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A Stronger South through Higher Education

Remarks by Jamie P. Merisotis, President/CEO, Lumina Foundation
2012 Chairman’s Conference—Southern Growth Policies Board, Chattanooga, TN

Thank you, and good morning, everyone. It’s a pleasure to be here with you today. I’m delighted to be among the speakers at this event, which marks the 40th anniversary of the Southern Growth Policies Board. Southern Growth has built a wonderful tradition of collaboration over the years, and I’m thrilled that Lumina Foundation and I are now included in that circle. It’s also an honor to share the podium with Governor Haslam, whose record in support of education reform here in Tennessee is second to none.

Of course, we’re here in Chattanooga for a discussion that goes beyond the boundaries of any single state and transcends the concerns of any one organization. In fact, it’s a discussion that aims to reimagine the ways in which we prepare our workforce. Frankly, in light of the economic pressures bearing down on every state, I can’t think of a more important or timely topic. The simple fact is, the word “jobs” is at the top of everyone’s priority list these days—as it must be. And, contrary to what you might think if you watch a lot of political ads, the jobs issue isn’t just an election-year football to be tossed back and forth between now and November. Fundamentally, it’s not about politics; it’s about progress … real, sustained, significant improvement in the lives of individuals, in families and in society as a whole.

The only way to ensure our future is to improve the ways we prepare our citizens for the 21st century workforce

In short, it’s about our future as a nation. And the only way to ensure that future is to improve the ways in which we prepare our citizens for the 21st century workforce. Clearly, we need to focus intently on education reform and human capital development, and we need to do it in a thoughtful, broad-based, comprehensive way.

That’s one of the things that impresses me about the structure of this conference: It includes all of the relevant stakeholders. Not just educators, but committed policymakers, economists and labor experts … private-sector representatives and philanthropic leaders … researchers and data experts. We’re all here working toward one aim. And it will take this sort of broad-based approach—a deliberative, collaborative, wide-ranging effort—to put our human-capital-development system on a course to create lasting and meaningful change.

I’m here today to talk about one specific but very important piece of the human capital puzzle—the piece that increasingly connects people most directly to the job market: higher education. It’s our belief at Lumina Foundation—a belief shared by an increasing number of labor economists and other experts—that postsecondary education is the key element in sustaining the recovery and forging a strong economy for the future.

In my brief time today, I hope to explain why a postsecondary degree or credential is more important than ever, for nearly every citizen. I also want to share some thoughts on how you can help advance the college-attainment agenda—and when I say “college” I mean all types of post-high school education—and thus increase opportunity for millions of Americans.

Before I delve too deeply into the topic, however, it might be helpful to tell you a bit more about the organization I represent. Lumina Foundation is a national foundation that plays an unusual role as one of the nation’s largest private foundations. 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 private foundation in America that focuses exclusively on that mission. And we pursue our mission in a 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. Our Big Goal is this: By the year 2025, we want 60 percent of Americans to hold high-quality college degrees and credentials.

Today, the national degree-attainment rate hovers just below 40 percent. That’s actually been the case for much of the last four decades, but a 40 percent rate hasn’t really hampered us until recently. In fact, a decade or so ago, we led the world in this race. No longer. College-attainment rates are soaring among young adults in many other nations, while our rate remains essentially flat. Figures released over a year ago put us in eighth place. And now, according to the latest figures, we’ve slipped to 15th in the proportion of 25- to 34-year-olds who have obtained a two- or four-year degree. Clearly, in an age where economies and labor markets are increasingly global, this downward trend is very troubling.

Now, and certainly in years to come, workers without college-level learning simply won’t have the knowledge and skills they need to succeed. In fact, the Georgetown University Center on Education and the Workforce has estimated that by 2018, 56 percent of all of the jobs here in the South will require some form of postsecondary education or training. That’s a huge increase since the mid-’70s, when only about a quarter of those jobs required any education beyond high school.

That means, in the next six years, this region will need to fill more than 10 million vacancies resulting from job creation, worker retirements and other factors. Of these expected vacancies, well over half—about 5.7 million jobs here in the South—will require postsecondary credentials.

