#1The Value of College in Tennessee Celeste K. Carruthers June 15, 2023 T THE UNIVERSITY OF TENNESSEE KNOXVILLE BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#22 Nationwide, 1.09 million fewer students are enrolled in college than before the pandemic 10.0% 5.0% Percent Change in Enrollment from Previous Year by Institutional Sector: 2019 to 2023 0.0% -1.2% -2.4% -3.1% -5.0% -10.0% Spring 2020 Spring 2021 Spring 2022 Spring 2023 5.2% L -0.5% -0.2% 0.3% -0.8% -0.6% 0.4% -1.29 -1.2961.096 -1.6% 0.8% 1.4% -0.9% -2.3% -3.1% 0.5% TT -6.0% -6.7% All Sectors Public 4-year Private nonprofit 4-year Private for-profit 4-year PABS -10.1% -8.2% Public 2-year • • • Steep 2020 and 2021 drops in postsecondary enrollment driven by two-year schools. Potential turnaround in 2022. See more: National Student Clearinghouse, "Current Term Enrollment Estimates," May 2023 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#3Why did college enrollment fall? Interruptions - pandemic-fueled hurdles to enrolling in college О Widespread online and hybrid learning Health risks from in-person learning Inconsistent child care Disruptions - also attributed to the pandemic, but may be longer lasting Worker shortages Rising (nominal) wages for high school graduates Transformation - ongoing pre-pandemic changes in expected cost and payoff of college O O O O Changing sentiment about the cost and value of higher education Structural resets to education requirements An aging US Labor-saving automation Local, state, and federal policy around college affordability 3 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#44 Source: BLS In Thousands 3700 3500 3300 3100 2900 2700 2500 Mar-12 Sep-12 Mar-13 Sep-13 Tennessee labor demand and labor supply Mar-14 Sep-14 -Labor Supply (Employed + Unemployed) Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 June 2023 |http://haslam.utk.edu/boyd-center Sep-17 Mar-18 Sep-18 Labor Demand (Employed + Job Openings) Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#58 4 2 Wages are growing faster for lower wage workers (Percent Annual Wage Growth) Bottom 25 percent Top 25 percent 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Atlanta Fed, BLS 5 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#6• Previous findings The value of college 18-22% returns to college for students at the margin (Zimmerman, 2014; Mountjoy, 2021). Pre-pandemic national estimates 4 in 5 jobs earnings $45K+ by age 45 go to workers with a college education (Georgetown). College "pays off" on average (Abel & Deitz, 2014 & 2019; Itzkowitz, 2020). Much less so for students who do not complete degrees (Cooper, 2021; Webber, 2018). Carruthers et al. (2023): High estimated average returns to college in the post- pandemic U.S. - 14.5% internal rate of return for a BA/BS, 9.5% for an AA/AS, 6.4% for college credit but no degree. Open questions Post-pandemic return to college for Tennesseans Estimated returns for Tennesseans by gender, race, ethnicity, metro area, and (for BA/BS recipients) degree field Previewed here and forthcoming in a UTK Boyd Center report Look here for slides and report: https://haslam.utk.edu/boyd- center/education/ Caveat: Estimates are descriptive. 6 June 2023 | http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#7Data and methods Census Bureau's American Community Survey, 2011-2021 Limited to — 18-64 year-olds -Either working or looking for work Not enrolled in school Estimates of -Lifetime earnings by educational attainment, gender, broad race/ethnicity group, city, and degree field -Internal rates of return on the college investment 7 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#88 2021 Tennessee labor force characteristics, by educational attainment All TN 18-64 year-olds in the labor Some force and not Did not HS diploma college, No Associate's Graduate or Bachelor's professional attending finish HS or GED degree degree degree degree school (6.7%) (30.9%) (20.8%) (8.2%) (21.8%) (11.7%) Female (%) 46.7 33.7 40.4 46.3 57.3 50.8 56.8 Black (%) 15.9 15.5 18.8 20.4 14.2 11.0 10.7 Native American (%) 0.2 0.7 0.2 0.2 0.2 0.1 0.1 Multiple Races (%) 5.8 14.0 5.5 5.6 5.4 4.7 5.0 Hispanic (%) 5.7 26.2 6.0 3.8 3.0 3.0 3.4 Notes: Authors' calculations using the 2021 American Community Survey, limited to 18-64 year-olds. Women are under-represented in the state labor force, but over-represented among workers with college degrees. June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#92021 Tennessee labor force characteristics, by educational attainment All TN 18-64 year-olds in the labor force and not Some Graduate or Did not HS diploma college, No Associate's Bachelor's professional attending finish HS or GED degree degree degree degree school (6.7%) (30.9%) (20.8%) (8.2%) (21.8%) (11.7%) Female (%) 46.7 33.7 40.4 46.3 57.3 50.8 56.8 Black (%) 15.9 15.5 18.8 20.4 14.2 11.0 10.7 Native American (%) 0.2 0.7 0.2 0.2 0.2 0.1 0.1 Multiple Races (%) 5.8 14.0 5.5 5.6 5.4 4.7 5.0 Hispanic (%) 5.7 26.2 6.0 3.8 3.0 3.0 3.4 Notes: Authors' calculations using the 2021 American Community Survey, limited to 18-64 year-olds. Non-white and Hispanic workers are over-represented among workers who did not finish high school, completed no more than a high school diploma/GED, or enrolled in college but did not complete an associate's or higher degree. 9 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#102021 Tennessee labor force characteristics, by educational attainment All TN 18-64 year-olds in the labor force and not Some Graduate or Did not HS diploma college, No Associate's Bachelor's professional attending finish HS or GED degree degree degree degree school (6.7%) (30.9%) (20.8%) (8.2%) (21.8%) (11.7%) Female (%) 46.7 33.7 40.4 46.3 57.3 50.8 56.8 Black (%) 15.9 15.5 18.8 20.4 14.2 11.0 10.7 Native American (%) 0.2 0.7 0.2 0.2 0.2 0.1 0.1 Multiple Races (%) 5.8 14.0 5.5 5.6 5.4 4.7 5.0 Hispanic (%) 5.7 26.2 6.0 3.8 3.0 3.0 3.4 Notes: Authors' calculations using the 2021 American Community Survey, limited to 18-64 year-olds. 10 June 2023 |http://haslam.utk.edu/boyd-center Non-white and Hispanic workers are under-represented among workers with college degrees. T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#11Income rises and unemployment falls with a college education Annual Salary and Wages (2021$) Unemployment (%) 140000 120000 100000 7.0% 6.0% 5.0% 80000 4.0% 60000 3.0% 40000 2.0% 20000 1.0% 0 0.0% Did Not Finish HS HS Diploma or GED Some Associate's Bachelor's Graduate or College, No Degree Degree Professional Degree Did Not Finish HS HS Diploma or GED Degree Some College, No Degree Degree Associate's Bachelor's Graduate or Degree Professional Degree Tennessee United States Tennessee Notes: Authors' calculations using the 2021 American Community Survey, limited to 18-64 year-olds working full-time in the previous year. United States 11 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#12College educated workers earn more than HS educated workers, and the gap grows through midcareer Tennessee 60000 Earn $9K more 50000 40000 with a Bachelor's at age 22 than 30000 20000 10000 60000 50000 with a HS diploma 40000 Earn $41K more at age 44 30000 20000 10000 United States 0 0 1 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 ■Sople college, no degree Associate's Bachelor's ■ Some college, no degree Associate's Bachelor's Notes: Authors' calculations using the 2011-2021 American Community Survey, limited to 18-64 year-olds working full-time in the previous year. 12 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#13Tennessee lifetime earnings over HS by education, gender, and race/ethnicity Lifetime earnings over HS (000s of 2021$) $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Women Men Black, Hispanic, Native White, non-Hispanic American Bachelor's Some college Associate's On average, Tennesseans with Bachelor's degrees earn $1.4 million more than high school graduates over their career. ● Only $826K more if Black, Hispanic, or Native American The lifetime earnings premium is $417K for an AA/AS and $258K for some college without a degree. T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#14Tennessee