Some College, No Degree

By Katie Thomas, Project Associate

In today’s economy, postsecondary education is now more important than ever before, while at the same time being more expensive than ever before. However, today’s blog is not about highlighting the importance of higher educational attainment or about how it is a key contributor to an individual’s lifetime earnings and wellbeing, among various other factors. It’s also not about the increase in tuition expenses and college costs – I’ll save that for another day. It’s about the most expensive education – the one that doesn’t lead to a degree.

Of all the data that we analyze when examining a community’s workforce, the one indicator that always concerns me is the educational attainment of the population with some college, no degree. It’s a vague indicator about that portion of the population’s educational level, which leaves me frustrated and yearning for more information. Are those individuals still currently pursuing higher education? Did they attend a postsecondary institution to get training in an occupation that requires a certificate, and therefore they don’t need a degree for their career field? Or, is it that they dropped out of college? 

The last question is the one that worries me the most. Not only do I fear that they may have enrolled in higher education and dropped out, I worry about what that cost them. While it’s true that individuals drop out for a variety of reasons, whether it’s a personal reason, a financial constraint, or another reason, I worry about the student loans that they may have accrued during their time attending postsecondary institutions and about those individuals possibly defaulting on them because their education did not lead to that higher paying, higher quality job that they had imagined when they first enrolled. As the costs to attend college continue to increase, the importance of ensuring that individuals are adequately prepared to succeed at the university-level and that they receive a quality education continues to grow.

This week the U.S. Department of Education released “Fact Sheet: Focusing Higher Education on Student Success.” It reported the graduation rates (percentage of students that earn a four-year degree within six years or less) and the student loan default rate by state, and also separated the data based on public; private, non-profit; and private, for-profit colleges. Among many things, the report highlighted the growing importance of ensuring that schools are providing meaningful, high-quality degrees and education. 

Nationally, the graduation rate for students attending a four-year institution in 2013 was 55 percent, while the default rate was 12 percent. However, the graduation rates and default rates varied by state and by the type of institution. Here in Georgia, at private, for-profit colleges, the graduation rate was a mere 16 percent, while the default rate was nearly one-quarter of the cohort analyzed. That means that of the individuals in Georgia that attended a private, for-profit college and who entered repayment on their federal student loans in the 2010 fiscal year, 23 percent had defaulted by 2013. In Georgia overall, the graduation rate was 45 percent for public, private, and for-profit colleges combined, and they had a cohort default rate of 13 percent. 

When an individual takes that step and commits to increasing their education, they should be properly prepared, as well as assured that they will be receiving a valuable education that will afford them quality, future employment opportunities. Individuals working in education and career advisement need to be aware of these issues and to properly educate and prepare individuals for their career paths and future educational endeavors. Individuals that are the first person in their family to attend college, especially, are often those that least understand the whole process of attending a postsecondary institution – loan applications, interest rates, employment opportunities for specific majors, future earning potentials, etc. 

Not all degrees are equal and not all colleges provide the same quality education. Looking at the educational attainment of a community alone does not show the whole picture. Individuals on the ground in the community must try to figure out who the people are that have some college, no degree and if there is a disconnect in the information, quality, or affordability of higher education in their region. Not only will this aid those individuals in improving their prosperity and wellbeing, it will also improve the wealth of the region by having a higher quality workforce that can support future economic opportunities.

Mapping State Workforce Trends

By Ranada Robinson, Research Manager

I love maps because they are an easy way to illustrate data points. Lately, I’ve been very interested in various data indicators we use at Market Street to evaluate workforce strengths and weaknesses. Here are a few state data maps using 2013 U.S. Census Bureau American Community Survey data that reveal some interesting findings. 

Because workforce sustainability is an emerging issue in the United States because of the impending retirements of Baby Boomers, in many communities, we take a look at the ratio of young professionals (25-44) to experienced professionals and those nearing retirement (45-64) to determine if there are currently enough young professionals to eventually replace those who retire. In some instances, we also take a look at these dynamics by occupation and/or business sector. In the following map, the states most at risk of not having a sustainable workforce are shown in yellow: Maine, Vermont, and New Hampshire. In these states, there are roughly only three young professionals for every four experienced professionals. The three states with the most sustainable workforces (highest levels of workers in the young professionals age range compared to those in experienced professionals) are Washington, D.C., Utah, and Texas. In D.C., the ratio is 1.62, meaning that there are nearly ten young professionals for every six experienced professional. 

