Educational Attainment Number of Jobs 20052025 Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree Total number of jobs 2,592,000 (17%) 3,348,000 (22%) 4,571,000 (30%) 3,167,000 (21%) 1,458,000 (10%) 15,135,000 3,079,000 (16%) 3,671,000 (19%) 4,849,000 (25%) 5,624,000 (29%) 2,452,000 (12%) 19,676,000 Sources: Authors’ calculations using industry projections from the California Department of Transportation (2005) and worker education from the 1995 and 2005 Earner Study of the Current Population Survey. Notes: See the textbox for our calculation methods. Percentages may not sum to 100 percent because of rounding. These economic projections suggest that by 2025, two of every five jobs (41%) will require a college graduate, an increase from less than one-third of all jobs in 2005. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 13 in 2005 (U.S.-born Latinos are much more likely than foreign- born Latinos to graduate from college), and to the increasing educational attainment of the parents of Latino children; paren- tal educational attainment is a strong predictor of the educational attainment of children (Reed et al., 2005). Among Asians, already high levels of educational attain- ment will increase to even higher levels as very highly educated younger cohorts age and replace older cohorts who are not as well educated. For example, among 50- to 54-year-old Asians, the share with a college degree is pro- jected to increase from 42 percent to 60 percent. Little change is expected in the proportion of whites with a college degree. The lack of overall progress in educational attainment in the absence of migration can be attributed to two related factors: the aging of highly educated older Californians past their working ages, between 2005 and 2025, and the increase in the share of the working-age population compris- ing ethnic groups that tend to have fewer college graduates. Cur- rently, California’s most-educated cohorts are older white adults. The three age groups in 2005 with the highest percentages of college graduates were 55 to 59 (35%), 50 to 54 (32%), and 60 to 64 (32%). The high levels of college comple- tion among those groups is partly due to the efforts of many in the 1960s and 1970s to avoid being drafted and sent to serve in the Vietnam War; college attendance allowed men to defer military service and sometimes avoid it altogether (Card and Lemieux, 2001). As those cohorts age out of working ages, they will be replaced by slightly less-educated younger cohorts. These replacement cohorts will have larger Latino popula- tions, a group that historically has had relatively low levels of college graduation. In 2005, 32 percent of 25- to 29-year-olds in California were Latino; by 2025, that figure will increase to 47 percent in the zero-migration projections. The difference (with some adjustments) between the popula- tion and economic projections helps us estimate of the size of the total college graduate migration, both domestic and international, that would be necessary to close the gap. The projections of jobs are based on our economic pro- jections, and the projections of workers are based on our popula- tion projections. The adjustments take into account such factors as labor force participation rates, self- employment, and age group differ- Table 5. Percentage of Adults with a College Degree, 2005, and Zero-Migration Projections for 2025 Age Group All Ethnic GroupsWhitesLatinosAsiansAfrican Americans 2005202520052025200520252005202520052025 25 –29 30 –34 35 –39 40 – 44 45 – 49 50 –54 55 –59 60 – 64 Total, 25 – 64 27 31 31 30 30 32 35 32 31 27 32 31 29 29 33 32 31 32 39 45 44 39 38 40 42 39 41 38 44 44 41 41 46 45 40 42 10 11 10 10 10 10 9 10 10 15 18 15 14 12 13 11 11 13 56 59 54 49 45 42 43 41 50 57 64 57 53 57 60 55 49 56 17 23 25 22 21 25 24 20 22 16 22 24 23 19 25 26 23 22 Sources: Authors’ calculations for 2005 based on the American Community Survey; authors’ projections for 2025.Note: See the textbox for our calculation methods. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 14 ences between the two sets of pro- jections. To estimate how many of the jobs shown in Table 4 will be filled by 25- to 64-year-olds, we use the ratio of 25- to 64-year-old workers to jobs in 2005, distin- guished by education level, and then adjust the 2025 projections of jobs.11 To estimate how many workers will be available in 2025, we apply 2005 labor force partici- pation rates to our 2025 popula- tion projections.12 The results show that Califor - nia would need to import large numbers of college-educated work- ers to meet the needs implicit in the economic projections (Table 6). The number would need to increase from 4.78 million in 2005 to 8.33 million in 2025—an increase of about 75 percent over two decades.13 The final column of Table 6 shows that the increase in number of college-educated work- ers is not likely to be met with- out substantial migration. In the absence of migration, the number of workers with a college educa- tion is projected to be only about 5.16 million, or 3.17 million short of what will be needed. Will College Graduates from Outside the State Close the Gap? R ecent trends show that col- lege graduate migration from other states has been far too small to provide the number the state’s economy will need (Table 7).14 Indeed, between 2000 and 2005, the state experienced an annual net loss of college-educated domes- tic migrants ages 25 to 64; the state did experience small gains of less than 2,000 per year for 20- to 64-year-old college graduates. Even if the state were to return to the large positive flows of highly educated migrants from other states that was experienced in the late 1980s, those flows would fall far short of the projected need (left column of Table 7). More- over, the general direction recently has been toward fewer, not more, college-educated domestic migrants. As noted, international migra- tion has been an increasingly important source of college gradu- ates for California. Our estimates suggest that those flows have almost doubled from the late 1980s to the first half of this decade (Table 7). From 2000 to 2005, one-third of international immigrants arriving Table 6. Jobs and Workers, by Educational Attainment, 2005 and 2025 2005 Jobs and Workers2025 Jobs2025 Workers Under Zero-Migration Projections Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree Total 2,290,000 2,911,000 4,236,000 3,046,000 1,734,000 14,217,000 2,721,000 3,192,000 4,494,000 5,409,000 2,917,000 18,733,000 2,239,000 3,412,000 4,631,000 3,458,000 1,698,000 15,438,000 Sources: Authors’ calculations for 2005 based on the American Community Survey; authors’ projections for 2025.Notes: See the textbox for our calculation methods. The numbers have been adjusted from esti-mates of the population and industrial employment to estimates of workers and jobs (see the text for details). Recent trends show that college graduate migration from other states has been far too small to provide the number the state’s economy will need. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 15 in California had a college degree. However, the net flows of college graduates from abroad still fall short of the projected need; in fact, they would have to more than dou- ble immediately to meet the pro- jected annual requirements for the economy. And although the share of immigrants arriving with a col- lege degree has risen over the long run, it has fallen recently from 37 percent in 2000–2001 to 29 per- cent in 2004–2005. This may be a consequence of the decline in the granting of visas for highly skilled workers, discussed below. These trends suggest that it is unlikely that migration of college- educated workers will bridge the gap. Even during the late 1980s, when the greatest net number of college-educated people came to California, net migration was about 60,000—less than 40 per- cent of the number required to meet the projected workforce needs. Many factors could increase or decrease such migration. One is the overall attractiveness of California. An annual survey of U.S. adults has consistently found over the past several years that if respondents could live in any state outside their own, California would be their first choice (Harris Poll, 2006). The state’s high home prices, often viewed as a barrier, may also reflect the increasing ability of more and more people with high incomes to choose where they want to live (Gyourko et al., 2006). However, those same housing prices have grown much faster than in other states, and high housing prices are still clearly a deterrent to moving here. In 1998, fewer than 10 percent of adults moving to other states cited housing as the primary reason they moved out of California in the previous year; by 2006, the percentage had jumped to 31.15 Wages are a second factor that will affect migration flows. A shortage of highly skilled workers in California should drive up their Table 7. Annual Average Projected Migration Required to Meet Economic Projections, and Historical Trends in Migration, by Educational Attainment ProjectionsHistorical Trends Total Net Migration Required to Meet Economic ProjectionsNet Domestic MigrationNet International Migration 2005 –20252000 –20051995 –20001985 –19902000 –20051995 –20001985 –1990 Not a high school graduate High school graduate Some college College graduate Total 24,100 (11,000) (6,900) 158,400 164,700 (14,600) (31,800) (33,800) (9,200) (89,400) (32,200) (27,000) (34,600) 11,400 (82,400) (4,200) (5,800) (600) 29,200 18,600 39,440 21,250 22,780 55,760 139,230 43,010 20,060 21,590 44,540 129,200 50,150 20,740 25,330 31,280 127,500 Sources: Authors’ projections for 2005 to 2025; authors’ calculations of historical migration using decennial Censuses and American Community Surveys.Notes: Net international migration assumes out-migration equal to 15 percent of in-migration. Based on adults ages 25– 64. . . . the net flows of college graduates from abroad still fall short of the projected need. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 16 wages and thus attract college- educated workers from other parts of the nation and world. At least two factors could work against this expectation, however. First, California is not the only state that needs these workers; the increase in demand is also expected in the rest of the nation (Neumark, 2005b). Second, the baby boom- ers, a large and important source of highly educated migrants to California in the past, have aged out of prime migration years. The youngest baby boomers in 2005 were 41 years old; and by 2025, many boomers will have reached retirement age (the oldest will be 79 years old). Since 1989, both California and the nation have experienced rising wages for college-educated workers, but the wage growth has been greater in California (Table 8). In 1989, a typical male worker with a bachelor’s degree earned $31 per hour in California and $28 per hour nationally—an 11 percent difference. By 2005, the average wage of such a worker had grown to $37 in California, 16 percent higher than the national level of $32 per hour. Despite this trend, the net migration of college- educated workers to California was much lower during recent years than in the 1980s or 1990s. So the better pay that California offers may still not be a strong enough draw to attract enough college graduates from other states.16 By comparison, international migrants appear to have been more responsive to wage adjustments in California and this could continue to be true. The growth in wages of college-educated workers in California was matched by strong growth in the international migra- tion of college-educated workers (Tables 7 and 8). The international pool of potential college-educated migrants from key countries is expected to continue to grow rap- idly and could lead to substantial increases in the numbers of college graduates coming here. In 1970, Table 8. Real Hourly Wage in California and the Nation, by Educational Attainment (in dollars) 1979198919992005 California Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree 22 24 27 33 34 19 21 24 31 36 19 20 25 35 39 21 21 26 37 44 United States Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree 19 21 24 30 31 17 18 21 28 32 17 18 21 30 34 17 18 22 32 37 Sources: Authors’ calculations using the 1980, 1990, and 2000 decennial Censuses and the 2005 American Community Survey.Notes: The table shows the predicted hourly wages for working men with 15 years of experience holding constant demographic variables at the California average in 2000. Values are inflation-adjusted to 2005 dollars using the CPI-U-RS from the Bureau of Labor Statistics. Wages are not adjusted for cost-of-living differences between California and the rest of the nation. The growth in wages of college-educated workers in California was matched by strong growth in international migration. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 17 71 percent of students enrolled in college worldwide were outside the United States; by 2000, this share had increased to 86 percent (Free- man, 2006a). California’s college graduates are increasingly likely to come from India, with the Philip- pines and China remaining impor- tant sources as well. Along with Korea, those countries contributed more than half the state’s immi- grant college graduates between 1995 and 2005 (Table 9). Fur- thermore, the number of college graduates in India and China is growing rapidly. Between 1991 and 2004, for example, the total number of college graduates in India more than doubled, from 20.5 million to 48.7 million (Shukla, 2005). By 2010, Chinese universities are expected to pro- duce more Ph.D.s in science and engineering than U.S. universities will (Freeman, 2006b). Federal Immigration Policy May Impede College Graduate Immigration I mmigration policy in the United States is slow to change and gives higher priority to the goal of family reunification than to the importation of highly skilled workers. Caps on the number of international immigrants admitted to live permanently in the United States are much higher for those in family-based than for skills- based categories. In the federal fiscal year 2005, only 20 percent (226,000) of the 1.1 million immigrants given legal permanent residency in the United States were based on employment for highly skilled workers, and most of those, 123,000, were granted to the spouses and children of such workers.17 Only Congress can change immigration caps (although some categories, such as the minor child of a legal per- manent resident, are not subject to caps) and so the system is slow to respond to changing labor and economic conditions. The U.S. sys- California’s college graduates are increasingly likely to come from India, with the Philippines and China remaining important sources as well. Table 9. College Graduates in California in 2005 and Arriving Between 1995 and 2005, by Country of Origin NumberPercentage of Total India Philippines China Korea Mexico Russia Japan Canada United Kingdom Iran All other countries Total 107,331 76,937 72,834 53,865 42,519 23,790 20,427 15,103 14,411 10,954 153,780 591,951 18 13 12 9 7 4 3 3 2 2 26 100 Source: Authors’ calculations using the 2005 American Community Survey.Notes: Total does not sum to 100 percent because of rounding. Based on adults ages 20 and over. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 18 tem is often compared unfavorably to the Canadian approach, which places greater emphasis on skills and allows levels to vary annually. The recent history of giving temporary visas for highly skilled workers, called H-1B visas, illus- trates some of these problems. H-1B visas allow skilled workers to live in the United States tem- porarily, initially for a period of three years. Employers must spon- sor such workers and both must meet a number of criteria to be eligible. The Immigration Act of 1990 set the annual cap for H-1B workers at 65,000. Many of these visa-holders work in the high-tech sector, and in 1997, at the height of the dot-com boom, the num- ber of applications for H-1B visas exceeded the cap for the first time. In response, Congress decided to raise the cap, an action that was controversial. Many argued that this action hurt U.S. workers. But by the time Congress responded by raising the cap (to 115,000 in 1999 and 2000, and 165,000 in 2001 through 2003), the dot-com boom had largely run its course and the number of applications was far below the caps. The quota returned to 65,000 in 2004. Since then, the demand for H-1B visas has risen dramatically with the number of applications exceeding the cap.18 Globalization Effects I ncreasing global competition for skilled labor suggests that California must compete with more destinations, including other states, than in the past.19 Some studies of the technology sec- tor suggest that a global shortage for skilled labor is already being felt and will intensify (McKinsey and Company, 2005). California will also be competing with the immigrants’ countries of origin for their labor. Some research suggests that the international brain drain (which benefits Cali- fornia) is increasingly becoming “brain circulation,” as interna- tional migrants from Taiwan and India return to their countries of origin to establish new firms or additional locations for California firms (Saxenian, 2006). Furthermore, college graduate migration may be reduced by the offshoring of highly skilled jobs to lower-wage countries. The Bureau of Labor Statistics (2006) has developed a list of 40 occupations susceptible to significant risk of offshoring in the future. Among the criteria for such work: It can be digitally transmitted, involves repetitive tasks, has clear require- ments with few nuances, and has little face-to-face interaction. The list includes many engineering and computer-related occupations and others that have a relatively high share of workers with a bachelor’s degree or more (48% for those on the list compared to 28% for other occupations). Discussion E conomic projections indicate that California’s employment will continue to shift toward college-educated workers, an inten- sification of trends over the last two decades. Population projec- tions show that without dramatic change, the state will not have the number of college graduates required by tomorrow’s economy. Meeting the skills gap by attract- ing more highly skilled migrants would require substantial increases in the number of college-educated migrants to the state, most likely from other countries. The net number of college-educated inter- national migrants to California has grown rapidly, with annual averages about 11,000 higher in the early 2000s as compared to the late 1990s. But even if this number Population projections show that without dramatic change, the state will not have the number of college graduates required by tomorrow’s economy. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 19 were to continue growing by the same amount every five years, by 2025 the annual number would be just over 100,000—substantially less than 158,000, the estimated average number needed each year between 2005 and 2025 to close the gap. In the past, large increases in the number of highly educated international migrants have been partly offset by declines in the net flow of highly educated domestic migrants. California’s high cost of housing has been at least one deterrent to attracting workers from other states. Future increases in the migration of college gradu- ates to California will close some of the gap, but to close it com- pletely would require an increase of unprecedented magnitude. Faced with a shortage of highly skilled workers, wages are likely to rise for these workers, continuing the trend in the grow- ing value of a college education in California. Wage adjustment should act as an incentive for more Californians to seek bache- lor’s degrees. The state clearly has a role in encouraging and enabling Califor- nians to attain bachelor’s degrees. First, most Californians prepare for college in the public K–12 system and a majority who start college do so through the public community colleges. Improvements or expansions in these systems will better prepare Californians for bachelor’s degree programs. Furthermore, most bachelor’s degree students in California attend a public institution. In 2005, 76 percent of adults gradu- ating from a California college with a bachelor’s degree attended a public college or university, so changes in public policy are likely to have direct effects. Ultimately, even strong growth in the num- bers graduating from California colleges is unlikely to fully close the workforce needs gap.20 Never- theless, of all the times to make an effort to increase educational attainment, doing so now may be particularly advantageous and can lead to better economic opportu- nities for Californians and possi- bly better outcomes for the state. ◆ Economic projections indicate that California’s employment will continue to shift toward college-educated workers, an intensification of trends over the last two decades. rate than other groups, but the Census Bureau estimates that the 2000 Census had a lower undercount rate than the 1990 Census. Thus, the increases in educational attain-ment between 1990 and 2000 cannot be attributed to an increase in the undercount of undocumented immigrants. The extent to which undocumented immigrants are counted in the American Community Survey is unknown; however, the ACS population weights are based on independent estimates of the state’s population that attempt to account for undocumented immigration. 8 Between 2000 and 2005, international in-migration to California totaled 1,514,000 according to the American Community Sur-vey (the Current Population Survey places the figure at 1,550,000). The Census Bureau estimates the state’s net international immi-gration at 1,342,000 for this same period, and the comparable figure from the Califor-nia Department of Finance is 1,166,000. 9 Other projections show similar trends. We use CalTrans economic projections by industry, developed by Mark Schniepp of the California Economic Forecast, because they extend to 2025 and include farm work-ers. Neumark (2005b) shows that industry projections from the California Employment Development Department and the UCL A Anderson Forecast also imply a substan-tial demand shift toward college-educated workers. Projections of employment by occupation also show a demand shift but, when combined with occupational educa-tion needs produced by the Bureau of Labor Statistics (BLS), they suggest only a small increase in the share of jobs requiring at least a bachelor’s degree. Nevertheless, Fountain (2006) concludes that California will face a shortage of college-educated workers using occupation projections from the California Employment Development Department combined with educational needs by occupa-tion from the BLS. Because the educational needs estimates from the BLS account only for a single level of training for each occupa-tion and do not consider the variation in educational needs within an occupation, we use the actual skill levels of workers for a more accurate picture of the range of skill requirements within an industry (see Neumark, 2005b, for further discussion of this issue). For example, within the group of occupations characterized by the BLS as requiring an associate’s degree, almost half Notes 1 The projected growth in demand for educa-tion in the California labor market continues a long-term trend over the last two decades in the state and in the nation (see Reed, 1999). Throughout this report, we use the term highly skilled to mean college educated. 2 We define a college graduate as an adult with at least a bachelor’s degree. For data before 1990, we define someone who has completed at least four years of college as a college graduate. 3 Throughout this report, working-age refers to adults ages 25 through 64. All data presented are for that age group unless otherwise noted. 4 Converting DOF net domestic migration estimates to gross flows and applying propor-tions of college graduates derived from CPS data to those gross flows yields an estimate of an annual net gain of 15,000 college gradu-ates ages 25 to 64 between 2000 and 2005. However, even the DOF net domestic migra-tion estimates imply a small net loss in the last two years. 5 The CPS and ACS samples are weighted to agree with Census Bureau estimates of the state’s total population. If we instead weight the CPS and ACS to DOF’s estimates of the state population, the estimates of domestic migration from the CPS and ACS samples change only slightly. For example, the ACS estimate of a net domestic migration loss of 834,000 between 2000 and 2005 is reduced to a loss of 771,000 using weights that sum to DOF population totals. 6 These figures are for all adults ages 20 to 64 and are based on the authors’ calculations using 2000 Census data and the 2000 –2005 American Community Surveys. From 2000 to 2005, California continued to gain young college graduates between the ages of 20 to 25 from other states even as it lost older col-lege graduates to other states. 7 The Censuses and the American Commu-nity Survey attempt to include all residents of the United States regardless of legal status. Undocumented immigrants, a group with low levels of educational attainment, are almost certainly undercounted at a higher of U.S.-born workers nationally report hav-ing a bachelor’s degree. Controlling for other factors and specific occupations, workers in these occupations who have bachelor’s degree earn an average of 17 percent more than workers who have an associate’s degree, suggesting that the labor market does value a bachelor’s degree even within these occupa-tions. However, the labor market appears to place a lower value on a foreign bachelor’s degree with 64 percent of foreign-born work-ers in these occupations holding a bachelor’s degree and those workers receiving only 12 percent higher wages than similar workers with an associate’s degree. 