A partnership to boost the US economy: business and higher education
With college tuition costs skyrocketing, and a dearth of skilled workers, American businesses worry they won't have enough educated employees to power their companies – and fuel economic recovery. Companies have begun to partner with colleges to meet a mutual demand.
Indianapolis and Washington — By 2018, 63 percent of all of US jobs will require some form of postsecondary education or training, according to estimates by the Georgetown University Center on Education and the Workforce. But the United States is only on track to deliver a fraction of this education. Currently, only 38 percent of America’s young adults have a college degree, compared to 58 percent in South Korea.
In fact, the current generation of college-age Americans is on its way to being less educated than their parents – a shameful first in America’s history.
With college tuition costs rising at double the rate of health-care costs, and a dearth of skilled workers, American businesses are increasingly worried about having enough educated employees to power their companies – and fuel economic recovery. Many businesses are beginning to understand the economic and competitive imperative to reverse these trends. They know higher education needs their help – and that they need better-educated workers.
In fact, if the US could better match skills with today’s jobs, unemployment would be at 6.5 percent instead of 9.1 percent, according to estimates from the Minneapolis Federal Reserve Bank. In that light, some companies have begun to partner with colleges to meet a mutual demand.
For example, Rio Salado College in Tempe, Ariz. works closely with corporations, government agencies, and other educational institutions to provide online classes that are convenient to students’ schedules and prepare them to succeed in well-paying careers.
The college and its business partners, ranging from airlines and banks to insurers, recognize that half of those who enroll in college are dropping out, citing costs and the demands of juggling work and family. A majority of today’s students work at least part-time and are raising families. Students at Rio Salado can choose from more than 600 online classes and more than 60 certificates and degrees, as well as in-person and hybrid classes (on-line and in-person) at college locations and workplaces.
One of Rio Salado College’s corporate partners, The United Services Automobile Association (USAA), has increased its workforce nearly ten-fold in recent years, due in large part to the kind of skills training and college credits completed at Rio Salado by more than 3,000 of its employees.
Large technology-intensive employers like Fortune 100 company Northrop Grumman drive America’s economic future and can represent a critical tipping point in education and training. Northrop Grumman Shipbuilding spin-off Huntington Ingalls relies on a highly skilled workforce equipped to handle the escalating challenges of nuclear-powered shipbuilding.
This business imperative justifies an investment of more than $100,000 per student to provide training and degrees through the Newport News Apprentice School in Newport News, Virginia. Apprentice students receive a salary and benefits as they progress through four- and five-year programs that build skills needed for success in the industry and provide associate degrees in business administration, engineering technology, or engineering. The curriculum provides the educational foundation necessary for continued growth throughout a career, with 80 percent of graduates still employed after five years and 70 percent employed after 15 years.
These are encouraging examples of business leadership helping colleges meet the needs of students and employers. But is it enough?
A new report from the McKinsey Global Institute released at a Committee for Economic Development forum estimates that the US needs to add 21 million jobs by 2020 to reach pre-recession unemployment of about 5 percent. To add this many new jobs, the US labor market would have to grow at about the same rate as it did in the second half of the 1990s.
And the US is still down about 7 million jobs from December 2007, when the recession officially began, and the economy may be falling further behind in its ability to absorb new entrants to the workforce as a result of normal population growth.
To engineer more college success, Lumina Foundation for Education has proposed a big goal: By the year 2025, we want 60 percent of Americans to hold high-quality college degrees and credentials (compared to the current national average of 38 percent). We’ve invested the foundation’s resources in organizations and efforts that will achieve this result, but we need support from business.
The examples of Rio Salado College and Huntington Ingalls show that the kind of college success that improves job prospects is best achieved locally and through partnerships. The conversation in America’s boardrooms must also include these urgent questions: Is enough being done in education to help revive the economy and put more Americans to work? What can and should business do about it?
American business needs to help determine what young people should know and be able to do as a result of their college experience – and then help them get there. Business involvement can range from the high-intensity model of Huntington Ingalls’s Apprentice School to partnering with colleges to develop curriculum and training to encouraging state leaders to adopt funding policies that reward higher education for graduation results (versus just mere enrollment).
The business-higher education partnership is a natural extension of the investment private business already makes, spending approximately $485 billion annually on education and training to help its workers keep pace with changing demands.
It’s hard to overstate the urgency here – higher education reform is a cause business must champion in order to secure our economic future. Prioritizing college completion must become a central business strategy to reduce America’s stubbornly high unemployment figure, remedy the skills mismatch, and ensure a vibrant future workforce and democracy.
Jamie Merisotis is president and CEO of Lumina Foundation for Education, and Charles Kolb is president of the Committee for Economic Development.