Of course, there is variation among the states. For example, West Virginia can expect to create only about 115,000 jobs requiring college-level learning, roughly 49 percent of the total number of 234,000 job vacancies expected by 2018. At the other end of the spectrum, Virginia will need to fill some 820,000 college-level jobs—64 percent of the expected total of 1.3 million vacancies.

All of these numbers—and a wealth of other data about educational attainment—are available in the report A Stronger Nation through Higher Education. I’ve brought copies with me today, and I urge you to pick one up and to use it to inform your work. Stronger Nation provides a detailed picture of educational attainment, not just in every state, but in every county and in each of the nation’s 100 most populous metropolitan areas—including 23 cities here in the South, from Atlanta and Augusta to Little Rock and Louisville.

Again, the numbers in this report are telling, and the trends are not encouraging. Remember, the national degree-attainment rate is below 40 percent, but according to our special analysis of the situation here in the South, those numbers are even lower. Among the Southern Growth Policies Board’s 13 member states, the average attainment rate for working-age residents is just 34.4 percent. Not surprisingly, the picture is a bit brighter in the region’s urban areas. In those 23 metro areas, about 39 percent of working-age residents hold at least a two-year degree—though that average dips to just 37.5 percent if we exclude the comparatively well-educated populations in and around Washington, D.C., and Raleigh.

Southern degree-attainment rates are well below the level that can position citizens for success in the global economy

It’s easy to get lost in the numbers here, so let me draw your attention to the main message, the one that is clear and compelling: Every state, every metropolitan area, and nearly every county in this 13-state region falls short of the 60 percent goal for college attainment. In fact, only five counties in the entire region exceed 60 percent: Albemarle (60.2%), Arlington (77%), Fairfax (65.3%) and Loudon (65.1%) counties in Virginia; and Orange County (62.6%) in North Carolina. Elsewhere, and in the huge majority of states and cities in the South, degree-attainment rates are well below the level that can position your citizens for success in the global economy.

Simply put, we have a long way to go. The gap is huge, and it represents a devastating loss: massive amounts of unrealized human potential, millions of jobs that are likely to go uncreated or unfilled.

Now I know what some of you may be thinking right now. “Jobs? What jobs? Aren’t opportunities more limited today than they have been for many years?”

Well let’s talk about that. Here are some things we know. First, the unemployment rates for those with college degrees are considerably lower than for those without postsecondary credentials. This is true even in these troubled economic times. According to data from late 2011, national unemployment rates for 18-24 year olds (not enrolled in school) are about 8.9% for BA recipients and 11.9% for AA holders, compared to a whopping 22.9% for those with only a high school credential.

We also know that wage differentials for people with college degrees compared to those with high school credentials are wide. That’s a fact that we’ve understood for many years—if you go to college, you make more money. What is less recognized is that the differential in wages is actually growing. Individuals with a bachelor’s degree make an average of 84% more over their lifetimes than those with just a high school diploma. This is an increase even since the late 1990s, when the differential was about 75%. This increasing wage premium shows that the labor market is hungry for college graduates. Even in this job market, employers are willing to pay an increasing premium for college graduates.

Now please don’t be distracted by the growing chorus of naysayers who question the value of college by pointing to people like Mark Zuckerberg and Bill Gates—college dropouts who went on to become corporate titans. Going that route is a bit like ditching your 401(k) plan to buy lottery tickets. The fact is, higher education is all but required for entry into the executive suite. According to surveys by executive search firm Spencer Stuart, 97 percent of CEOs at Fortune 500 companies have a four-year college degree, and 62 percent have advanced degrees.

College can’t guarantee success, but you almost certainly will be poor without some kind of postsecondary credential

So does all of this mean that every person who graduates from a college or university is going to get a good job and lead a middle-class life? No. The point is, in this environment, a college degree is a prerequisite. College can’t guarantee success, but in the future, you almost certainly will be poor without some kind of postsecondary credential.

