Michael Hicks: Workforce training, higher education bill conceals a crisis

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Indiana’s legislature is considering House Bill 1001, which contains numerous small changes to previous higher education bills. Most of its provisions seem pretty straightforward and simply modify or tweak existing legislation. But there also are some concerns.

The bill would require universities to better compile and maintain reports on graduates, faculty and spending. That is not very ambitious. Like most states, Indiana has spent tens of millions of dollars creating a rich data set of educational and labor market outcomes of Hoosiers. But we are literally decades behind other states in analyzing these data.

In 2002, I did a study for the West Virginia Department of Workforce Development that measured the effects of MBAs and several other master’s degrees from different state universities on wages and salaries of graduates. We’ve done nothing that sophisticated. Indiana has the data available to comprehensively evaluate the Indiana labor market effects of individual high schools, colleges and degrees over time.

I know there are strong interests in the state who fear analysis of these data. But lagging West Virginia’s analytical prowess by two decades is hardly an optimal use of resources. HB1001 should require colleges and workforce development to do a lot more of the analysis that they should already be doing.

My larger concern with the legislation is how it steers students away from college by extending the career scholarship account program to non-college programs. Government should be focused on fundamental education for a lifetime of work and citizenship. Job readiness is the responsibility of the employer, as any successful business already knows.

Indiana is in real trouble with declining educational attainment, and HB1001 risks weakening our economy in the coming decades. Here, a bit of arithmetic helps.

For the past 75 years, Indiana has sent kids to college at a lower rate than the nation as a whole. That meant our educational attainment slowly fell farther and farther behind the nation. This suppressed salaries and wages, which are now close to 15% below the national average. Since 81% of all net job growth in the country went to college grads, businesses that create the bulk of new jobs in the US economy just aren’t going to look at Indiana.

As an example of our problem, consider 100 kids in a cohort of students nationally and here in Indiana. We will also consider Mississippi, a state with historical educational shortfalls. Last year, out of every 100 kids in a cohort nationwide, 79 graduated high school. In Indiana it was 87 and in Mississippi 88 kids. Of those who graduated high school, the number who then went to college were 51, 46 and 72 respectively.

The persistence rate are the share of those who went to college and stayed for their sophomore year. Nationwide that was 75.5, in Mississippi it was 75.4. Indiana kept 73.2% of first-year students in college a second year.

Putting this all together means that nationwide, for every 100 kids in the most recent age cohort, 39 are enrolled in college at the start of their second year after graduation. Only 34 out of 100 Hoosier students are still enrolled, while a whopping 54 Mississippians remain enrolled into their sophomore year. These are stunning differences.

Now, these data are imperfect. High school graduation standards vary a bit, as does reporting of graduation rates. Mississippi’s big burst of new college students will likely mean that a higher share fails to graduate. Likewise, college graduation requirements vary by state. Indiana has the lowest maximum course credit requirements. But the implications of these data are clear.

As of last year, 38 out of every 100 adults held a bachelor’s degree. So, the nation as a whole is slowly improving educational attainment. The state of Mississippi is in the midst of an aggressive effort to reverse a century and a half of lagging education. Sadly, Indiana is slipping behind, both in absolute numbers and relative to other states. In fact, only three states with lower levels of educational attainment than Indiana send a smaller share of kids to college than we do. That my friends, is an economic crisis.

Any legislation that risks further eroding our college attendance is a mistake. HB1001 needs more work to reduce that risk.

Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. This commentary previously appeared at indianacapitalchronicle.com. Send comments to [email protected].