10 Health and education services does not include public school teachers who are classi-fied in the “government” sector by the Cali-fornia Department of Transportation. This sector is projected to grow, albeit more slowly than the overall economy. 11 This adjustment implicitly assumes that sev-eral factors will remain the same in 2025 as in 2005 within each education group: the share of jobs held by people ages 25– 64, the share of people with more than one job, the share of people self-employed, and the share of people in the Armed Forces. There are several plau-sible alternatives to these assumptions, but the alternatives do not lead to changes in the estimates of sufficient magnitude to affect our conclusions drawn from Table 7. 12 This adjustment implicitly assumes that labor force participation rates will remain the same in 2025 as in 2005 within each education group. In the event of a shortage of skilled workers, growth in the wages of such workers would likely induce an increase in labor force participation. However, even if labor force participation among college-educated workers increased from current levels of about 83 percent to 95 percent, the net migration need in the first column of Table 7 would remain substantial at about 131,000 college-educated workers annually. 13 With no migration, the projected number of workers with a graduate degree in 2025 is lower than the number in 2005. This occurs because foreign-born workers are a particu-larly large share of California workers with a graduate degree. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 20 14 The net migration estimates in Table 7 are based on the migration of people ages 25 to 64. Some younger migrants will arrive before 2025 and will be of working age by 2025. We estimate the net number of such migrants to be about 23,000 migrants annu-ally, judging by past trends in child and young adult migration. Even if half of these migrants were to obtain a bachelor’s degree, the estimated number of college-educated workers needed annually would remain sub-stantial at almost 147,000. 15 Based on authors’ calculations using annual Current Population Survey data. Figures for college graduates are similar, with only 7 percent citing a housing-related reason in 1998 and 27 percent doing so in 2006. Housing-related reasons include cheaper housing, new or better housing, owning rather than renting, wanting a bet- ter neighborhood, and establishing one’s own household (but not a change in marital status). A plurality of domestic out-migrants (37% in 2006) cite job-related reasons. 16 Table 8 also shows that since 1989, wages for college-educated workers have grown whereas wages for high-school-educated workers have been stagnant in California and in the nation. These trends suggest a rising demand for college-educated workers, consis-tent with our projections. 17 Of course, some of the family-based immi-grants are highly educated. Estimates are based on data compiled from the Yearbook of Immigration Statistics (U.S. Department of Homeland Security, 2006). California Counts Can California Import Enough College Graduates? Public Policy Institute of California 18 For federal fiscal year 2008, the limit on H-1B visas was reached in the first day that such applications could be filed, with 150,000 applications filed on April 2, 2007. 19 In 2005, 27 percent of the nation’s immi-grants resided in California, compared to 33 percent in 1980. California’s share of highly educated immigrants has also declined slightly over this time period (24% of college graduates in 2005 lived in California, com-pared to 27% in 1990). 20 Data from the California Postsecondary Education Commission show that roughly 140,000 people graduate with a bachelor’s degree from California colleges each year. For studies of the value to California of college-educated workers and the returns to state investments in college education, see Fountain (2006) and Brady et al. (2005). 21 California Counts Can California Import Enough College Graduates? Public Policy Institute of California Freeman, R ichard B., “Labor Market Imbal-ances,” paper presented at the Boston Federal Reserve Economic Conference, Boston, Mas-sachusetts, June 2006b. Gyourko, Joseph, Christopher Mayer, and Todd Sinai, “Superstar Cities,” National Bureau of Economic Research, Working Paper No. 12355, Cambridge, Massachu-setts, July 2006. Hanak, Ellen, and Mark Baldassare (eds.), California 2025: Taking on the Future, Public Policy Institute of California, San Francisco, California, 2005. Harris Poll, “California and New York City Remain Most Popular Places People Would Choose to Live,” September 6, 2006, avail-able at http://w w w.harrisinteractive.com/ harris_poll/index.asp?PID=697. Johnson, Hans P., “California’s Population in 2025” in Ellen Hanak and Mark Baldassare (eds.), California 2025: Taking on the Future, Public Policy Institute of California, San Francisco, California, 2005. McKinsey and Company, The Emerging Global Labor Market, June 2005. Neumark, David, “California’s Economic Future and Infrastructure Challenges,” in Ellen Hanak and Mark Baldassare (eds.), California 2025: Taking on the Future, Public Policy Institute of California, San Francisco, California, 2005a. References Brady, Henry, Michael Hout, and Jon Stiles, Return on Investment: Educational Choices and Demographic Change in California’s Future, University of California, Berkeley, December 2005. Bureau of Labor Statistics, “Chapter II. Accounting for Offshoring in Occupational Employment Projections,” Occupational Pro-jections and Training Data, 2006 – 07 Edition, U.S. Department of Labor, Washington, D.C., 2006. California Department of Transportation, 2005 All County Forecast Book, Office of Transportation Economics, California, 2005, available at http://w w w.dot.ca.gov/hq/tpp/offices/ote/socio-economic.htm. Card, David, and Thomas Lemieux, “Going to College to Avoid the Draft: The Unin-tended Legacy of the Vietnam War,” Ameri-can Economic Review, Vol. 91, May 2001. Fountain, Robert, Keeping California’s Edge: The Growing Demand for Highly Educated Workers, California Business Roundtable and the Campaign for College Opportunity, Sac-ramento, California, 2006. Freeman, R ichard B., “Is a Great Labor Shortage Coming? Replacement Demand in the Global Economy,” NBER Working Paper No. 12541, National Bureau of Economic Research, Cambridge, Massachusetts, Sep-tember 2006a. Neumark, David, California’s Economic Future and Infrastructure Challenges, Occa-sional Paper, Public Policy Institute of Cali-fornia, San Francisco, California, 2005b. Reed, Deborah, California’s Rising Income Inequality: Causes and Concerns, Public Policy Institute of California, San Francisco, California, 1999. Reed, Deborah, Laura E. Hill, Christopher Jepsen, and Hans P. Johnson, Educational Progress Across Immigrant Generations in Cali-fornia, Public Policy Institute of California, San Francisco, California, 2005. Reyes, Belinda, Dynamics of Immigration, Public Policy Institute of California, San Francisco, California, 1997. Saxenian, AnnaLee, The New Argonauts: Regional Advantage in a Global Economy, Harvard University Press, Cambridge, Mas-sachusetts, 2006. Shukla, Rajesh, India Science Report; Sci-ence Education, Human Resources and Public Attitude towards Science and Technolog y, India National Council of Applied Economic Research, New Delhi, India, 2005. U.S. Department of Homeland Security, Yearbook of Immigration Statistics: 2005, Office of Immigration Statistics, Washing-ton, D.C., 2006. 22 California Counts Can California Import Enough College Graduates? Public Policy Institute of California The Public Policy Institute of California is a private, nonprofit research organization established in 1994 with an endowment from William R. Hewlett. The Institute conducts independent, objective, nonpartisan research on the economic, social, and political issues affecting Californians. The Institute’s goal is to raise public awareness of these issues and give elected representatives and other public officials in California a more informed basis for developing policies and programs. Copyright © 2007 by Public Policy Institute of California A ll rights reserved San Francisco, CA Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source and the above copyright notice is included. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. PUBLIC POLICY INSTITUTE OF CALIFOR NIA 500 Washington Street, Suite 800 San Francisco, California 94111 Telephone: (415) 291-4400 Fax: (415) 291-4401 w w w.ppic.org ISSN #1554-401X Board of Directors Thomas C . Sutton, Chair retired Chairman and Chief executive officer p acific life insurance Company Mark Baldassare p resident and Chief executive officer p ublic policy institute of California Linda Griego p resident and Chief executive officer Griego enterprises, inc. Edward K. HamiltonChairman Hamilton, rabinovitz & alschuler, inc. Gary K. Hart f ormer state senator and secretary of education s tate of California Walter B. Hewlett d irector Center for Computer assisted research in the Humanities Ki Suh Park d esign and Managing partner Gruen associates Constance L . Rice Co- director The advancement project Raymond L . Watson Vice Chairman of the Board emeritus The irvine Company Carol Whiteside p resident Great Valley Center About the Authors Hans P. Johnson is a research fellow at the Public Policy Institute of California. Deborah Reed is director of research at the Public Policy Institute of California. Contributors Amanda Bailey provided valuable assistance in updating information on worker education levels for economic projections. The authors acknowledge the helpful comments of Pamela Burdman, Mary Heim, and David Neumark and are grateful to The William and Flora Hewlett Foundation for providing funding for this research. The California 2025 project was supported with funding from The William and Flora Hewlett Foundation. 23 California Counts Can California Import Enough College Graduates? Public Policy Institute of California NON-PROFIT ORG.U.S. POSTAGE PAID BRISBANE , CAPERMIT #83 PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 800 San Francisco, California 94111 Can California Import Enough College Graduates? In This Issue This issue of California Counts popu l at ion t r e nds a nd profil e s is part of PPIC’s California 2025 project, an ongoing study of the major trends and forces shaping California over the next two decades. Other California 2025 publications include: California 2025: Taking on the Future At Issue: California’s Exclusive Electorate California 2025: In Your Hands These publications and other features are available free of charge at www.ca2025.org" } ["___content":protected]=> string(106) "

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By Hans P. Johnson and Deborah Reed V o l u m e 8 N u m b e r 4 • M a y 2 0 0 7 California’s labor market has changed dramatically over the past two decades because of rising demand for highly educated workers. Although economic projections for California indicate a continu- ation of this trend, projections of educational attainment for the future population strongly suggest a mismatch between the level of skills the population is likely to possess and the level of skills that will be needed to meet economic projections. PPIC’s report, California 2025: Taking on the Future, highlighted this mismatch and in this issue of California Counts, we assess whether the state will be able to attract enough college graduates from other states and other countries to meet the projected economic demand. Our analysis shows that the state can do so only if it attracts college graduates in unprec - edented numbers. But judging by recent trends, it seems unlikely that a substantial number of college graduates will migrate to California. Estimates for the 1990s and the early 2000s suggest that, on net, California attracted relatively few college-educated migrants from other states, and most recently, the state has seen more college-educated residents leaving for other states than arriving. One reason for this is California’s high cost of housing, which has made the state less accessible to residents of other states. Moreover, the baby boomers, who histori- cally provided California with a large supply of college graduates from other parts of the coun- try, are beyond the young adult ages when interstate migration is most common. Summary Hans P. Johnson, editor California Counts Can California Import Enough College Graduates? Public Policy Institute of California 2 To bridge the gap between supply and demand through migration, those with high skills would need to come from other countries. Hence, meeting the demand would require an intensification of current trends: Between 2000 and 2005, for the first time, immigrants to California with a college degree exceeded the number of immigrants who were not high school graduates. Large increases in the number of college graduates in other countries indicate that this trend could continue to intensify but the number of highly educated immigrants to California would still need to more than double to meet projected needs. U.S. immigration law would need to change fairly dramatically, and it seems unlikely that this will happen in the near future. Moreover, increasing global demand for highly skilled labor, including increasing demand in origin countries, makes it even less likely that California could successfully and sufficiently compete for large numbers of highly skilled labor from other countries. We conclude that it is extremely unlikely that the projected need for highly skilled workers will be met mainly through the increased migration of college-educated workers. However, increases in college participation and graduation among California’s residents could help meet these future demands. Such increases will be at least partly induced by the wage growth that will occur as highly skilled labor becomes relatively scarce. Public policy in California, a state where the vast majority of college students are in public institutions, has an important role to play in accommodating and even encouraging such increases. To bridge the gap between supply and demand through migration, those with high skills would need to come from other countries. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 3 Introduction P PIC’s report, California 2025, highlighted the potential mismatch between the skill levels that will be needed in Califor- nia’s increasingly highly skilled economy and the skill levels the future population is likely to possess (Hanak and Baldassare, 2005; Johnson, 2005; Neumark 2005a).1 Only 33 percent of the state’s working-age adults were projected to have a college degree in 2020, but 39 percent of jobs in the state’s economy were projected to need a college graduate worker. That analysis assumed that past trends in population change would continue into the future. In particular, past trends in patterns of college graduates moving into and out of the state were used to gauge future patterns. In this issue of California Counts, we assess whether the state might be able to attract even more college gradu- ates from other states and other countries to meet the projected economic demand. We begin with a discussion of the context: California’s relatively highly skilled economy and the role that domestic and interna- tional migration has played in fueling economic growth. We then examine the projected skills gap in the absence of the migra- tion of college-educated workers to gauge how many such workers the state would need to attract by 2025. In the final sections, we consider the likelihood of bridging the skills gap through migration. We focus on the skills gap in college graduate workers—an important focus of the California 2025 study. However, we do not intend to imply that a policy focus on college graduates is the only way, or even the most important way, for California to prepare the future workforce. Certainly, other forms of workforce training, includ- ing vocational education, are important to consider in address- ing the skills gap. Throughout the report, when we refer to skill needs or requirements, we mean the worker education levels that would be needed to meet eco- nomic projections. In 2025, as in any year, worker supply will equal worker demand in the sense that the education of Californians who work will be the same as the education of workers in Califor- nia jobs. If the education levels of the population do not increase substantially more than projected in the California 2025 study, then the California economy will be less highly skilled than projected. Context C alifornia’s economy has long been characterized as relatively skilled, one that demands large numbers of college graduates. Moreover, California’s economy has become more highly skilled over time, as has the economy in We conclude that it is extremely unlikely that the projected need for highly skilled workers will be met mainly through the increased migration of college- educated workers. However, increases in college participation and graduation among California’s residents could help meet these future demands. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 4 were born outside the state, a pat- tern that has persisted for many decades (Figure 3)—although within this group, the share born in other states has declined sharply and the share born in other coun- tries has increased dramatically. Since 1980, these two trends have mostly offset each other. Recent Trends in the Domestic Migration of College Graduates T here is some dispute about the overall level of domestic migration into and out of Cali- fornia in this decade. The U.S. Census Bureau estimates that from 2000 to 2005, the state lost 644,000 people to other states and the California Department of Finance (DOF) estimates that the state gained 173,000 people via domestic migration during that period. Those two widely divergent estimates in turn imply very different recent levels of net flows of college-educated adults. The state estimate implies that California continues to gain col- lege graduates from the rest of the United States, albeit fewer than in the past, whereas the federal estimates imply losses of college graduates.4 Annual estimates of net domestic migration from four sources (Figure 4) show that the discrepancy persists across years and is consistently in the same direction. American Community Survey (ACS) figures are closer to Figure 1. California Adults, by Educational Attainment, 1960–2005 Number of adults (millions) 1990198020051970198519751995200019651960 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey.Note: Based on adults ages 25 to 64. 0 5 6 4 3 2 7 1 College graduate Some college High school graduate Not a high school graduate Immigration has long been an important source of college graduates in California. the rest of the nation. Growth in the number of college graduates in California has outpaced overall population growth for decades.2 In 1960, when the state’s Master Plan for Higher Education was developed, only 10 percent of adults were college graduates; by 2005, 31 percent were. Between 1960 and 2005, the number of working-age adults with at least a bachelor’s degree increased more than sixfold, whereas the overall working-age population almost doubled.3 By 2005, for the first time in the state’s history, college graduates outnumbered any other education group (Figure 1). The state tends to be relatively well- educated compared to the rest of the nation; California ranks 12th among the 50 states in terms of the percentage of adults ages 25 and older who are college gradu- ates (Figure 2). Immigration has long been an important source of college gradu- ates in California. A large majority of California’s college graduates California Counts Can California Import Enough College Graduates? Public Policy Institute of California 5 Figure 2. Percentage of College Graduates Among Adults Ages 25 and over, by State, 2005 5403530252015100 Percentage Source: Authors’ calculations using the 2005 American Community Survey. Minnesota ConnecticutColorado MarylandNew JerseyVirginiaVermont Massachusetts New HampshireNew York Nebraska Rhode IslandCalifornia IllinoisKansasHawaiiUtah Washington OregonDelaware North Carolina GeorgiaUnited States MontanaPennsylvaniaMaineArizona Alaska North DakotaFlorida Wyoming WisconsinNew Mexico South DakotaMichiganMissouriIowa Texas IdahoOhio Nevada South CarolinaOklahomaTennesseeAlabamaIndiana ArkansasKentucky MississippiWest Virginia 37 30 27 17 Louisiana California Counts Can California Import Enough College Graduates? Public Policy Institute of California 6 those of the Census Bureau, and estimates from the much smaller federal Current Population Sur- vey (CPS) are more volatile.5 The latest estimates from the state Department of Finance show net domestic migration losses continu- ing to 2005–2006 (not shown in Figure 4), so there is agree- ment that the state is now losing domestic migrants to other states, although the magnitude of that loss remains in dispute. It is clear that since the 1970s, there has been a sharp decline in the share of California’s college graduates who were born in other states. This is attributable to the overall decline in migration from other states across all education 26 Figure 3. Distribution of California College Graduates, by Place of Birth Percentage 1980200520001990 3437 2933 46 21 31 64 26 66 8 353331 19701960 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey.Note: Based on adults ages 25 to 64. 0 50 60 40 30 20 70 109 53 15 Born in California Born elsewhere inthe United States Foreign-born Figure 4. Estimates of Annual Net Domestic Migration Number of migrants (thousands) 2002–20032004–20052003–2004 –47 –126–128(129) 2001–20022000–2001 Sources: Authors’ calculations using Current Population Survey (CPS) and American Community Survey (ACS) data; California Department of Finance (DOF) E-6 report; and U.S. Census Bureau “Annual Estimates of the Components of Population Change,” tables for the nation and the states. –300 50 100 0 –50 –100 –150 150 –200 –250 DOF Census Bureau CPS ACS ACS and CPSweighted average 97 –108 –9 –134(114) 66 –95–79(58) 7066 –155 –213(208) 16 –181 –239 –281(260) –29 62 California Counts Can California Import Enough College Graduates? Public Policy Institute of California 7 fornia are relatively few, so that in the early part of this decade, the state experienced no net increases in the number of college gradu- ates moving to and from other states. Indeed, ACS data show that California lost some college graduates to other states, in addi- tion to the hundreds of thousands of less-educated residents who also left. This outflow—of less-educated adults—leads to a higher percent- age of college graduates among the population remaining here. In this decade, domestic migration has increased the percentage of Californians with a college degree primarily because less-educated residents are leaving. In contrast, in previous decades the state gained college graduates while losing less- educated adults (Table 2, bottom panel). Of course, if these estimates overstate outflows from the state, as suggested by California Depart- ment of Finance data, then domes- tic migration of college graduates to California is actually somewhat In this decade, domestic migration has increased the percentage of Californians with a college degree primarily because less-educated residents are leaving. groups. This domestic migration, once the leading source of popula- tion growth in California before the 1990s, now contributes little if anything to it. From at least the 1940s through the 1970s, migra- tion from other states was a far more important source of growth than international migration, but now the reverse is true. Although net domestic migra - tion overall has declined, sizable numbers of people still flow into and out of California. For exam- ple, data from the 2005 American Community Survey suggest that in 2004 and 2005, almost 500,000 people moved into California from other states but more than 700,000 moved out. The educa- tional attainment distributions of these two flows are quite different, and so domestic migration still has an important effect on the share of college-educated Californians. Those arriving from other states tend to be better educated, with a large share having graduated from college (Table 1). Between 2000 and 2005, almost half of this group of immigrants from other states had completed college. Those leaving California for other states tend to be less educated, with almost a third having no more than a high school diploma during the same time period. However, the relative sizes of the two groups are very different: Many more people are leaving the state than are mov- ing here (according to the ACS data). Domestic migrants to Cali- Table 1. Educational Attainment of Domestic Migrants Moving into and out of California, 2000–2005 Domestic In, %Domestic Out, % Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree 9.0 15.1 27.6 28.4 20.0 11.1 20.5 30.2 25.0 13.2 Source: Authors’ calculations using the 2001–2005 American Community Surveys.Notes: Respondents were asked where they lived one year before the survey. Based on adults ages 25– 64. higher. Still, it is not dramatically so, and the general pattern of greater losses of less-educated residents is undoubtedly true. It is also clear that the share of college graduates among migrants arriving from other states has increased across time. In 1960, only 10 percent of California residents