But even this doesn’t tell the whole story. The big shift in employment isn’t a shift from low-skill occupations to high-skill occupations. The fact is, 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. Jobs in manufacturing, in mining—really, in nearly any practical field you can name, from auto repair to X-ray technology—now require some level of postsecondary education. What’s more, all jobs increasingly demand the “soft skills” that college-level learning provides … the critical thinking and analytical skills that make workers more adaptable in an ever-changing workplace.

I’m sure you’re all familiar with the report last year from the National Skills Coalition which pointed out that the South’s economic growth will continue to rely on middle-skills jobs—jobs that now overwhelmingly require some form of postsecondary education. The report called these middle-skills jobs “the engine of the American South’s economy.”

And here’s an even more compelling truth about the benefits of boosting college attainment—a truth that has huge implications for the nation’s future: Increasing college success isn’t just a way to prevent 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? Because they increase productivity, and productivity growth is the engine that drives all advanced economies. Talent is the vital element, and higher education is the lever for developing it.

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 those skills … that type of knowledge … can only be offered in well-designed and rigorous postsecondary programs. Colleges and universities play the central role in retraining and up-skilling workers. The best of them are geared to the diverse needs of students throughout the society, most particularly first-generation students in population groups that have not traditionally been well-served by higher education. These are precisely the students whose success is increasingly critical to the health of the U.S. economy. That’s why Goal 2025 is all about ensuring that many more of these students enroll in and complete high-quality postsecondary programs.

Of course, the benefits of higher education aren’t limited to individuals, and they extend well beyond economics and labor markets. The broader societal benefits of a well-educated population are enormous: lower crime rates, less reliance on public assistance, better health, increased levels of civic involvement. And, as Americans, we all recognize equity of educational opportunity as a shared value. Every person, regardless of finances or family circumstances, deserves the chance to succeed and contribute to our collective well-being. Like nothing else, higher education offers that opportunity.

We know that Goal 2025 is an ambitious goal. In fact, we know it can’t be reached without the concerted and cooperative effort of stakeholders from every arena, including K-12 and higher education, federal and state government, business and labor leaders. So let’s examine a few of the steps that these various stakeholders can take … that you, as concerned citizens, can take … to help build a stronger South—and a stronger nation—through higher education.

It’s clear that we must tighten the connection between college success and economic success … and that connection must be tightened from both sides. In short, both sides must change. Let’s start with what might be called the “supply side” of the higher-ed enterprise—that is, higher-ed institutions and systems, and the policymakers who help create the environment in which those schools and systems operate.

On that side, institutional leaders and government 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.

And there’s other evidence of progress as well, including a new realization that workforce-relevant learning includes far more than the traditional, four-year college degree. Associate degrees and occupational certificates matter—first, because they have genuine currency in the workplace; second, because they can serve as early steps on the path to further educational attainment.

I can also point you toward three promising developments in the policy arena … concrete steps being taken by lawmakers and officials in several states to increase college attainment.

  • First of all, at the K-12 level, widespread adoption of the Common Core State Standards will go a long way to help ensure college-readiness among the nation’s high school graduates. This important effort at improving the alignment of standards and assessment of college readiness between the K-12 and postsecondary systems is not news to most of you, since nearly every southern state signed on to the Common Core in 2010.
  • The second policy step is the move toward performance-based funding. That is, instituting a system to fund higher education, not based on mere enrollment of students, but on institutions’ success in serving and graduating those students. Again, this movement is well known here in the South. In fact, Tennessee has led the way in performance funding for years, and in 2010 made even further improvements with the passage of the groundbreaking Complete College Tennessee Act. Louisiana followed suit with its GRAD act, and now at least four other Southern states—Arkansas, South Carolina, Virginia and West Virginia—have approved or are considering such systems.
  • Finally, the last policy move is one that holds great promise for virtually any state: That is, making a purposeful, focused effort to attract and graduate adult students, particularly those who already have earned some college credit. Kentucky has led the way in this area for years, and organizations in many other states are following suit, including West Virginia, with its DegreeNow program; and the Southern Regional Education Board in Atlanta, which is developing an online portal to assist adult students seeking to complete their degrees.

