Remarks by Jamie P. Merisotis, President/CEO, Lumina Foundation for Education
The Economic Club of Indiana, Indianapolis

Thank you, and good afternoon. I’m honored to be with you today, and I want to thank you for the opportunity to speak here this afternoon. As the leader of a national organization based in Indianapolis, I’ve attended several of these luncheons over the past few years, and I’ve learned a lot about issues and ideas that have helped me be more effective in my work. So it’s a real privilege for me to be here on the other side of the lectern.

Today I’m here to talk about what is quite possibly the single most important economic growth issue of our time: the critical connection between college success and economic prosperity … or between my line of work and your bottom line. That connection is direct, real, and more important than ever before. And, perhaps more than in any other time in this nation’s history, that connection needs to be tightened—from both directions.

It’s probably worth starting with a brief description of what Lumina Foundation is doing to help strengthen this connection between educational degrees and economic development. As I noted earlier, we’re based here in Indianapolis, and we’ve done our best in our 10-year history to be an engaged local partner and a good corporate citizen. Still, I want to briefly remind you of what it is we do, and especially to explain why we do what we do.

Lumina is a national foundation with assets of about a billion dollars. We are committed to one cause: enrolling and graduating more students from college—especially low-income students, students of color, first-generation students and adult learners. In fact, we are the largest foundation in America that focuses exclusively on that mission. And we pursue our mission in a very targeted way. All of our energy and resources are focused on achieving one ambitious but specific goal for college attainment, what we call “Goal 2025” or simply, the Big Goal.

I’ll come back to the Big Goal in a moment, but first let’s talk about Indiana’s record of cooperative action to enhance college success among its residents. In many ways, the Hoosier State serves as a model for other states. For example, there is the 21st Century Scholars program to aid low-income students…there also is the entrepreneurial spirit that has taken hold, in just a short period of time, at Ivy Tech Community College…there is the strong commitment to educational excellence embodied in the “Reaching Higher” initiative of the Indiana Commission on Higher Education…and there is the recent launch of Western Governors University, Indiana—a nonprofit, online institution geared toward adult learners in high-demand fields.

Each of these important and innovative efforts has produced impressive results. As just one example, think about the fact that in 1986, less than 39% of Indiana’s youth went directly to college from high school. Today, 63% do. Indiana went from one of the lowest rates in the country to one of the highest, and believe me, other states know this and look to Indiana for lessons about how to do it.

But we still have a lot of catching up to do. In spite of the success of Indiana’s efforts to get more students to go to college, only a third—33.4% to be exact—of adult Hoosiers have a college degree. This is well below the national average of 38%, and less than all our neighbors except for Kentucky. Young adults—those between the ages of 25 and 34—are better educated as a whole. 36% of young adult Hoosiers have a college degree—an increase of 5 percentage points just since the year 2000. But even this is not nearly enough.

As you all know very well, competing with Ohio and Illinois is one thing, but the real competition for economic growth and jobs is global. It may shock you hear how far behind we are slipping. In Korea, 58% of young adults (the 25 to 24 year olds) have completed college. In Japan it’s 55% and in Ireland, it’s 45%. If Indiana were a country, we would rank 19th out of 31 developed countries—just ahead of Chile.

This bring us back to Lumina’s Big Goal. I’ll state it here: By the year 2025, we want 60 percent of Americans to hold high-quality college degrees and credentials. Today, the national degree-attainment rate is hovering just below 40 percent, and as I said, here in Indiana the attainment rate among working-age Hoosiers is even lower—just 33 percent.

Why should we care? Believe me, I’ve heard all the arguments. “Too many people go to college now who aren’t college material.” Or, “you can get a good job without going to college.” Or, “people are graduating from college now with thousands of dollars in debt and they can’t get a job.” Or, my personal favorite, “Facebook founder Mark Zuckerberg didn’t get a college degree, so why should I have to?” All this sounds deceivingly convincing, but the facts tell a dramatically different story.

These facts show clearly that increasing higher education attainment is essential to the nation. Why? Because, without college-level learning, workers simply won’t have the knowledge and skills they need to succeed in today’s global economy

The Georgetown University Center on Education and the Workforce has estimated that by 2018, 63 percent of all of the nation’s jobs will require some form of postsecondary education or training. That’s a huge increase since the mid-’70s, when less than 30 percent of jobs required any education beyond high school. Here in Indiana, 55 percent of jobs will require postsecondary education by 2018. Between now and 2018, Indiana will need to fill about 930,000 vacancies resulting from job creation, worker retirements and other factors. Of these expected vacancies, then, 55 percent—more than half a million Hoosier jobs—will require postsecondary credentials.

