THE LINK BETWEEN EDUCATION AND ECONOMIC DEVELOPMENT
TESTIMONY BEFORE THE PENNSYLVANIA HOUSE DEMOCRATIC POLICY COMMITTEE
THURSDAY, MARCH 13, 2014
Good afternoon Chairman Sturla and members of the Policy Committee. My name is Steve Hicks and I am the president of the Association of Pennsylvania State College and University Faculties (APSCUF). Our union represents nearly 6,000 faculty members and coaches teaching approximately 115,000 students on the Pennsylvania State System of Higher Education’s (PASSHE) 14 campuses.
PASSHE is the 15th largest employer in the Commonwealth; employing nearly 12,800 people statewide. In the regions and counties where PASSHE campuses operate—many of which are rural—our universities are among the largest—if not the largest—employers in the area. I have provided a list to the committee detailing each university’s employer ranking within its host county.
It is estimated that the operation of PASSHE campuses support 41,000 additional ancillary jobs and generate a total annual economic output for the Commonwealth of $3.7 billion.
But this hearing is about more than just higher education institutions as regional employers. Pennsylvania is in the late states of moving from a manufacturing-based to a knowledge-based economy. Quality higher education is a necessary prerequisite for Pennsylvania to meet the workforce needs of employers and ensuring employment.
A 2013 Association of American Colleges and Universities (AACU) survey of private and non-profit executives found that 95 percent gave hiring preference to college graduates. More importantly, 93 percent agreed that an employee’s ability to think critically and solve complex problem was more important than a specific major or technical expertise—something that runs counter to the recent hyper-focus on vocational training.. Today’s employers want college graduates with the technical skills needed for the job, but also the foundation of a liberal arts education. PASSHE universities and others in the Commonwealth meet this need.
Meeting employer needs for skilled employees is not the only economic benefit higher education provides. Studies suggest that having a college degree insulates individuals from the impact of an economic downturn far better than a high school diploma. According to a study by the Georgetown University Public Policy Institute, workers with a high school diploma or less lost a total of 5.6 million jobs during the 2008 recession. Those with an Associate’s degree or some college lost 1.75 million jobs. But those with a bachelor’s degree or more post-secondary education actually gained 187,000 jobs. Those with a bachelor’s degree not only had better job retention and growth rate during the recession, they also saw greater employment growth in the recovery. I have included a chart from the Georgetown study for the committee’s information.
College graduates also have increased income and lifetime earnings potential, creating more discretionary income spending and greater potential for tax revenues.
In February 2013, the Milken Institute released a comprehensive study of 261 U.S. metropolitan areas. The study tracked the connection between educational attainment and economic productivity in these regions over a 20-year period, from 1990 and 2010. Not surprisingly, the study found that adding years of post-secondary education to a high school educated workforce significantly increased a region’s economic productivity—both in terms of per capita GDP and real wages.
On average, adding just one year of college education to a region’s workforce increased per capita GDP by 17.4 percent and real wages by 17.8 percent. The study also found that regional disparities in economic productivity are directly connected to the educational attainment of its workforce. On average, states with residents who have some post-secondary education—particularly those with higher percentages of bachelor’s degree holders–have a higher than average per capita GDP.
There are many possible reasons why educational attainment increases productivity and wages in a region’s economy. Enrico Moretti sums it up best in his book “The New Geography of Jobs”:
A worker’s education has an effect not just on his own salary but on the entire community around him. The presence of many college-educated residents changes the local economy in profound ways, affecting both the kinds of jobs available and the productivity of every worker who lives there, including the less skilled.
Because of the clear correlation between higher education and the economy, the Commonwealth should be investing in the 14 state-owned universities. The State System provides a comprehensive education to the residents of the Commonwealth. Many of our students are first generation college student who desire an affordable, high-quality, four-year college education that ensures economic security and mobility. Ninety percent of PASSHE graduates stay in Pennsylvania, making them the future workforce of the Commonwealth.
Yet, in 2011, when our state economy was slowly crawling out of one of the worst recessions in U.S. history, the legislature cut $90 million (18 percent) from its appropriation to the State System of Higher Education. As a result, our students have experienced increased tuition and fees and a more significant financial burden on their families.
The evidence clearly shows that the growth of jobs and the economy starts with investment in higher education. For this reason, I ask members of the committee to make funding for our state-owned universities a priority during the 2014-15 budget negotiations. I also applaud Chairman Sturla’s continued commitment to legislation that would provide a dedicated source of funding for higher education (currently HB 58).
Unfortunately, recently introduced legislation in the Senate — Senate Bill 1275 — does the opposite. The Student Sellout Act, as we are calling it, would allow some of our larger state-owned universities to leave the System to become state-related. The result would be our System’s larger universities no longer being a legitimate option for working class families as the skyrocket tuition and fees and recruit a much higher proportion of higher paying and out-of-state students instead of Pennsylvanians. What students, instead, would have left is a handful of small universities that have limited capacity and mounting financial issues including a reduction in economies of scale that benefit State System universities. In essence, students and families that can afford $17,000 annual tuition will still have access to what are now our larger State-Related. The rest will have limited options or be shut out completely.
Is this the system we envision to move our economy forward? If successful, SB1275 would ensure that fewer working class Pennsylvanians have a shot at a college degree and the very benefits it provides them and our Commonwealth described above
Pennsylvania’s economy cannot grow without an educated workforce and we cannot have an educated workforce without affordable, quality institutions of higher education. That all starts with commitment from the legislature to support our universities and not dismantle our System one-by-one. Thank you for your time. I am happy to take any questions members may have.