ages 25 to 64 who were born in another state were college graduates; by 2005, 43 percent California Counts Can California Import Enough College Graduates? i Public Policy Institute of California 8 were (see Figure 5). This increase was more pronounced than the overall increase in the share of college graduates in the state or nation; that is, the group coming to California from other states has become even more strongly skewed toward those with high levels of education. All of this means that the net domestic flow of college graduates from other states has been quite small over the past 10 years—even turning negative in this decade for those ages 25 to 64 (but remain- ing positive if 20- to 24-year-olds are included). The state appears to be losing hundreds of thousands Table 2. Domestic Migration Flows of Adults, by Educational Attainment Domestic In-Migrants Not a High School GraduateHigh School GraduateSome CollegeCollege GraduateTotal 1985 –1990 1995 –2000 2000 –2005 120,000 79,000 118,000 220,000 139,000 194,000 377,000 276,000 350,000 461,000 475,000 612,000 1,178,000 969,000 1,274,000 Domestic Out-Migrants 1985 –1990 1995 –2000 2000 –2005 141,000 240,000 191,000 249,000 274,000 353,000 380,000 449,000 519,000 315,000 418,000 658,000 1,085,000 1,381,000 1,721,000 Net Domestic Migration Flow 1985 –1990 1995 –2000 2000 –2005 (21,000) (161,000) (73,000) (29,000) (135,000) (159,000) (3,000) (173,000) (169,000) 146,000 57,000 (46,000) 93,000 (412,000) (447,000) Sources: Authors’ calculations using the 1990 and 2000 decennial Censuses and the 2001–2005 American Community Surveys.Notes: Respondents were asked where they lived five years before the survey in the decennial Census. For 2000 –2005, respondents were asked where they lived one year before the survey and we cumulated responses across five years. Based on adults ages 25– 64. Figure 5. Percentage of Domestic Migrants with a College Degree Percentage 2000–2005 48 30 49 29 3938 1995–20001985–1990 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey.Note: Based on adults ages 25 to 64. 0 50 40 30 20 60 10 Domesticin-migrants Domesticout-migrants California Counts Can California Import Enough College Graduates? Public Policy Institute of California 9 of less-educated adults to other places in the country. From 1995 to 2005, the state lost more than one million adults ages 20 to 64 who did not have a college degree, whereas it gained just under 100,000 college graduates from other states.6 Recent Trends in International Migration F or many decades, California has been the most popular destination of immigrants to the United States. The most recent large wave of international migrants to California and the United States began in the 1970s. That wave strengthened consider- ably in the 1980s and continued into the 1990s and this decade. In 1970, only 9 percent of Cali- fornians were foreign-born; today, about 30 percent are. Many foreign-born residents of California are highly educated, although many more have low levels of educational attainment. In 2005, more than one-third (36%) of foreign-born adults in California (ages 25 to 64) had not graduated from high school, but college graduates do make up a substantial share. Indeed, foreign- born residents are only slightly less likely than California-born resi- dents to have graduated from col- lege (25% versus 29%). The share of college graduates among the state’s foreign-born population has risen steadily over time. In 1960, among 25- to 64-year-olds, only 8 percent of the foreign-born in California were college graduates. In absolute terms, the number of foreign-born college graduates liv- ing in California increased almost 30-fold, from 65,000 in 1960 to 1.8 million by 2005. The number of recently arrived highly skilled immigrants has also increased dra- matically (Figure 6). Some international immi - grants come to California as young children or young adults and complete their education in the state; others come to Cali- fornia already having completed college.7 As shown in Table 3, immigrants who have recently arrived from other countries have been the best-educated immigrants California has ever received, with one-third having graduated from college. For the first time ever among recent inter- national immigrants, the number of college graduates exceeded the number who had not completed high school. Although we have data for domestic migration flows both to and from California, we do not have good information on the gross flows of migrants out of California to other countries and so do not know the net increase in college graduates resulting from international migration; the fig- ures in Table 3 show only gross flows into the country. Both the Census Bureau and the California Figure 6. Number of Foreign College Graduates Migrating to California 0 300 250 200 150 100 350 Number of migrants (thousands)50 2000–20051995–20001985–19901975–19801965–1970 Sources: Authors’ calculations using decennial Census data and the 2005 American Comm unity Survey. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 10 Methods” provides details of our approach. The new economic projections are consistent with the previous series used in PPIC’s California 2025 report.9 The projections cat- egorized by industry, show that the state’s economy will continue to demand more highly educated workers. This occurs as the state’s economy continues to shift toward industries that need more highly skilled workers and as skill levels increase within industries. The health and education services industry is projected to be the most important growth industry in the state, increasing from 10.8 percent of all jobs in 2005 to likely than other workers to return to Mexico. Trouble Ahead? Economic and Demographic Projections T o assess whether domestic and international migration might resolve the projected shortfall in the number of college-educated workers, we updated and extended our population projections and economic analysis from 2005 using new data. The text box “Economic and Demographic Projections Department of Finance estimate net international migration to the state when developing annual estimates of the state’s population. Combining those estimates, which are not broken down by age or education, suggests that the per- centage of people leaving the state for other countries is between 11 and 23 percent of those arriving.8 Most emigration to other coun- tries consists of return migrants— people returning to their original countries of departure after stay- ing in the United States for some time. In a study of return migra- tion to Mexico, Reyes (1997) found that less-educated, low-wage, and undocumented workers were more Table 3. Educational Attainment of Recently Arrived Immigrants, 1985–1990, 1995–2000, and 2000 –2005 Not a High School GraduateHigh School GraduateSome CollegeCollege GraduateTotal 18- to 64-year-olds 1985 –1990505,000 (45%)193,000 (17%)217,000 (19%)201,000 (18%)1,116,000 (100%) 1995 –2000424,000 (39%)186,000 (17%)190,000 (17%)286,000 (26%)1,086,000 (100%) 2000 –2005342,000 (31%)201,000 (18%)204,000 (18%)363,000 (33%)1,110,000 (100%) 25- to 64-year-olds 1985 –1990295,000 (39%)122,000 (16%)149,000 (20%)184,000 (25%)750,000 (100%) 1995 –2000253,000 (33%)118,000 (16%)127,000 (17%)262,000 (34%)760,000 (100%) 2000 –2005218,000 (28%)120,000 (15%)132,000 (17%)320,000 (41%)790,000 (100%) Sources: Authors’ calculations using the 1990 and 2000 decennial Censuses and the 2001–2005 American Community Surveys.Note: Recently arrived immigrants are those who arrived within the past five years. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 11 Economic projections. Projections of the educational demands of the future workforce follow the methods developed in Neumark (2005b). We use economic projections by industry from the California Department of Transportation (2005). For each industry, we calculate the education of California workers in 2005 using the Earner Study of the Current Population Survey from the U.S. Census Bureau. We project the education needs of the industry in 2025 assuming that the worker education changes occurring from 1995 to 2005 will continue (using linear extrapolation). For example, for health and education services, we estimate that the share of workers with a college degree increased from 36.7 percent to 42.6 percent from 1995 to 2005. Continuing this growth for two additional decades leads to a projection of 54.4 percent for 2025. Our pro- jections reflect a continued upgrading in worker education within industries consistent with California’s experience since 1980. Our approach, a continuation of recent trends, is also consistent with the approach used for the demographic and industry employment projections. Neumark (2005b) considers a “static” alter- native projection whereby education needs within each industry remain at current levels. When combined with static demographic projections (i.e., people within each demographic group maintain current education levels; see Johnson, 2005), the projections also lead to a shortage of college-educated workers, although a smaller shortage than is implied by the projections here. Demographic projections. We use a cohort component model to develop population projections by edu- cational attainment. In this model, age-specific mortality and migration rates are applied to a base year population broken down by age to project subsequent year populations. In our model, because we want to develop projections in the absence of migration, we set migration rates equal to zero. We disaggregate our populations and mortality rates by age (five-year age groups up to 90 and older); by six mutually exclusive ethnic groups (white, Latino, African American, American Indian, Asian and Pacific Islander—referred to as Asian—and multiracial); by two nativities (U.S.-born and foreign-born) and two genders; and by five educational attainment categories (not a high school graduate, high school graduate, some college, bachelor’s degree, and graduate degree). Because we set migration to zero, the model is fairly straightforward. For example, the number of U.S.-born Latino males ages 55 to 59 with a bachelor’s degree in 2025 equals the number of U.S.-born Latino males ages 35 to 39 with a bachelor’s degree in 2005 times the probability of surviving (one minus the mortality rate for that group) over the 20-year period. We also make an adjustment for education completed after age 30 based on recent trends in educational improvements by cohort. Our base population is the 2005 American Community Survey population broken down by the categories listed above. Fertility does not affect our projections because we focus only on the age range 25 to 64 in 2025. Mortality rates are age-, ethnic-, nativity-, and gender-specific (but not education-specific). Thus, we do not allow mortality rates to differ by educational attainment. Our base rates for mortality are from 2000 values calculated by combining administrative vital statistics data with Census counts of the state’s population. We allow mortality rates to decline by 1 percent for each five-year period. For younger cohorts (e.g., those ages 5 to 9 in 2005 and 25 to 29 in 2025), we project completed educational attainment based on parents’ edu- cational attainment. We use our own previous estimates of the relationship between parents’ education and children’s eventual levels of education by ethnicity and nativity. See Reed et al. (2005) for our method. Economic and Demographic Projections Methods California Counts Can California Import Enough College Graduates? Public Policy Institute of California 12 13.2 percent of all jobs in 2025.10 In this industry, 43 percent of workers in 2005 held a bachelor’s degree and, if trends over the last decade continue, that share is expected to grow to 54 percent by 2025. The second most important growth industry is projected to be professional services, which includes legal, engineering, and computer services, among others. The share of workers in this indus- try is projected to grow from 14.7 percent to 16.4 percent. The com- position of this industry has been changing rapidly and the share of workers with a college degree is projected to grow from 35 percent to 54 percent in 2025. The manu- facturing industry, where only 30 percent of workers have a college education, is projected to be the one most in decline, falling from 10.8 percent to 8 percent of all jobs. These economic projections suggest that by 2025, two of every five jobs (41%) will require a col- lege graduate, an increase from less than one-third of all jobs in 2005 (Table 4). In absolute terms, the total number of jobs is projected to increase by 4.5 mil- lion. The vast majority of this net increase in jobs will be due to job growth at the high end, with 3.5 million additional jobs for people with either a bachelor’s or graduate degree. Job growth is expected to be weakest for high school graduates and for those with some college but no degree. In those categories, the number of jobs is expected to grow less than 10 percent over the entire 20-year period. In contrast, there will be a 68 percent increase in jobs requir- ing a graduate degree and a 78 percent increase in jobs requiring a bachelor’s degree. How many college graduates would reside in California in 2025 if the state experienced no migra- tion? Our projections show that if current trends continue without a major change in college-going and in college graduation, the proportion would remain essen- tially unchanged, with about three in 10 working-age adults having graduated from college, both in 2005 and in 2025 (Table 5). How- ever, the ethnic makeup of these college graduates is expected to show some shifting, with some increases projected among Latinos and Asians. Among Latinos, the group least likely to graduate from college, younger cohorts will see especially strong increases. For example, among 30- to 34-year- olds, 18 percent are projected to be college graduates in 2025 compared to only 11 percent in 2005. This increase is due both to a greater share of U.S.