Let’s look at the Indiana picture in another way. Data from the Georgetown Center show just how important postsecondary education should be to Hoosier job-seekers. On average, in industries that are growing the fastest—healthcare and various service industries—about seven in ten workers have at least some college. On the other side of the ledger—the industries that are declining in terms of their relative share of jobs, only four in ten workers have attended college. The message is clear: In the coming years and decades, fewer and fewer jobs will be available to those who lack postsecondary education.

But even this doesn’t tell the whole story. The seismic shift that is under way is not a shift from low-skill occupations to high-skill occupations. It’s that almost all jobs are becoming higher-skill jobs.

Even in some so-called declining industries, the need for college-educated workers is becoming acute as jobs become more complex. Take manufacturing, for instance. In a recent interview, Tim Solso, CEO of Cummins Inc. in Columbus, cited a growing lack of skilled workers. He said that, when it comes to education for advanced-manufacturing positions, (and I quote): “what we’re doing right now isn’t working” (end quote).

The shift toward advanced manufacturing is increasing the demand for higher levels of skills and a better educated workforce. A study conducted late last year predicted a significant shortage of qualified manufacturing workers in Northwest Indiana. The study, conducted by the National Skills Coalition, estimates that, by 2016, there will be 490,000 job openings in the region for middle-skill workers—those with more than a high school diploma, but less than a four-year degree.

As I’m sure you’ve heard, Carbon Motors has announced that the minimum qualification to work on its assembly line will be an associate degree. How many of you saw the TV and newspaper coverage of this announcement? At first, it focused on unemployed auto-workers saying things like “That’s ridiculous—I’ve worked in auto plants for 25 years and I know how to build cars.” Later, though, the coverage shifted to workers asking “Where can I get the education and training I need to qualify for one of those jobs?” That’s a huge shift—and it mirrors what is happening throughout the economy.

Employers in Indiana and all over the nation are making it clear, then, that they need more highly skilled workers. And the workers who have those skills are the ones who tend to keep their jobs when times get tough. Here in Indiana, while overall unemployment rates are hovering between 9 and 10 percent, less than 5 percent of college graduates in the state overall are unemployed. It has become clear, not just to economists, but to millions of Americans, that completing some form of higher education is the best unemployment insurance you can find.

Now, a college degree is a prerequisite. There’s no guarantee that a student who obtains a college degree is going to get a good job and have a middle-class life. But in the future, you almost certainly will be poor without some kind of postsecondary credential.

Oh, and by the way, as to that Mark Zuckerberg argument, here is a key fact that puts that silly idea to rest, courtesy of US News and World Report. Of the 500 CEOs running Fortune 500 companies, 481 have college degrees. So 96% have taken the smart path to personal and professional success.

But the relationship between education and employment goes beyond the personal benefits of having a college degree. There is growing evidence that increasing educational attainment actually contributes to economic growth, and that low attainment rates are inhibiting the economic recovery.

The Federal Reserve Bank of Cleveland recently published an article entitled “Could Low Educational Attainment Be Slowing the Recovery?” I’ll spare you the charts and graphs and just tell you the answer: it’s “Yes.”

Many labor economists say that increasing postsecondary success rates is vital to jump-start job growth in the short term. What’s more, economists and policymakers at every level and in virtually every state cite higher education as a key factor—perhaps the key factor—in long-term economic growth. And in the current job market, it’s easy to see why. As a nation, we simply must “skill up” if we hope to succeed.

Do you need more convincing? I’ll share one more piece of concrete evidence, and that is the growing wage premium for college graduates. It comes as no surprise to hear that college graduates earn more than those who only graduate from high school or who drop out. What is surprising to hear is that the wage premium for college graduates—at both the associate and bachelors levels—is growing. Even in countries where the supply of college graduates is increasing rapidly—countries like Korea—the gap in wages between college graduates and non-graduates is still widening. While I’m not an economist, the explanation for this fact is as simple as the law of supply and demand. The growing wage premium for college graduates is clear evidence that labor markets are undersupplied with college graduates. And the consequence of this fact is simple—depressed economic growth.