lifetime earnings over HS by education, and gender/race/ethnicity intersection Lifetime earnings over HS (000s of 2021$) $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Black, Hispanic, Native White Non-Hispanic Black, Hispanic, Native White Non-Hispanic American Women Women American Men Some college Associate's Bachelor's Men White, non-Hispanic men with a Bachelor's degree earn $1.8 million more than white, non- Hispanic men who did not attend college. The gap is smaller for women and non-white workers; for example, $822K for Black, Hispanic, and Native American women. The lifetime income premium with an Associate's degree is $344K-598K and $217K - 337K with some college. T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#15Tennessee lifetime earnings over HS by education and metro/non-metro area Lifetime earnings over HS (000s of 2021$) $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Chattanooga Knoxville Memphis Nashville Rest of TN ■Some college Associate's Bachelor's Nashville has the largest income gap between college- educated and HS-educated workers. • $1.8M difference between workers with a Bachelor's degree and workers without college in the city $689K difference with an Associate's The educational income gap is smaller outside of the four largest cities. T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#16The rate of return to a college degree is high in the US and TN Estimated Internal Rate of Return to a College Education, 2011-2021 United States Tennessee Some College, No Degree Associate's Degree Bachelor's Degree 9% 13% 16% 7% 11% 14% Notes: Author's calculations using American Community Survey, 2011-2021. The internal rate of return is the return that would make someone financially indifferent between investing time and tuition/fees in a college education versus going straight to work after high school. Lifetime earnings with HS are 9% lower in TN than nationwide, but earnings with a BA/BS are 12% lower. . Financial benefits of investing in college: the value of additional lifetime earnings (in present value, 2021$) with different levels of a college education. The college investment is valued at the U.S. average net price of college for 2-4 years plus 2-4 years of income that students could have earned if they did not go to college. For comparison, the long-term average real return to stocks is about 7%. 16 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#1717 Returns to college degrees in TN are high across gender and race/ethnicity Estimated Internal Rate of Return to a College Education in Tennessee by Demographic Subgroup, 2011-2021 Black, Hispanic, and Native American Women Black, Hispanic, White, non- Hispanic Women and Native American Men White, non- Hispanic Men Some College, No Degree 9% 11% 8% 7% Associate's Degree 12% 19% 18% 12% Bachelor's Degree 12% 16% 12% 13% Notes: Author's calculations using American Community Survey, 2011-2021. Black, Hispanic, and Native American women also have low earnings without college, but a somewhat smaller college income premium than white women. June 2023 | http://haslam.utk.edu/boyd-center For white non-Hispanic women, low earnings without college (especially at younger ages) lead to higher estimated returns to college T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#18Returns to college degrees in TN are high across gender and race/ethnicity Estimated Internal Rate of Return to a College Education in Tennessee by Demographic Subgroup, 2011-2021 Black, Hispanic, and Native American Women Black, Hispanic, White, non- Hispanic Women and Native American Men White, non- Hispanic Men Some College, No Degree 9% 11% 8% 7% Associate's Degree 12% 19% 18% 12% Bachelor's Degree 12% 16% 12% 13% Notes: Author's calculations using American Community Survey, 2011-2021. A bachelor's degree adds relatively more to lifetime income for white, non-Hispanic workers than for Black, Hispanic, or Native American workers. 