Workforce Age Ratio, 2013 

In terms of migration, the population of communities is dependent on two factors: natural change (birth minus deaths) and net migration (in-migration minus out-migration). The demographics of residents moving in and out of states can significantly affect the workforce, particularly when net migration outpaces natural change. The next two maps illustrate the levels of educational attainment of residents moving into respective states. States (and communities) that can attract talent with higher educational attainment while also retaining educated talent are likely to be more competitive for knowledge-driven, higher-wage business sectors. The states with the largest percentages of in-migrants with bachelor’s degrees or higher are: Washington, D.C. (79.5 percent), Massachusetts (59.7 percent), New Jersey (55.5 percent), and New York (54 percent). The states with the lowest percentages of in-migrants with four-year college degrees are Mississippi (23.1 percent), West Virginia (23.2 percent), Arkansas (28.2 percent), and Idaho (28.4 percent). 

Percentage of In-Migrants with a Bachelor’s Degree or Higher, 2013 

The states that attract high levels of in-migrants without a high school diploma are primarily in the South. The states with the largest percentages of in-migrants who likely need additional training are Mississippi (16.5 percent), Oklahoma (15.3 percent), New Mexico, Arkansas, Delaware, and Georgia (all 14.7 percent). The states with the lowest percentages are Vermont (2.8 percent), Hawaii (3.5 percent), Montana (3.6 percent), and Washington, D.C. (3.8 percent). 

Percentage of In-Migrants with No High School Diploma, 2013 

I also took a look at adult educational attainment for all residents by gender. Interestingly, the bachelor’s degree-plus maps for women and men look very similar with the exception of just Vermont. 

Percentage of Women aged 25+ with a Bachelor’s Degree or Higher 

Percentage of Men aged 25+ with a Bachelor’s Degree or Higher 

There are actually 32 states where there are a larger percentage of adult women with a bachelor’s degree or higher than their male counterparts. In the following map, states where women have higher percentages of higher educational attainment are shaded yellow, and states where men have higher percentages of higher educational attainment are shaded blue. In Vermont, women lead in the percentage of attainment of bachelor’s-plus by 8.3 percentage points, and in Alaska, by 6.5 percentage points. In Utah, men lead by 4.6 percentage points, and in D.C., 2.8 percentage points. 

Percentage Point Difference of Bachelor’s Degree or Higher Attainment between Women and Men 

On the other end of the spectrum, the story is very different. In all states except Hawaii, women have lower percentages of not having a high school diploma than men. This is an important observation in understanding workforce and occupational dynamics and educational trends. Communities can match this set of indicators to occupational data that reveals male-heavy (or woman-heavy) occupations that may require certifications or experience rather than educational attainment. It can also be paired with school system dropout data to help steer students into trades that may help them overcome the odds that come with not having a high school diploma. 

Percentage of Women aged 25+ with no high school diploma, 2013 

Percentage of Men aged 25+ with no high school diploma, 2013 

As you can see, there are many publicly available data indicators that can be helpful in understanding workforce dynamics. Additional indicators include wage data, educational attainment by race and ethnicity data, and graduation rates by gender or race and ethnicity. Because talent is so important in today’s economic development environment, analyzing a community’s workforce strengths and weaknesses can be the key to gaining competitive advantage.

Growing Quickly into Decline

By Alex Pearlstein, Vice President

I was in a community this week that is experiencing an interesting phenomenon: too much success. More specifically, too many small-lot, low-to-mid price point single-family homes being constructed than are fiscally sustainable. As can be imagined, this community is a fast-growing suburb of a fast-growing metro area. Schools are good, crime is low, retail is plentiful, so the steady march of new residents heading for this community shows no sign of abating. 

Unfortunately, government staff now estimates that for every newly constructed housing unit the community runs an $80,000 deficit for provision and maintenance of infrastructure and services. On top of that, some of the area’s older subdivisions (circa the 1960s and 70s) are starting to see their infrastructure fail. Strong Towns has written extensively and convincingly about this phenomenon, but it is striking to see it play out so clearly in reality. As could also be predicted – and is far from unique in commuter suburbs – the general public and elected officials are vehemently opposed to new multi-family development; in fact, there’s a moratorium on this type of product. Transit is also a dirty word here. Moreover, investing public dollars for talent-attracting/retaining amenities such as parks, paths, arts, beautification, event spaces, festivals, etc., gets short shrift when needs are so great for new roads, schools, water and wastewater infrastructure, police and fire personnel, etc. 