Here’s an even more compelling truth: Increasing college attainment isn’t just a way to inoculate individuals against the contagion of job loss; it’s actually a proven means to stimulate job creation. Economists tell us that much of the nation’s economic growth over the last half-century is largely attributable to two things: technology and increased educational attainment. Why are these two so important? It’s because they increase productivity, and productivity growth is the engine that drives all advanced economies.

When employers are given a more highly educated workforce, they’ve actually been shown to organize the work in more efficient and productive ways. They have learned through experience that hiring better-educated workers increases productivity and enhances workplace creativity. This, in turn, helps fuel the innovation that leads to new products and services, new markets … and new jobs to serve those markets.

The key to business success—indeed, the key to the nation’s long-term economic success—is a 21st century labor force, one with adaptable workers who possess high-level skills and relevant knowledge. And as you all well know, those skills … that type of knowledge … can only be offered in well-designed and rigorous postsecondary programs. And that’s why the Big Goal is all about ensuring that many more students enroll in and complete such programs. It’s all about the learning.

Of course, the aim is not merely to push these growing numbers of students through college. Rather, the goal is to help all of them achieve high-quality degrees and credentials—those that have currency and relevance in the 21st century workforce.

Again, the focus must be on tightening the connection between college success and economic success. And as I said at the outset of my remarks, that connection must be tightened from both sides.

Put a bit more bluntly, what that really means is that both sides must change.

On one side, higher education institutions and officials must do a better job of listening and responding to the needs of employers. They must show greater willingness to work in true partnership with the business and workforce development community … to give students what they truly need to succeed on the job and in life. And they must eradicate the false distinctions between what many tend to revere as “education” and what they often deride as mere “training.” It’s well past time for a full realization that virtually all skills are workforce-relevant and that all are constantly evolving.

The work we’re doing at Lumina—and, really, all that I’ve learned in more than two decades of work in the higher education arena—convinces me that fundamental changes are needed. Despite its many strengths—strengths that, admittedly, served this nation well for many decades—the current system simply cannot get us where we need to be in the 21st century.

In short, we need a more productive higher-ed system—one that enables institutions to meet each student where he or she is and provide the support each student needs to succeed. We need a system that ensures quality by fostering genuine learning, not mere program completion … a system that truly prepares students for work—and for life—in an increasingly global society.

Such a system should allow students to accumulate credits from different institutions over several years to earn a degree, minimizing waste and duplicative learning. That system should also acknowledge and credit prior learning—skills developed through work or military service and which often reflect a student’s abilities even better than earning classroom credit.

At Lumina, we believe strongly that higher education needs to be far more focused on the needs of students and less on the needs of higher education institutions. And it’s critically important that we focus on today’s students—the ever-growing number of low-income, first-generation, minority and adult students whom we are calling 21st century studentsthe people who constitute the “real world” on campuses these days.

In short, higher education must be more student-centered. Or, to put it in terms that might resonate better with an Economic Club audience: it must be more customer-focused. By better serving its main customers—students—the postsecondary system will also meet the needs of employers, not to mention the ultimate customer base, which is American society itself.

Enlightened members of the higher-ed community already know all of this, of course. They’re very much aware that change is needed, and they are working to bring about those changes. I’ve already mentioned some examples of change that are playing out right here in Indiana. Here are two others that are worthy of note.

One is the Accelerated Associate Degree program under way at Ivy Tech. This initiative is aimed at young, at-risk students who would likely be overlooked in the current postsecondary system. Through a comprehensive program that includes early assessment of college readiness, financial and academic support, summer remediation, and full-time study in block-scheduled classes, Ivy Tech is working to put hundreds of deserving students on the fast track to college success. In effect, going to school becomes a full-time job, and students do it on a predictable schedule that allows for family and other obligations. Even more important, we feel that this program can act as a “living lab” for accelerated degrees. It can teach us important lessons that can help this fast-track concept spread throughout the state and the nation. In fact, the U.S. Department of Labor has taken note of this and other promising accelerated degree efforts around the country. The Department recently announced its intention to encourage more of them as a component of a new, $2 billion program aimed at community colleges and career training.

The second effort—the Adult College Completion project—is a four-year initiative that just got under way last November. This joint Indiana University/Ivy Tech program targets a different and growing segment of the 21st century student population: adults who have earned some college credits but lack a degree. More than 37 million Americans fit that description—730,000 of them here in Indiana, representing 22 percent of the state’s adult population.