18 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#1919 2021 characteristics of Bachelor's degree holders in Tennessee, by broad degree field Arts, Humanities, Sciences and Communication, and Business (28.2%) Education (7.4%) Engineering (39.4%) Other Fields (25.1%) Salary and Wage Income Female (%) 83,401 41.4 47,714 72,709 61,636 79.3 44.7 51.9 Black (%) 11.0 10.5 9.9 14.2 Native American (%) Multiple Races (%) Hispanic (%) 0.1 0.2 0.1 0.1 4.4 4.7 5.1 4.1 3.3 1.3 3.3 2.4 Notes: 2021 American Community Survey, limited to 18-64 year-olds in the labor force, not attending school, working full-time. Salary and wage income are in inflation-adjusted 2021 dollars. Business, Science, and Engineering majors earn the most, on average. June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#2020 2021 characteristics of Bachelor's degree holders in Tennessee, by broad degree field Arts, Humanities, Sciences and Communication, and Business (28.2%) Education (7.4%) Engineering (39.4%) Other Fields (25.1%) Salary and Wage Income Female (%) 83,401 41.4 47,714 72,709 61,636 79.3 44.7 51.9 Black (%) 11.0 10.5 9.9 14.2 Native American (%) Multiple Races (%) Hispanic (%) 0.1 0.2 0.1 0.1 4.4 4.7 5.1 4.1 3.3 1.3 3.3 2.4 Notes: 2021 American Community Survey, limited to 18-64 year-olds in the labor force, not attending school, working full-time. Salary and wage income are in inflation-adjusted 2021 dollars. Women are under-represented in higher-earning fields. June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#212021 characteristics of Bachelor's degree holders in Tennessee, by broad degree field Arts, Humanities, Sciences and Communication, and Business (28.2%) Education (7.4%) Engineering (39.4%) Other Fields (25.1%) Salary and Wage Income Female (%) 83,401 41.4 47,714 72,709 61,636 79.3 44.7 51.9 Black (%) 11.0 10.5 9.9 14.2 Native American (%) Multiple Races (%) Hispanic (%) 0.1 0.2 0.1 0.1 4.4 4.7 5.1 4.1 3.3 1.3 3.3 2.4 Notes: 2021 American Community Survey, limited to 18-64 year-olds in the labor force, not attending school, working full-time. Salary and wage income are in inflation-adjusted 2021 dollars. Black, Hispanic, Native American, and multiple-race workers with bachelor's degrees are more evenly represented across higher-earning and lower-earning fields than women. 21 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#22Business, Science, and Engineering degrees correspond with higher earnings and returns to college Lifetime Earnings Over HS and Rate of Return for Bachelor's Degree Holders, by Degree Field Lifetime Earnings Over HS (000s of 2021$) Estimated Rate of Return to College Business Education Science & engineering Arts & other fields $1,855 17% $368 7% $1,493 14% $1,043 13% Notes: Author's calculations using the 2011-2021 American Community Survey 22 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#23Looking ahead: Factors that will shape the value of college for Tennesseans in the future Cost of college Student loan financing In-migration and aging See interactive Boyd Center projections here. Sustained higher labor market demand -See Boyd Center forecasts and much more in the Economic Report to the Governor. • Changes to entry-level education requirements • Technology, automation 23 June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#2424 A college degree may become less of a requirement for higher paying jobs • Ten states recently revised entry-level education requirements for state jobs. Similar changes by prominent private sector employers: Google, Apple, IBM, BofA, and more. Carruthers et al. (2023) find little movement in % HS-educated workers in college-level jobs, but this could change. States that have eliminated degree requirements in the civil service Governors of both parties have taken such actions Democrat Republican Map: Ethan Dodd/Insider Source: State websites INSIDER June 2023 |http://haslam.utk.edu/boyd-center T BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH#2525ne 2023 | http://haslam.utk.edu/boyd-center Thank you [email protected] https://haslam.utk.edu/boyd-center/education/ T THE UNIVERSITY OF TENNESSEE KNOXVILLE BOYD CENTER FOR BUSINESS AND ECONOMIC RESEARCH