Despite increasingly dire fiscal projections, elected officials continue to show distaste for raising taxes; meanwhile, local government has been cut almost to the bone to remain solvent. Unsurprisingly, the community is thinking about strategies to become more fiscally sustainable. One way to accomplish this is to attract and create better jobs. Another is to engineer the development of higher-value housing. Backroom discussions on increasing minimum lot sizes for new development are starting to creep into the open. 

Some in the community are dubious that even downzoning properties reserved for residential will have the desired effect of luring investment in higher-priced housing. “We’ve already gone too far down that path and established a reputation as an entry-level community,” some argue. If developers thought there was a market for higher-cost homes they would have built them already. Others note that lot and/or home size is no guarantee that a desired price point will be realized. Value is largely determined by (wait for it…) location, location, location. In fact, one local developer of a higher-end subdivision was reportedly disappointed in the average sales price he received for his larger units. 

The situation in this community is being played out in hundreds if not thousands of similar suburbs in fast-growing metro areas. There is no guarantee that they’ll one day go the way of Ferguson, Missouri, but the likelihood of this scenario is greater if unsustainable development trends are not reversed. Unfortunately, the longer a community grows unsustainably, the harder it is to change minds and policies to pivot in new directions. Especially if we’re talking about increased density, mixed-use development, transit, road diets, and other bugaboos foisted on populations that self-selected suburban environments. 

Above all, making smart and sustainable choices comes down to leadership and vision; often, they go hand in hand. Realistically, however, leaders represent the values and viewpoints of the population that elects them, so you get situations where the blind are leading the blind. In other words, we’ve got some trainwrecks coming – and fast. Strong Towns is battling hard, but growth patterns are so established and mentalities so steadfast in their certitude, that it might not be a fair fight.

Gay Marriage, Economic Development, and The Case for Inclusive Communities

By Ryan Regan, Project Associate

On June 26, 2015, the Supreme Court handed down an historic 5-to-4 decision in Obergefell v. Hodges, which declared that the Constitution guarantees a right to same-sex marriage. It is most appropriate and perhaps serendipitous that this long-sought victory for the gay rights movement in the United States was delivered during LGBT Pride Month and just days before the 46th anniversary of the Stonewall riots in New York. The morality of same-sex marriage has been and will be debated ad nauseam, but this blog post isn’t meant to wade into those waters. Instead, the purpose of this post is to make the case that tolerant, open, and inclusive communities are a step ahead of their peers in competing for jobs and talent in the 21st century. 

Dr. Richard Florida is a noted American urban studies theorist who is most well-known for his research around the “Creative Class,” a phrase he coined to describe the knowledge-based workers that he posited would be key to economic prosperity in a post-industrial world. Florida argues that the “three t’s” – talent, technology, and tolerance – are necessary foundational principles that communities must embrace in order to remain competitive in a new economy that is increasingly tied to high-tech sectors. 

The idea around the tolerance part of the equation is that talented knowledge workers who are driving the new economy are increasingly young, diverse, and tolerant, and these workers desire to live and work in communities that are accepting of their open-mindedness. When laid out that way, the tie between community economic development and marriage equality is quite clear, and I am not the only one who has noticed this before. 

While serving as governor of Rhode Island, recent 2016 presidential race entrant, Lincoln Chafee (D-RI), signed the Marriage Equality Act into law in 2013 in part on the basis that the legislation would bring economic development benefits to the state. His op-ed to the New York Times from 2013 cited Richard Florida’s “three t’s,” and Chafee went on to further state: “The talented workers who are driving the new economy — young, educated and forward-looking — want to live in a place that reflects their values. They want diversity, not simply out of a sense of justice, but because diversity makes life more fun. Why would any state turn away the people who are most likely to create the economies of the 21st century?” 