-born Lati- nos in this cohort in 2025 than Table 4. Skill Needs of Jobs in California (All Ages), by Educational Attainment Number of Jobs 20052025 Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree Total number of jobs 2,592,000 (17%) 3,348,000 (22%) 4,571,000 (30%) 3,167,000 (21%) 1,458,000 (10%) 15,135,000 3,079,000 (16%) 3,671,000 (19%) 4,849,000 (25%) 5,624,000 (29%) 2,452,000 (12%) 19,676,000 Sources: Authors’ calculations using industry projections from the California Department of Transportation (2005) and worker education from the 1995 and 2005 Earner Study of the Current Population Survey. Notes: See the textbox for our calculation methods. Percentages may not sum to 100 percent because of rounding. These economic projections suggest that by 2025, two of every five jobs (41%) will require a college graduate, an increase from less than one-third of all jobs in 2005. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 13 in 2005 (U.S.-born Latinos are much more likely than foreign- born Latinos to graduate from college), and to the increasing educational attainment of the parents of Latino children; paren- tal educational attainment is a strong predictor of the educational attainment of children (Reed et al., 2005). Among Asians, already high levels of educational attain- ment will increase to even higher levels as very highly educated younger cohorts age and replace older cohorts who are not as well educated. For example, among 50- to 54-year-old Asians, the share with a college degree is pro- jected to increase from 42 percent to 60 percent. Little change is expected in the proportion of whites with a college degree. The lack of overall progress in educational attainment in the absence of migration can be attributed to two related factors: the aging of highly educated older Californians past their working ages, between 2005 and 2025, and the increase in the share of the working-age population compris- ing ethnic groups that tend to have fewer college graduates. Cur- rently, California’s most-educated cohorts are older white adults. The three age groups in 2005 with the highest percentages of college graduates were 55 to 59 (35%), 50 to 54 (32%), and 60 to 64 (32%). The high levels of college comple- tion among those groups is partly due to the efforts of many in the 1960s and 1970s to avoid being drafted and sent to serve in the Vietnam War; college attendance allowed men to defer military service and sometimes avoid it altogether (Card and Lemieux, 2001). As those cohorts age out of working ages, they will be replaced by slightly less-educated younger cohorts. These replacement cohorts will have larger Latino popula- tions, a group that historically has had relatively low levels of college graduation. In 2005, 32 percent of 25- to 29-year-olds in California were Latino; by 2025, that figure will increase to 47 percent in the zero-migration projections. The difference (with some adjustments) between the popula- tion and economic projections helps us estimate of the size of the total college graduate migration, both domestic and international, that would be necessary to close the gap. The projections of jobs are based on our economic pro- jections, and the projections of workers are based on our popula- tion projections. The adjustments take into account such factors as labor force participation rates, self- employment, and age group differ- Table 5. Percentage of Adults with a College Degree, 2005, and Zero-Migration Projections for 2025 Age Group All Ethnic GroupsWhitesLatinosAsiansAfrican Americans 2005202520052025200520252005202520052025 25 –29 30 –34 35 –39 40 – 44 45 – 49 50 –54 55 –59 60 – 64 Total, 25 – 64 27 31 31 30 30 32 35 32 31 27 32 31 29 29 33 32 31 32 39 45 44 39 38 40 42 39 41 38 44 44 41 41 46 45 40 42 10 11 10 10 10 10 9 10 10 15 18 15 14 12 13 11 11 13 56 59 54 49 45 42 43 41 50 57 64 57 53 57 60 55 49 56 17 23 25 22 21 25 24 20 22 16 22 24 23 19 25 26 23 22 Sources: Authors’ calculations for 2005 based on the American Community Survey; authors’ projections for 2025.Note: See the textbox for our calculation methods. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 14 ences between the two sets of pro- jections. To estimate how many of the jobs shown in Table 4 will be filled by 25- to 64-year-olds, we use the ratio of 25- to 64-year-old workers to jobs in 2005, distin- guished by education level, and then adjust the 2025 projections of jobs.11 To estimate how many workers will be available in 2025, we apply 2005 labor force partici- pation rates to our 2025 popula- tion projections.12 The results show that Califor - nia would need to import large numbers of college-educated work- ers to meet the needs implicit in the economic projections (Table 6). The number would need to increase from 4.78 million in 2005 to 8.33 million in 2025—an increase of about 75 percent over two decades.13 The final column of Table 6 shows that the increase in number of college-educated work- ers is not likely to be met with- out substantial migration. In the absence of migration, the number of workers with a college educa- tion is projected to be only about 5.16 million, or 3.17 million short of what will be needed. Will College Graduates from Outside the State Close the Gap? R ecent trends show that col- lege graduate migration from other states has been far too small to provide the number the state’s economy will need (Table 7).14 Indeed, between 2000 and 2005, the state experienced an annual net loss of college-educated domes- tic migrants ages 25 to 64; the state did experience small gains of less than 2,000 per year for 20- to 64-year-old college graduates. Even if the state were to return to the large positive flows of highly educated migrants from other states that was experienced in the late 1980s, those flows would fall far short of the projected need (left column of Table 7). More- over, the general direction recently has been toward fewer, not more, college-educated domestic migrants. As noted, international migra- tion has been an increasingly important source of college gradu- ates for California. Our estimates suggest that those flows have almost doubled from the late 1980s to the first half of this decade (Table 7). From 2000 to 2005, one-third of international immigrants arriving Table 6. Jobs and Workers, by Educational Attainment, 2005 and 2025 2005 Jobs and Workers2025 Jobs2025 Workers Under Zero-Migration Projections Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree Total 2,290,000 2,911,000 4,236,000 3,046,000 1,734,000 14,217,000 2,721,000 3,192,000 4,494,000 5,409,000 2,917,000 18,733,000 2,239,000 3,412,000 4,631,000 3,458,000 1,698,000 15,438,000 Sources: Authors’ calculations for 2005 based on the American Community Survey; authors’ projections for 2025.Notes: See the textbox for our calculation methods. The numbers have been adjusted from esti-mates of the population and industrial employment to estimates of workers and jobs (see the text for details). Recent trends show that college graduate migration from other states has been far too small to provide the number the state’s economy will need. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 15 in California had a college degree. However, the net flows of college graduates from abroad still fall short of the projected need; in fact, they would have to more than dou- ble immediately to meet the pro- jected annual requirements for the economy. And although the share of immigrants arriving with a col- lege degree has risen over the long run, it has fallen recently from 37 percent in 2000–2001 to 29 per- cent in 2004–2005. This may be a consequence of the decline in the granting of visas for highly skilled workers, discussed below. These trends suggest that it is unlikely that migration of college- educated workers will bridge the gap. Even during the late 1980s, when the greatest net number of college-educated people came to California, net migration was about 60,000—less than 40 per- cent of the number required to meet the projected workforce needs. Many factors could increase or decrease such migration. One is the overall attractiveness of California. An annual survey of U.S. adults has consistently found over the past several years that if respondents could live in any state outside their own, California would be their first choice (Harris Poll, 2006). The state’s high home prices, often viewed as a barrier, may also reflect the increasing ability of more and more people with high incomes to choose where they want to live (Gyourko et al., 2006). However, those same housing prices have grown much faster than in other states, and high housing prices are still clearly a deterrent to moving here. In 1998, fewer than 10 percent of adults moving to other states cited housing as the primary reason they moved out of California in the previous year; by 2006, the percentage had jumped to 31.15 Wages are a second factor that will affect migration flows. A shortage of highly skilled workers in California should drive up their Table 7. Annual Average Projected Migration Required to Meet Economic Projections, and Historical Trends in Migration, by Educational Attainment ProjectionsHistorical Trends Total Net Migration Required to Meet Economic ProjectionsNet Domestic MigrationNet International Migration 2005 –20252000 –20051995 –20001985 –19902000 –20051995 –20001985 –1990 Not a high school graduate High school graduate Some college College graduate Total 24,100 (11,000) (6,900) 158,400 164,700 (14,600) (31,800) (33,800) (9,200) (89,400) (32,200) (27,000) (34,600) 11,400 (82,400) (4,200) (5,800) (600) 29,200 18,600 39,440 21,250 22,780 55,760 139,230 43,010 20,060 21,590 44,540 129,200 50,150 20,740 25,330 31,280 127,500 Sources: Authors’ projections for 2005 to 2025; authors’ calculations of historical migration using decennial Censuses and American Community Surveys.Notes: Net international migration assumes out-migration equal to 15 percent of in-migration. Based on adults ages 25– 64. . . . the net flows of college graduates from abroad still fall short of the projected need. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 16 wages and thus attract college- educated workers from other parts of the nation and world. At least two factors could work against this expectation, however. First, California is not the only state that needs these workers; the increase in demand is also expected in the rest of the nation (Neumark, 2005b). Second, the baby boom- ers, a large and important source of highly educated migrants to California in the past, have aged out of prime migration years. The youngest baby boomers in 2005 were 41 years old; and by 2025, many boomers will have reached retirement age (the oldest will be 79 years old). Since 1989, both California and the nation have experienced rising wages for college-educated workers, but the wage growth has been greater in California (Table 8). In 1989, a typical male worker with a bachelor’s degree earned $31 per hour in California and $28 per hour nationally—an 11 percent difference. By 2005, the average wage of such a worker had grown to $37 in California, 16 percent higher than the national level of $32 per hour. Despite this trend, the net migration of college- educated workers to California was much lower during recent years than in the 1980s or 1990s. So the better pay that California offers may still not be a strong enough draw to attract enough college graduates from other states.16 By comparison, international migrants appear to have been more responsive to wage adjustments in California and this could continue to be true. The growth in wages of college-educated workers in California was matched by strong growth in the international migra- tion of college-educated workers (Tables 7 and 8). The international pool of potential college-educated migrants from key countries is expected to continue to grow rap- idly and could lead to substantial increases in the numbers of college graduates coming here. In 1970, Table 8. Real Hourly Wage in California and the Nation, by Educational Attainment (in dollars) 1979198919992005 California Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree 22 24 27 33 34 19 21 24 31 36 19 20 25 35 39 21 21 26 37 44 United States Not a high school graduate High school graduate Some college Bachelor’s degree Graduate degree 19 21 24 30 31 17 18 21 28 32 17 18 21 30 34 17 18 22 32 37 Sources: Authors’ calculations using the 1980, 1990, and 2000 decennial Censuses and the 2005 American Community Survey.Notes: The table shows the predicted hourly wages for working men with 15 years of experience holding constant demographic variables at the California average in 2000. Values are inflation-adjusted to 2005 dollars using the CPI-U-RS from the Bureau of Labor Statistics. Wages are not adjusted for cost-of-living differences between California and the rest of the nation. The growth in wages of college-educated workers in California was matched by strong growth in international migration. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 17 71 percent of students enrolled in college worldwide were outside the United States; by 2000, this share had increased to 86 percent (Free- man, 2006a). California’s college graduates are increasingly likely to come from India, with the Philip- pines and China remaining impor- tant sources as well. Along with Korea, those countries contributed more than half the state’s immi- grant college graduates between 1995 and 2005 (Table 9). Fur- thermore, the number of college graduates in India and China is growing rapidly. Between 1991 and 2004, for example, the total number of college graduates in India more than doubled, from 20.5 million to 48.7 million (Shukla, 2005). By 2010, Chinese universities are expected to pro- duce more Ph.D.s in science and engineering than U.S. universities will (Freeman, 2006b). Federal Immigration Policy May Impede College Graduate Immigration I mmigration policy in the United States is slow to change and gives higher priority to the goal of family reunification than to the importation of highly skilled workers. Caps on the number of international immigrants admitted to live permanently in the United States are much higher for those in family-based than for skills- based categories. In the federal fiscal year 2005, only 20 percent (226,000) of the 1.1 million immigrants given legal permanent residency in the United States were based on employment for highly skilled workers, and most of those, 123,000, were granted to the spouses and children of such workers.17 Only Congress can change immigration caps (although some categories, such as the minor child of a legal per- manent resident, are not subject to caps) and so the system is slow to respond to changing labor and economic conditions. The U.S. sys- California’s college graduates are increasingly likely to come from India, with the Philippines and China remaining important sources as well. Table 9. College Graduates in California in 2005 and Arriving Between 1995 and 2005, by Country of Origin NumberPercentage of Total India Philippines China Korea Mexico Russia Japan Canada United Kingdom Iran All other countries Total 107,331 76,937 72,834 53,865 42,519 23,790 20,427 15,103 14,411 10,954 153,780 591,951 18 13 12 9 7 4 3 3 2 2 26 100 Source: Authors’ calculations using the 2005 American Community Survey.Notes: Total does not sum to 100 percent because of rounding. Based on adults ages 20 and over. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 18 tem is often compared unfavorably to the Canadian approach, which places greater emphasis on skills and allows levels to vary annually. The recent history of giving temporary visas for highly skilled workers, called H-1B visas, illus- trates some of these problems. H-1B visas allow skilled workers to live in the United States tem- porarily, initially for a period of three years. Employers must spon- sor such workers and both must meet a number of criteria to be eligible. The Immigration Act of 1990 set the annual cap for H-1B workers at 65,000. Many of these visa-holders work in the high-tech sector, and in 1997, at the height of the dot-com boom, the num- ber of applications for H-1B visas exceeded the cap for the first time. In response, Congress decided to raise the cap, an action that was controversial. Many argued that this action hurt U.S. workers. But by the time Congress responded by raising the cap (to 115,000 in 1999 and 2000, and 165,000 in 2001 through 2003), the dot-com boom had largely run its course and the number of applications was far below the caps. The quota returned to 65,000 in 2004. Since then, the demand for H-1B visas has risen dramatically with the number of applications exceeding the cap.18 Globalization Effects I ncreasing global competition for skilled labor suggests that California must compete with more destinations, including other states, than in the past.19 Some studies of the technology sec- tor suggest that a global shortage for skilled labor is already being felt and will intensify (McKinsey and Company, 2005). California will also be competing with the immigrants’ countries of origin for their labor. Some research suggests that the international brain drain (which benefits Cali- fornia) is increasingly becoming “brain circulation,” as interna- tional migrants from Taiwan and India return to their countries of origin to establish new firms or additional locations for California firms (Saxenian, 2006). Furthermore, college graduate migration may be reduced by the offshoring of highly skilled jobs to lower-wage countries. The Bureau of Labor Statistics (2006) has developed a list of 40 occupations susceptible to significant risk of offshoring in the future. Among the criteria for such work: It can be digitally transmitted, involves repetitive tasks, has clear require- ments with few nuances, and has little face-to-face interaction. The list includes many engineering and computer-related occupations and others that have a relatively high share of workers with a bachelor’s degree or more (48% for those on the list compared to 28% for other occupations). Discussion E conomic projections indicate that California’s employment will continue to shift toward college-educated workers, an inten- sification of trends over the last two decades. Population projec- tions show that without dramatic change, the state will not have the number of college graduates required by tomorrow’s economy. Meeting the skills gap by attract- ing more highly skilled migrants would require substantial increases in the number of college-educated migrants to the state, most likely from other countries. The net number of college-educated inter- national migrants to California has grown rapidly, with annual averages about 11,000 higher in the early 2000s as compared to the late 1990s. But even if this number Population projections show that without dramatic change, the state will not have the number of college graduates required by tomorrow’s economy. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 19 were to continue growing by the same amount every five years, by 2025 the annual number would be just over 100,000—substantially less than 158,000, the estimated average number needed each year between 2005 and 2025 to close the gap. In the past, large increases in the number of highly educated international migrants have been partly offset by declines in the net flow of highly educated domestic migrants. California’s high cost of housing has been at least one deterrent to attracting workers from other states. Future increases in the migration of college gradu- ates to California will close some of the gap, but to close it com- pletely would require an increase of unprecedented magnitude. Faced with a shortage of highly skilled workers, wages are likely to rise for these workers, continuing the trend in the grow- ing value of a college education in California. Wage adjustment should act as an incentive for more Californians to seek bache- lor’s degrees. The state clearly has a role in encouraging and enabling Califor- nians to attain bachelor’s degrees. First, most Californians prepare for college in the public K–12 system and a majority who start college do so through the public community colleges. Improvements or expansions in these systems will better prepare Californians for bachelor’s degree programs. Furthermore, most bachelor’s degree students in California attend a public institution. In 2005, 76 percent of adults gradu- ating from a California college with a bachelor’s degree attended a public college or university, so changes in public policy are likely to have direct effects. Ultimately, even strong growth in the num- bers graduating from California colleges is unlikely to fully close the workforce needs gap.20 Never- theless, of all the times to make an effort to increase educational attainment, doing so now may be particularly advantageous and can lead to better economic opportu- nities for Californians and possi- bly better outcomes for the state. ◆ Economic projections indicate that California’s employment will continue to shift toward college-educated workers, an intensification of trends over the last two decades. rate than other groups, but the Census Bureau estimates that the 2000 Census had a lower undercount rate than the 1990 Census. Thus, the increases in educational attain-ment between 1990 and 2000 cannot be attributed to an increase in the undercount of undocumented immigrants. The extent to which undocumented immigrants are counted in the American Community Survey is unknown; however, the ACS population weights are based on independent estimates of the state’s population that attempt to account for undocumented immigration. 8 Between 2000 and 2005, international in-migration to California totaled 1,514,000 according to the American Community Sur-vey (the Current Population Survey places the figure at 1,550,000). The Census Bureau estimates the state’s net international immi-gration at 1,342,000 for this same period, and the comparable figure from the Califor-nia Department of Finance is 1,166,000. 9 Other projections show similar trends. We use CalTrans economic projections by industry, developed by Mark Schniepp of the California Economic Forecast, because they extend to 2025 and include farm work-ers. Neumark (2005b) shows that industry projections from the California Employment Development Department and the UCL A Anderson Forecast also imply a substan-tial demand shift toward college-educated workers. Projections of employment by occupation also show a demand shift but, when combined with occupational educa-tion needs produced by the Bureau of Labor Statistics (BLS), they suggest only a small increase in the share of jobs requiring at least a bachelor’s degree. Nevertheless, Fountain (2006) concludes that California will face a shortage of college-educated workers using occupation projections from the California Employment Development Department combined with educational needs by occupa-tion from the BLS. Because the educational needs estimates from the BLS account only for a single level of training for each occupa-tion and do not consider the variation in educational needs within an occupation, we use the actual skill levels of workers for a more accurate picture of the range of skill requirements within an industry (see Neumark, 2005b, for further discussion of this issue). For example, within the group of occupations characterized by the BLS as requiring an associate’s degree, almost half Notes 1 The projected growth in demand for educa-tion in the California labor market continues a long-term trend over the last two decades in the state and in the nation (see Reed, 1999). Throughout this report, we use the term highly skilled to mean college educated. 2 We define a college graduate as an adult with at least a bachelor’s degree. For data before 1990, we define someone who has completed at least four years of college as a college graduate. 3 Throughout this report, working-age refers to adults ages 25 through 64. All data presented are for that age group unless otherwise noted. 4 Converting DOF net domestic migration estimates to gross flows and applying propor-tions of college graduates derived from CPS data to those gross flows yields an estimate of an annual net gain of 15,000 college gradu-ates ages 25 to 64 between 2000 and 2005. However, even the DOF net domestic migra-tion estimates imply a small net loss in the last two years. 