Some of you may be asking, “did I hear that right?” so let me repeat it. Today, right here in Indiana, there are more than 700,000 people between the ages of 25 and 64 who have gone to college but never completed any degree. Think about that for a moment—that’s almost 1 in 4 adult Hoosiers.

It’s true that we need to do more to encourage young people in school to go to college and prepare them to be successful, and we’re doing a lot of work on that. But these are millions of American who actually did go to college, but neither they nor the nation reaped the benefits that a college diploma offers. We wanted to understand why they left college, whether or not they wanted to finish, and if so whether they could be brought back to finish what they started.

So we did some research. And, in short, we found out that these people left college for a lot of different reasons, but surprisingly few were academic. In fact, a lot of them are only a few hours short of graduation. In many cases, life just got in the way.

You would be amazed, and saddened, to know how many people never finish college because their car broke down and they couldn’t afford to fix it, or because they couldn’t find daycare for their kids, or because someone in their family got sick and they needed to go to work to pay the bills. We found out that if you contact these people—and it is frankly shocking how seldom we ever do—many of them are living with a sense of failure that almost haunts them. When you give them the chance, many desperately want to finish their degrees, and will take the chance when it is offered.

We did a pilot project in Kentucky to target these adults to see if we could make any progress. In less than a year, they brought about a thousand people back to college and in that same year, more than 300 of them graduated. That’s right, in less than a year. How much did it cost to find these people and re-enroll them? 48 dollars each. Our data suggests that targeted returning adults could increase the number of college graduates in the U.S. by 10%. Needless to say, we’re excited, and we just committed several million dollars to projects around the country—including Indiana—to focus on this population.

These two programs—and many others at other institutions in Indiana and throughout the nation that I don’t have the time to mention—hold great promise because they seek to tap into a deep well of untapped potential. Their goal is to develop human capital that Indiana—and the nation—desperately need and simply can’t afford to overlook.

Yet these programs, however promising, cannot succeed in isolation. Collaboration and partnership are central to their design and absolutely vital to their chances for success.

And that brings me back to the other side of the higher-ed/business connection … in effect, your side. Remember I said that both sides must change if we hope to reach the Big Goal of 60 percent degree attainment by 2025? Well, for the remainder of my time with you today, I want to focus on what you, as employers and civic leaders, can do to advance this vital goal.

I have three specific suggestions to share, but before I get to the specifics, I want to share one key message that drives all three. That message is simple and direct … perhaps even a bit brusque.

It is, quite simply: “GET IN THE GAME!”

Too often in the past—and even today, despite the urgent need for a new approach—employers, local chambers of commerce and workforce-development groups have stayed on the sidelines when it comes to higher education reform. In far too many cases, the business community has assumed one of only two roles. Sometimes it acts as a detached critic of the higher education system; at other times, it’s an unabashed supporter of particular institutions—often institutions that have personal meaning to those leading a business or organization.

How many times have you heard or read an employer’s lament about ill-prepared or poorly educated job applicants? How often have you voiced those complaints yourself? Of course these concerns are valid, but merely voicing them isn’t enough. In fact, in this globally competitive age, that course of action could be disastrous because it can only result in more of the same … and that is precisely what’s not needed.

No, what’s needed now is for employers and business advocates to get off the sidelines, to actively and eagerly participate in the effort to increase college attainment. Goal 2025 isn’t something for Lumina to achieve. It’s not an initiative owned by the field of philanthropy or state and federal policymakers, or the higher education community. It is—and must be—a broad-based, national effort. Clearly, the business community has a critical role to play in that effort—a role for which you are perfectly positioned and uniquely qualified.

In fact, as I said, I want to suggest three specific areas where your expertise and energy are sorely needed—if not absolutely critical—in tightening the connection between college success and economic success. And to make it easy for you to remember these three areas, I’ll sum up each one in a single word:

Teach … Target … Triangulate.

So, what do I mean by teach? What can the business community do to help educate the educators? Well, I’ve talked a great deal today about the need for increased productivity in higher education—and with good reason. The numbers don’t lie: Achievement of the Big Goal will demand steady increases in the number of Americans earning degrees and certificates each year for more than a dozen years. Clearly, for that to happen, the higher education system will have to operate with much greater efficiency than ever before.

New processes and procedures will be required; innovative approaches will have to be taken—all in an effort to boost productivity; to maximize higher-ed’s return on investment. Obviously, these are lessons that any successful businessperson has learned and applied many times over. And they are lessons that can and must be taught in the postsecondary arena. True, colleges and universities generate people, not products, so the lessons won’t translate precisely and will have to be adapted. Still, if the approach is mutually respectful and truly collaborative, there’s no doubt that much progress can be made if business takes a teaching role in the productivity effort.

