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Report · November 2020

Higher Education and Economic Opportunity in California

Hans Johnson and Marisol Cuellar Mejia

This research was supported with funding from the Bill and Melinda Gates Foundation, the Spencer Foundation, and the Sutton Family Fund.


Higher education could be one of California’s most effective tools for combating economic and social inequities. College graduates experience large wage gains and their jobs offer more benefits than those of workers without bachelor’s degrees. College graduates are also relatively insulated from recessions-including the current downturn-and benefit the most from recoveries.

However, lower rates of college access and completion among Latinos, African Americans, and low-income Californians exacerbate the state’s economic divide and puts California further behind in meeting its workforce needs. And even though a college degree benefits Californians in all racial/ethnic and income groups, these benefits vary by family income and race/ethnicity.

In this report, we focus on pathways to a bachelor’s degree, outlining the economic benefits of completing college, identifying inequitable outcomes, and exploring how inequities can be addressed by the state and its higher education institutions. Among our key findings:

  • A college degree has economic benefits across all demographic groups. Average earnings for full-time, year-round workers in each of the state’s largest racial/ethnic groups are about twice as high for college graduates as for high school graduates. Other labor market outcomes-unemployment rates, labor force participation, and job quality-are also better for college graduates. But this “college wage premium” varies across groups.
  • Low-income, Latino, and African American students are less than half as likely to make it from 9th grade to a college degree as their peers. Many of the obstacles along this pathway hamper the efforts of students to reach their educational goals.
  • California’s share of recent high school graduates who enrolled in a four-year college ranked 41st in the nation in 2018, and the vast majority of low-income, Latino, and African American students who complete high school never attend a four-year college. This is significant because students who begin at four-year schools are much more likely to obtain degrees than those who start at a community college.
  • California ranks 4th in the country in the share of recent high school graduates who enrolled in a two-year college. But too few community college students transfer to four-year universities.
  • Low-income, Latino, and African American students are especially underrepresented in the college majors that have the highest labor market returns. In many colleges, those majors-most notably engineering and computer science-cannot accommodate student demand.

Policymakers and higher education institutions have many tools to increase access and completion. But at every step in the path from high school to college completion, an emphasis must be placed on ensuring that low-income and underrepresented students have the information, access, and support they need to reach their educational goals. From expanded and re-oriented high school preparation and outreach programs, to aggressive inclusion of low-income students in the admissions process, to financial support that makes college truly accessible and sustainable, California and its higher education institutions must find ways to make higher education a ladder of economic mobility.


Access Completion Economy Equity Higher Education Population Workforce and Training Workforce Needs