5 The CPS and ACS samples are weighted to agree with Census Bureau estimates of the state’s total population. If we instead weight the CPS and ACS to DOF’s estimates of the state population, the estimates of domestic migration from the CPS and ACS samples change only slightly. For example, the ACS estimate of a net domestic migration loss of 834,000 between 2000 and 2005 is reduced to a loss of 771,000 using weights that sum to DOF population totals. 6 These figures are for all adults ages 20 to 64 and are based on the authors’ calculations using 2000 Census data and the 2000 –2005 American Community Surveys. From 2000 to 2005, California continued to gain young college graduates between the ages of 20 to 25 from other states even as it lost older col-lege graduates to other states. 7 The Censuses and the American Commu-nity Survey attempt to include all residents of the United States regardless of legal status. Undocumented immigrants, a group with low levels of educational attainment, are almost certainly undercounted at a higher of U.S.-born workers nationally report hav-ing a bachelor’s degree. Controlling for other factors and specific occupations, workers in these occupations who have bachelor’s degree earn an average of 17 percent more than workers who have an associate’s degree, suggesting that the labor market does value a bachelor’s degree even within these occupa-tions. However, the labor market appears to place a lower value on a foreign bachelor’s degree with 64 percent of foreign-born work-ers in these occupations holding a bachelor’s degree and those workers receiving only 12 percent higher wages than similar workers with an associate’s degree. 10 Health and education services does not include public school teachers who are classi-fied in the “government” sector by the Cali-fornia Department of Transportation. This sector is projected to grow, albeit more slowly than the overall economy. 11 This adjustment implicitly assumes that sev-eral factors will remain the same in 2025 as in 2005 within each education group: the share of jobs held by people ages 25– 64, the share of people with more than one job, the share of people self-employed, and the share of people in the Armed Forces. There are several plau-sible alternatives to these assumptions, but the alternatives do not lead to changes in the estimates of sufficient magnitude to affect our conclusions drawn from Table 7. 12 This adjustment implicitly assumes that labor force participation rates will remain the same in 2025 as in 2005 within each education group. In the event of a shortage of skilled workers, growth in the wages of such workers would likely induce an increase in labor force participation. However, even if labor force participation among college-educated workers increased from current levels of about 83 percent to 95 percent, the net migration need in the first column of Table 7 would remain substantial at about 131,000 college-educated workers annually. 13 With no migration, the projected number of workers with a graduate degree in 2025 is lower than the number in 2005. This occurs because foreign-born workers are a particu-larly large share of California workers with a graduate degree. California Counts Can California Import Enough College Graduates? Public Policy Institute of California 20 14 The net migration estimates in Table 7 are based on the migration of people ages 25 to 64. Some younger migrants will arrive before 2025 and will be of working age by 2025. We estimate the net number of such migrants to be about 23,000 migrants annu-ally, judging by past trends in child and young adult migration. Even if half of these migrants were to obtain a bachelor’s degree, the estimated number of college-educated workers needed annually would remain sub-stantial at almost 147,000. 15 Based on authors’ calculations using annual Current Population Survey data. Figures for college graduates are similar, with only 7 percent citing a housing-related reason in 1998 and 27 percent doing so in 2006. Housing-related reasons include cheaper housing, new or better housing, owning rather than renting, wanting a bet- ter neighborhood, and establishing one’s own household (but not a change in marital status). A plurality of domestic out-migrants (37% in 2006) cite job-related reasons. 16 Table 8 also shows that since 1989, wages for college-educated workers have grown whereas wages for high-school-educated workers have been stagnant in California and in the nation. These trends suggest a rising demand for college-educated workers, consis-tent with our projections. 17 Of course, some of the family-based immi-grants are highly educated. Estimates are based on data compiled from the Yearbook of Immigration Statistics (U.S. Department of Homeland Security, 2006). California Counts Can California Import Enough College Graduates? Public Policy Institute of California 18 For federal fiscal year 2008, the limit on H-1B visas was reached in the first day that such applications could be filed, with 150,000 applications filed on April 2, 2007. 19 In 2005, 27 percent of the nation’s immi-grants resided in California, compared to 33 percent in 1980. California’s share of highly educated immigrants has also declined slightly over this time period (24% of college graduates in 2005 lived in California, com-pared to 27% in 1990). 20 Data from the California Postsecondary Education Commission show that roughly 140,000 people graduate with a bachelor’s degree from California colleges each year. For studies of the value to California of college-educated workers and the returns to state investments in college education, see Fountain (2006) and Brady et al. (2005). 21 California Counts Can California Import Enough College Graduates? Public Policy Institute of California Freeman, R ichard B., “Labor Market Imbal-ances,” paper presented at the Boston Federal Reserve Economic Conference, Boston, Mas-sachusetts, June 2006b. Gyourko, Joseph, Christopher Mayer, and Todd Sinai, “Superstar Cities,” National Bureau of Economic Research, Working Paper No. 12355, Cambridge, Massachu-setts, July 2006. Hanak, Ellen, and Mark Baldassare (eds.), California 2025: Taking on the Future, Public Policy Institute of California, San Francisco, California, 2005. Harris Poll, “California and New York City Remain Most Popular Places People Would Choose to Live,” September 6, 2006, avail-able at http://w w w.harrisinteractive.com/ harris_poll/index.asp?PID=697. Johnson, Hans P., “California’s Population in 2025” in Ellen Hanak and Mark Baldassare (eds.), California 2025: Taking on the Future, Public Policy Institute of California, San Francisco, California, 2005. McKinsey and Company, The Emerging Global Labor Market, June 2005. Neumark, David, “California’s Economic Future and Infrastructure Challenges,” in Ellen Hanak and Mark Baldassare (eds.), California 2025: Taking on the Future, Public Policy Institute of California, San Francisco, California, 2005a. References Brady, Henry, Michael Hout, and Jon Stiles, Return on Investment: Educational Choices and Demographic Change in California’s Future, University of California, Berkeley, December 2005. Bureau of Labor Statistics, “Chapter II. Accounting for Offshoring in Occupational Employment Projections,” Occupational Pro-jections and Training Data, 2006 – 07 Edition, U.S. Department of Labor, Washington, D.C., 2006. California Department of Transportation, 2005 All County Forecast Book, Office of Transportation Economics, California, 2005, available at http://w w w.dot.ca.gov/hq/tpp/offices/ote/socio-economic.htm. Card, David, and Thomas Lemieux, “Going to College to Avoid the Draft: The Unin-tended Legacy of the Vietnam War,” Ameri-can Economic Review, Vol. 91, May 2001. Fountain, Robert, Keeping California’s Edge: The Growing Demand for Highly Educated Workers, California Business Roundtable and the Campaign for College Opportunity, Sac-ramento, California, 2006. Freeman, R ichard B., “Is a Great Labor Shortage Coming? Replacement Demand in the Global Economy,” NBER Working Paper No. 12541, National Bureau of Economic Research, Cambridge, Massachusetts, Sep-tember 2006a. Neumark, David, California’s Economic Future and Infrastructure Challenges, Occa-sional Paper, Public Policy Institute of Cali-fornia, San Francisco, California, 2005b. Reed, Deborah, California’s Rising Income Inequality: Causes and Concerns, Public Policy Institute of California, San Francisco, California, 1999. Reed, Deborah, Laura E. Hill, Christopher Jepsen, and Hans P. Johnson, Educational Progress Across Immigrant Generations in Cali-fornia, Public Policy Institute of California, San Francisco, California, 2005. Reyes, Belinda, Dynamics of Immigration, Public Policy Institute of California, San Francisco, California, 1997. Saxenian, AnnaLee, The New Argonauts: Regional Advantage in a Global Economy, Harvard University Press, Cambridge, Mas-sachusetts, 2006. Shukla, Rajesh, India Science Report; Sci-ence Education, Human Resources and Public Attitude towards Science and Technolog y, India National Council of Applied Economic Research, New Delhi, India, 2005. U.S. Department of Homeland Security, Yearbook of Immigration Statistics: 2005, Office of Immigration Statistics, Washing-ton, D.C., 2006. 22 California Counts Can California Import Enough College Graduates? Public Policy Institute of California The Public Policy Institute of California is a private, nonprofit research organization established in 1994 with an endowment from William R. Hewlett. The Institute conducts independent, objective, nonpartisan research on the economic, social, and political issues affecting Californians. The Institute’s goal is to raise public awareness of these issues and give elected representatives and other public officials in California a more informed basis for developing policies and programs. Copyright © 2007 by Public Policy Institute of California A ll rights reserved San Francisco, CA Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source and the above copyright notice is included. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. PUBLIC POLICY INSTITUTE OF CALIFOR NIA 500 Washington Street, Suite 800 San Francisco, California 94111 Telephone: (415) 291-4400 Fax: (415) 291-4401 w w w.ppic.org ISSN #1554-401X Board of Directors Thomas C . Sutton, Chair retired Chairman and Chief executive officer p acific life insurance Company Mark Baldassare p resident and Chief executive officer p ublic policy institute of California Linda Griego p resident and Chief executive officer Griego enterprises, inc. Edward K. HamiltonChairman Hamilton, rabinovitz & alschuler, inc. Gary K. Hart f ormer state senator and secretary of education s tate of California Walter B. Hewlett d irector Center for Computer assisted research in the Humanities Ki Suh Park d esign and Managing partner Gruen associates Constance L . Rice Co- director The advancement project Raymond L . Watson Vice Chairman of the Board emeritus The irvine Company Carol Whiteside p resident Great Valley Center About the Authors Hans P. Johnson is a research fellow at the Public Policy Institute of California. Deborah Reed is director of research at the Public Policy Institute of California. Contributors Amanda Bailey provided valuable assistance in updating information on worker education levels for economic projections. The authors acknowledge the helpful comments of Pamela Burdman, Mary Heim, and David Neumark and are grateful to The William and Flora Hewlett Foundation for providing funding for this research. The California 2025 project was supported with funding from The William and Flora Hewlett Foundation. 23 California Counts Can California Import Enough College Graduates? Public Policy Institute of California NON-PROFIT ORG.U.S. POSTAGE PAID BRISBANE , CAPERMIT #83 PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 800 San Francisco, California 94111 Can California Import Enough College Graduates? In This Issue This issue of California Counts popu l at ion t r e nds a nd profil e s is part of PPIC’s California 2025 project, an ongoing study of the major trends and forces shaping California over the next two decades. Other California 2025 publications include: California 2025: Taking on the Future At Issue: California’s Exclusive Electorate California 2025: In Your Hands These publications and other features are available free of charge at www.ca2025.org" ["post_date_gmt"]=> string(19) "2017-05-20 09:39:03" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(6) "closed" ["post_password"]=> string(0) "" ["post_name"]=> string(10) "cc_507hjcc" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2017-05-20 02:39:03" ["post_modified_gmt"]=> string(19) "2017-05-20 09:39:03" ["post_content_filtered"]=> string(0) "" ["guid"]=> string(52) "http://148.62.4.17/wp-content/uploads/CC_507HJCC.pdf" ["menu_order"]=> int(0) ["post_mime_type"]=> string(15) "application/pdf" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" ["status"]=> string(7) "inherit" ["attachment_authors"]=> bool(false) }