As the presidential campaign of 2020 kicks into high gear, the stagnation of worker earnings in recent decades has drawn much attention and comment from the candidates. Yet, outside of advocating for a few trendy proposals like free college, the candidates have said little to date on how to improve education and skills, especially those that are highly rewarded in the US labor market, among the roughly two-thirds of Americans who do not attain BAs. The candidates’ relative silence is especially noteworthy in a year when both the Higher Education Act (HEA) and the Workforce Innovation and Opportunity Act (WIOA) are up for reauthorization, and at a time when fairly tight labor markets make it harder for employers to find and retain the skilled workers they need.
What are the problems and barriers that keep students from gaining the skills that the US labor market rewards? Aside from affordability, students at America’s community colleges get too little support and guidance about what they can realistically achieve in college and what the labor market rewards; too many students wander aimlessly, taking liberal arts classes in the hope of transferring to 4-year schools, while not completing a meaningful credential there. The colleges themselves cannot afford to provide more supports or scale their occupational programs in high-demand fields like health care and IT, but they also face too few incentives to do so – since such programs are expensive, and college funding is rarely tied to better future employment outcomes of students. Employers engage too little with these institutions, thus making it hard to scale successful partnerships in high-demand economic sectors that provide classroom training or work-based learning (like apprenticeships). And students at the for-profit institutions either fail to complete programs, or earn credentials with low market value, while racking up high debts and frequently defaulting on their loans.
To strengthen the skills and earnings capacities of workers without BAs, we should prioritize the following: 1) Providing more supports and especially career guidance for students; 2) Providing more resources to the community colleges while strengthening their incentives to respond to labor market demand; 3) Engaging more employers in partnerships with community colleges to expand occupational education and work-based learning; and 4) Maintaining and strengthening regulations in the for-profit sector.
To provide more guidance and supports, HEA should explicitly raise funding for these services at community colleges, while also encouraging the use of nearby one-stop shops (now called American Job Centers) funded by WIOA. Helping institutions build the kinds of “guided pathways” advocated by Thomas Bailey and his coauthors at Columbia University makes sense, while also rigorously evaluating these approaches. Title IV funding for shorter-term certificate programs with labor market value should rise.
There can be no doubt that community colleges need more resources from states to provide a range of supports for students, and that such funding improves outcomes there (see research by David Deming and Christopher Walters). But incentives that reward institutions for improving subsequent student earnings capacity might help as well. While many states now use some version of outcomes-based funding for higher education, I think these incentives should put more weight on subsequent earnings outcomes of students as well as credit or credential attainment, and especially among minorities and disadvantaged students.
On the other hand, poorly designed incentives can encourage schools to “cream-skim” in admissions, denying entry to higher-risk individuals, or to lower the current bars to course completion or graduation. And greater emphasis on later earnings requires better use of academic and labor market data to measure student outcomes over time. We should learn more about the impacts of what the states currently do in these regards, and support their more successful efforts.
Engaging more employers in partnerships with community colleges is a topic on which we know relatively little, but where many states are experimenting with various kinds of financial incentives and technical assistance. Federal support for these efforts, along with rigorous evaluations of their cost-effectiveness, should grow. Finally, the College Affordability Act proposed recently by House Democrats rightly restores and strengthens “gainful employment” regulations and limits on the extent to which the for-profit colleges rely on public funding for support.
In 2020, both a strong economy and a presidential campaign will require us to pay more attention to the many factors, like skill limitations, that currently prevent millions of US workers from improving their earnings and their access to the middle class. Let’s not waste an important opportunity to focus on the real issues here and to generate workable solutions to this problem.