Policy in Perspective: Using Workforce Data to Study Postsecondary Productivity

Aug 1, 2012 by Matthew Smith

Focusing on Both Sides of the Coin

States now have the ability to compare postsecondary and workforce outcomes through the use of employment and wage records. Education and wage data matches have the potential to change the policy conversation by indicating which state investments might reap a higher, long-term return.

The Demand Side: Workforce Needs

Employment data clarify occupational needs by measuring the number of jobs going unfilled because of skills mismatch or sector growth. These data also can hint at expected earnings of graduates in shortage areas.

The earning premium enjoyed by college graduates has increased over the last 40 years. The workforce data suggest that certain fields, such as STEM and allied health occupations, produce an additional salary boost. When policymakers hear data generalizations like the one above, it is easy to interpret them as a way of reallocating postsecondary investments to produce higher-paying jobs. These targeted investments in narrow fields are essential to sustained economic growth but must be accompanied with broad-based investments across the postsecondary programs. Each state has a different “balance point” between narrow and broad investments based on economic need. While the data cannot identify the exact balance point to prime a state for economic growth, it can identify the areas of focus.

The Supply Side: The Postsecondary Role

Micro-production in three-to-four career clusters might meet immediate industry needs but could lead to overproduction in these narrow fields. Oversupply of college-educated workers in specific occupations drives down salaries and could lead to workers relocating to other states. On the other hand, producing without regard to the demand side also has negative ramifications.

To achieve a balance point between micro- and macro-degree production, states should consider industry profiles. These profiles allow for data matches between education and occupational records, which consumers, employers, and postsecondary institutions can use. Recent enactments in Florida and Virginia will allow consumers and employers to examine median incomes generated by specific programs of study.

By replicating the national methodologies embedded in the Bureau of Labor Statistics surveys, states could measure economic growth prospects. With this idea, however, comes a caution to use data responsibly. The employment records generally measure incomes six months to five years after graduation. What the data do not show is the convergence of salaries for bachelor’s degree holders. While applied and scientific credentials produce a more immediate earnings boost, adults with liberal arts degrees earn comparable salaries after 10 years. The graph below illustrates this phenomenon.

The postsecondary community can play a role by studying the employment and wage data to create more responsive high-demand certificates and associate degree programs. If implemented with quality, these programs could deliver high-need programs quicker and more cheaply.

The Deciders: The Legislative Role

Legislators play the main role in the interplay between workforce data and the allocation of state funds. These new workforce data come with caveats, though. They are imperfect and not diagnostic; in most situations, they do not provide the type of specificity that states would need to use these data for accountability purposes. Still, data matches can be used to estimate workforce demand, provide consumers with median wages by program of study, and guide postsecondary allocation decisions. With employment and wage records uncovering the demand-side of the postsecondary equation, policymakers can have a more thorough conversation of how investments lead to economic growth.

This blog post is the first of three focusing on the Boosting College Completion Legislative Workshop held in Atlanta, Georgia on July 12, 2012. The first session featured Patrick Kelly from the National Center for Higher Education Management Systems (NCHEMS) and Nicole Smith from the Georgetown University Center for Education and the Workforce.

To view the blog post on state postsecondary strategies, click here.

To view the blog post on technology game changers in postsecondary education, click here.