Now for targeting, the second area where employers can take an active role. By targeting, I don’t just mean that the business community can help higher-ed become more customer-focused—though that is certainly true. Just as employers can share important lessons about productivity, they can emphasize the gains to be made through enhanced customer service.

However, what I mean by targeting is even more specific: For the nation to reach the 60 percent attainment goal—and, really, for the good of the economy and the nation as a whole—it’s important that higher-ed focus much more of its efforts specifically on increasing attainment among adult students. The business community can and must be instrumental in maintaining that focus.

It’s not just about ensuring that progress continues in the K-12 arena. Education reform in the pre-college years is absolutely necessary, and the business community’s long support and involvement in that area should be sustained. In fact, it absolutely must continue. The problem is, though K-12 reform is necessary, it’s also insufficient. What’s really needed—as the labor economists and unemployment statistics keep telling us—is progress at the postsecondary level. We need many more workers—especially those who come from low-income and historically disadvantaged backgrounds—with college degrees and credentials. As hard as it is to say, the truth is that dramatic improvements at the K-12 level, and all of the efforts to fix our schools; to reward high quality teaching; and to help make students college ready—all of that merely gets these students to the starting line. As employers, you must do all you can to help get them to the finish line.

That means more programs like the Adult College Completion effort at IU and Ivy Tech. It means advocating with policymakers and education leaders for the fact that the learning you support for workers is accredited and credentialed. It means promoting college attainment for your employees through your various communication channels and motivating them by rewarding those who attain credentials/degrees. And it means more—and more generous—employer-based tuition-reimbursement programs.

The idea in targeting adults for postsecondary success is not simply to ensure that employers have a ready supply of trained workers for their own businesses. The view that’s required is much broader than that. Really, it’s about empowering the individual … because that’s ultimately the power that drives ALL businesses.

And that broader view is also required for triangulation, the third and final area in which the employer community can best contribute to Goal 2025. By triangulation, I simply mean that business leaders can’t limit their working partnerships to those that include members of the higher-ed community. They must also reach out to a third vital partner: the policy community.

In short, employers must become active and committed advocates for policy change—the kind of systemic, civic-minded policy change whose aim is to improve the overall economy. Too often, the only higher-ed policy efforts that business leaders seem to support are those whose goals are narrow—even provincial. What’s really needed are new policies that can bring about widespread improvement in degree attainment, not efforts that benefit a particular institution—even if that institution happens to be your alma mater.

In other words, it’s vital that business leaders think and work expansively as they join the reform effort. Public-private partnerships are critical to our success as we work to achieve the Big Goal, but they must be triangular partnerships—cooperative, mutually beneficial ones that involve business, higher education and the policy community.

So we know we’re aiming high, and that we have a long way to go to reach that 60 percent goal, in Indiana and throughout the nation. But in our view, the achievement of this Big Goal is vital—not only to maintain a good quality of life for individual Americans, but to ensure the long-term stability and security of our society as a whole. What’s more, we at Lumina are convinced that this ambitious goal is achievable—so long as the various stakeholders work together and work according to a plan.

We do have a plan to reach Goal 2025, and I’ve brought along with me a small brochure that summarizes Lumina’s Strategic Plan. Naturally, with a goal this big, our plan to reach it has room for many partners. I encourage you to pick up a copy, and to look for a place where you can plug in. I also urge you to review another document I brought with me today—a one-page policy brief that highlights the degree-attainment challenge here in Indiana. It clearly shows achievement gaps among various segments of the state’s population and breaks down college-completion rates by county. I urge you to pick up one of these briefs, and to really think about ways that you and the organizations you represent can address the challenge it presents.

At Lumina, we’re thinking about this challenge every day—and in every state—because it is very much a national challenge. That’s why we approach Goal 2025 not as an institutional goal for Lumina, but as a nationwide goal—a national imperative.

And we are certainly not alone in that approach. Many higher education leaders, state and federal officials, and business leaders have identified college attainment as a top priority.

In fact, as I close my remarks this afternoon and prepare to take a few questions, I want to underscore the urgent need for this sort of broad-based, cooperative action as we confront the challenge of increasing college attainment. The Big Goal is truly a vital national task. And we all need to be in the game.

Thank you very much.

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