These policy developments are certainly well worth emulating in any state, and they point to an important shift among those on the supply side of higher ed. However, that shift is by no means complete. In fact, we at Lumina are convinced that many more changes are needed on the supply side. Despite its many strengths—strengths that, admittedly, served this nation well for many decades—today’s postsecondary system simply cannot get us where we need to be in the 21st century.

Perhaps the best indicator of the limits of the current system is the very real problem we have with college affordability. We all know that the increasing cost of higher education has been placing a burden on families and individual students for many years. But now, the challenge is far greater than that. In fact, it’s clear that we’ve reached a critical crossroads when it comes to funding higher education in this country. What we’ve always done just isn’t working anymore.

For decades, the American higher education system has essentially relied on two major sources of funds: government appropriations, and the tuition and fees paid by students and families. When one source was in short supply, institutions looked to the other. Both of these sources have increased over the last two decades to meet rising college costs. It’s been a constant chorus droning in the background … what I like to call the “mood music” accompanying the national conversation about college finance.

But now the music has stopped. After years of college costs rising faster than inflation, faster than family incomes, faster even than the cost of health care—we’re at the limit. Neither government nor students can afford these continuing cost increases. The money, and the political will, are just not there. Yet the demand—and the societal need—for increased college attainment is greater than ever before in our nation’s history. That’s what Goal 2025 is all about: meeting that rising need.

Now we recognize that the challenge is huge: We need to scale up the system so that it can produce the numbers of graduates that our economy needs, all while maintaining or improving the quality of its graduates … and without the likelihood of major new investments made by the federal government, states, parents and students.

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.

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.

Ultimately, this means that higher education must be more student-centered. Or, to put it in terms that might resonate better with the employers and business leaders we seek as partners: 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.

And that brings me to the “demand side” of the higher-ed enterprise. This includes students, to be sure, but also employers, workforce-development officials and other members of the business community. Without question, the business community—the demand side—has a major role in making Goal 2025 a reality. And my Lumina colleagues and I are doing more and more these days to encourage employers to seize that role.

New processes and procedures will be required; innovative approaches will have to be taken—all in an effort to boost productivity and 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.

It’s also important that business leaders help higher education maintain its focus on increasing attainment among adult students. 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 the power that ultimately drives ALL businesses.

Finally, employers 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 and society as a whole.

In practical terms, we’re asking the business community to view its role in the Goal 2025 effort from three perspectives or through three lenses: company, community and country.

From the company perspective, each employer can take direct and meaningful steps to aid college attainment among its own workers. Some examples:

  • More and better programs that provide tuition reimbursement.
  • Flexible work scheduling to allow workers to attend college classes.
  • Assistance and counseling to help create individualized learning plans for workers.
  • Use of company communications to promote employees’ educational efforts.
  • Programs that offer tangible rewards to employees who earn degrees and credentials.
  • And many other incentives for employees to pursue training, certificates, degrees and credentials of all kinds.

Next, from the community perspective, employers should make education a central plank in their platform of community engagement and service. In fact, boosting attainment should be at the top of the list when it comes to corporate responsibility efforts. What better way to demonstrate good corporate citizenship than to foster an “education-friendly” workplace?

Finally, and most broadly, employers need to view this effort through the larger lens of country. Business leaders here in the South—and really, all of us as Americans—need to be advocates for increasing college attainment because that’s what the entire country needs. Reaching that Big Goal—60 percent attainment of high-quality college credentials—will benefit all of us. A better workforce leads to more robust job creation, sustained growth, and greater economic security in this global age. A better-educated citizenry also means increased civic involvement and greater social stability.

In other words—and in closing—Goal 2025 isn’t something for Lumina to achieve. It’s not an initiative owned by the field of philanthropy … or employers … or state and federal policymakers … or the higher education community. It is—and must be—a broad-based, inclusive and intensive effort. Increasing postsecondary attainment is in everyone’s interest … and that makes it everyone’s business. I appreciate the fact that all of you are here today because you have made it your business, and I look forward to working with you all.

Thank you again for the opportunity to speak with you this morning.

Kate Snedeker

A series of reports show investing in employee tuition reimbursement yields significant financial payback.
See Talent Investment series