VALUE OF AN EDUCATION
Associate Professor of Economics,
Colorado State University
FORT COLLINS – It’s June. The last notes from Elgar’s Pomp and Circumstance have drifted into the summer sky and a spate of thunderstorms has extinguished the embers of graduation barbecues across northern Colorado. After years of angst pointing to this singular moment, many new high school and college graduates, along with their parents, are probably wondering “what now?”
The stumbling economy adds to the uncertainty. Wages are stagnant, unemployment is up and job growth has slowed.
In some respects, it seems like our freshly minted alums are in for a rather harsh introduction to reality.
Because economists tend to point out things like this, it is not surprising that I was not invited to give a commencement address. But if I had been, my message would have been a simple one.
Don’t worry. You made the right decision.
Recent earnings data indicates the essentiality of education. According to the Current Population Survey (CPS) annual earnings for Colorado’s full-time workers without a high school diploma averaged $25,916 in 2006. For Centennial State residents holding a high school degree only, annual earnings averaged $34,698. Over just 15 years, a (crude) calculation shows the high school diploma is worth about $130,000.
High school graduates are also less likely to live in poverty. CPS data from 2005 indicate 22.1 percent of Colorado’s adult population without a high school diploma lived in poverty. By comparison, the state’s high school only graduates had poverty rates of 11.6 percent.
The data present an even more startling picture as educational attainment increases. In 2006, full-time Colorado workers with “some college, less than 4-year degree” had average annual earnings of $43,703, while earnings for those with at least a 4-year degree averaged $75,341. The 2005 combined poverty rate for these two groups was only 6.6 percent.
The message is clear. Education greatly enhances a person’s chance at economic prosperity.
Fortunately, the Poudre School District is doing an excellent job keeping its students on track for graduation. In 2006-07, the district’s dropout rate for all students was 2.5 percent, nearly 2 full percentage points below the state’s overall rate.
Yet the data still shows 337 students dropped out of PSD last year. And if history is any guide, about 75 of these young people will end up living in poverty.
As we think about improving quality of life in northern Colorado, education must be viewed as the fundamental building block.
Economic globalization reinforces this message. In today’s economy the United States’ comparative advantage remains its educated and skilled workforce.
Yet other countries are catching up. For example, in 1995 the US was second only to New Zealand in college graduation rates. Today it is 15th. And it is not that the United States is lagging – college graduation rates have actually increased since then. Rather, it’s that other countries have made education their primary economic development strategy.
Northern Colorado has a strong tradition in education and workforce development. However, to remain economically viable as a region, it is essential to renew our commitment to these efforts.
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