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Cascade: No. 78, Fall 2011

Spotlight on Research: The Economic Benefit of a Community College Education

The persistently high rate of unemployment during the economic recovery continues to challenge policymakers and frustrate those seeking employment. At the same time, the federal government continues to pursue policies to stimulate job growth. However, many of the unemployed lack the skills or training required for the jobs that are available. More reliance on workforce development might be the avenue to take in order to equip low-skilled workers with the proficiency to obtain jobs and help those at risk of losing their job to acquire the additional skills necessary to retain their employment. One type of institution that might provide the needed building or upgrading of skills is a community college. The research on the effect of community colleges on employment and earnings is mixed. However, Dave E. Marcotte provides a fresh perspective on the issue by focusing not only on the labor market returns to a community college degree or certificate but also on the credits earned without receiving a degree or certificate.1

Background

Marvin M. Smith, Ph.D., Community Development Research AdvisorMarvin M. Smith, Ph.D., Community Development Research Advisor

Marcotte pointed out that “since the early 1980s, the earnings of workers with a postsecondary education have grown substantially, relative to those of their high school peers.” One rationale for the increase is the “shifts in the structure of demand in the labor market that have favored workers with more skill.” While most attention has been focused on four-year institutions as a source for providing postsecondary education, community colleges2 have been given little consideration. Marcotte observed that “nearly 40% of all students enrolled in postsecondary education are at [community colleges].” Moreover, enrollment in community colleges has been increasing. The author further noted that the “recent economic downturn has been cited as an important factor behind large increases in enrollment in community colleges across the country.” According to Marcotte, “because of open enrollment policies, low tuition, and their applied courses, community colleges can be relatively attractive during difficult times for adults looking to upgrade skills and traditional college students facing financial hardship.”

Given the current economic environment, it is important not only to get a better understanding of the economic returns to a community college education but also to determine which segments of the population might benefit the most, the possible appeal of a community college education, and the receptiveness of community college enrollment to policy initiatives. In regard to the latter, Marcotte offered the following observations: “First, community colleges provide educational opportunities to students who are typically economically disadvantaged, and whose academic preparation is typically not as strong. These are the students most at risk of being left behind by ongoing changes in the labor market. Second, community colleges are a principal mechanism for upgrading skills of those already in the workforce because of their open admissions policies and flexible courses of study, which include degree programs, certificates, and nondegree courses. Finally, as others have argued, community college enrollment is likely to be particularly amenable to policy intervention because they enroll a larger share of students affected by state and federal financial aid.”

Data and Methodology

In light of the established body of research that underscores the effect of postsecondary education on earnings and employment, the author sought to augment our knowledge of the value of enrolling at a community college. He used data from the 2000 follow-up of the National Education Longitudinal Survey (NELS). “The NELS follows a nationally representative sample of students who were in the eighth grade in 1988.” The author used only those “sample members who completed interviews in all years, and who were not still enrolled in a postsecondary institution in 1999 or at the time of the 2000 interview.” The data contain information on the postsecondary education and labor force experiences (including employment, earnings, and occupation) of the cohort following high school in 1992. The cohort was between 25 and 27 years of age by 2000.

During the course of his analysis, Marcotte estimated several regression models. Since he could “measure completed degrees” as well as “years of postsecondary study among those not earning degrees,” he was able to estimate the returns to degrees separately from the returns to postsecondary study without degrees. The author also estimated the returns to credits earned in occupational versus academic courses. To isolate these returns, he controlled for other possible influences “between those who enroll in postsecondary institutions and those who do not as well as among those completing different levels of postsecondary education.” Among those likely influences were differences in the educational environment or expectations at home, the economic status of the sample members, the academic culture of their high schools, and “any preexisting differences in academic ability in core subjects.”

Results

According to Marcotte, the schooling and work decisions of men and women are shaped by different influences; thus, he estimated the regression models separately by gender. He found that “on average, young men who enrolled in a community or technical college earned approximately 5.1% more annually for each year of full-time equivalent coursework completed, even though no degree was obtained.” As far as the returns to the receipt of a degree are concerned, the author estimated that “men who obtained an associate degree earn about 12.2% more annually…than their high school educated peers.” His further analysis determined that the “observed relationship between enrollment in community colleges and labor market earnings is in large part the result of relatively more employment hours for workers who attended community college.”

The author also found that compared with young men, young women had larger returns to enrollment in and degrees from community colleges. For instance, he estimated that “women who earn associate degrees earn about 45.8% more annually…than similar high school educated women.” Marcotte pointed out that the gender differences in returns “to postsecondary education suggest there are important differences in the educational and/or economic experiences of young men and women.” He suggested that this might be due to the fact that “women who enroll in postsecondary education more commonly enroll in programs that provide training for occupations where postsecondary study is particularly important. For example, in the context of community colleges, a common major for women is in nursing or other health fields…” Men, however, “may be more likely to enroll in occupational programs for which work experience or apprenticeship might be better substitutes, such as electronics or automotive technology.”

The author was less successful in isolating the returns to academic versus occupational credits. He observed that since most community college students take a mix of both types of courses, “the substantial correlation between academic and occupational credits earned makes it difficult to identify whether enrollment in one type of course or the other is particularly advantageous.”

Conclusions

Marcotte augmented our knowledge of the economic benefit of a community college education. He found “consistent evidence that average wages and salaries for young women and men who enroll in community colleges and those who earned associate degrees are substantially higher than their peers whose education extends no further than high school.” Moreover, the author determined that the “most substantial earnings benefits associated with community college education, and postsecondary education in general, accrue to women.” In light of the current economic conditions, one implication of Marcotte’s findings is that “increases in enrollment at community colleges, regardless of whether they lead to a degree, are likely to result in improved employment opportunities in the future.”

  • 1Dave E. Marcotte, “The Earnings Effect of Education at Community Colleges,” Contemporary Economic Policy, 28:1 (January 2010), pp. 36–51.
  • 2The author uses the terms two-year postsecondary institutions and community colleges synonymously. The former also includes junior colleges.

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