The business community understands the tie between diversity and inclusion and recruiting a talented workforce. As a whole, the business community has been unequivocal in their support for marriage equality. There were 379 corporations and employer organizations to sign on to an employers’ amicus brief to the Supreme Court urging the court to strike down state bans on gay marriage in Obergefell v. Hodges. Chambers of commerce from Durham to San Antonio to Seattle and plenty of places in between have since lauded the Supreme Court’s ruling. Recall that earlier this year major employers in Indiana along with the Indianapolis Chamber and the Indiana Chamber were vocal in their opposition to the original version of a controversial “religious freedom” bill that some argued could lead to discrimination against members of the LGBTQ community. 

Communities that have embraced public policies that value diversity & inclusion, including gay-friendly policies, are flourishing throughout the country and that is no coincidence. San Francisco and Austin are arguably the most gay-friendly cities in the country, and they check in at #1 and #2 respectively on the Milken Institute’s 2014 List of Best-Performing Cities. San Francisco is home to the Golden Gate Business Association (GGBA), the nation’s first LGBT Chamber of Commerce, and the Austin Gay & Lesbian Chamber of Commerce is noteworthy in its own right, boasting over 350 members and over 10,000 “likes” on the Chamber’s Facebook page. Forward-thinking cities like San Francisco and Austin understand the value of opening their community’s doors to the types of workers that will be key to maintaining economic competitiveness in the 21st century. 

Communities looking to remain competitive for talented workers and high-quality jobs need to be mindful about how the country’s evolving diversity affects their local community economic development strategies. Consider the fact that more than one-in-three American workers are Millennials (ages 18-34) and this generation recently surpassed Gen Xers (ages 35-50) as the largest generation in the U.S. workforce, according to a Pew Research Center study released earlier this year. Millennials are not just more racially diverse than all other generations, but perhaps more importantly, they embrace diversity and inclusion in a manner that transcends all other generations before them. Pew Research Center data from just last month noted that 73 percent of Millennials support same-sex marriage – by far the highest percentage of all U.S. generations. It is these workers who will define the U.S. economy for the foreseeable future. Communities looking to attract these young, bright minds have to be cognizant of the open-minded social values that this generation embraces. 

The only constant in life is change, and this mindset is beneficial to keep in mind across all walks of life, including the work we do at Market Street. The country continues to change and so too must your community’s approach to community economic development.

A Nation of Renters?

By Stephanie Allen, Project Assistant

It has been a while since we talked in depth about the housing market on this blog—about 3 years and 5 months, if you’re counting. Back then, way back in early 2012, we were all wondering when the market would hit bottom. Economists kept saying the economy wouldn’t recover until the housing market did and home prices just kept falling. 

Now, home sales are at a five and a half year high, according to Reuters. But, that’s not the big news. The big news is that homeownership fell for the eighth straight year and is now at a 20 year low, according to a report published last week by the Joint Center for Housing Studies of Harvard University. 

More people are renting than ever and vacancy rates for rentals are the lowest they’ve been since the mid-1990s. 

Millennials are taking the majority of the blame for the dropping homeownership rates, though it seems to be Gen-Xers who aren’t buying. Homeownership rates among 35-54 year-olds have dropped more since 1993 than among any other age group. Among 35-39 year-olds, there’s been a 10% drop in just the last 10 years. 

But, it isn’t just the young people who aren’t buying that are driving homeownership rates down. It’s also the 45-64 set who’ve traded owing for renting after waves of foreclosures and profitable seller’s markets. Households aged 45-64 accounted for almost twice the share or renter growth as households under the age of 35. 

So, everybody’s renting more. Eight years of stagnant wages, pay cuts, a minimum wage that was more than a dollar higher an hour (in terms of real purchasing power) in 1968 than today, and mountains of student debt accumulated by X-ers and Millennials alike make saving enough for a down payment difficult, especially in this post-housing-market-bust economy where lenders are pretty tight fisted. 

In areas with booming economies, saving for a down payment might not be a problem, but that’s not enough to buy. In markets like Boston, Denver, San Francisco, San Jose, Dallas, even Los Angeles, buying a house means facing some stiff competition and winning the bidding war usually requires ponying up a lot more cash than 20% and paying significantly more than asking. Check out some of these housing market horror stories. 

And, renting is getting pretty expensive too. According to Zillow, rents were up 4% over last year in April—outpacing a 3% uptick in home prices over the same period. In hard hit places like San Jose, San Francisco, and Denver, rents are up more than 10% since last year. In the San Francisco region, and 16 other metro areas nationwide, more than one in four low- and moderate-income households spend half or more of their income on rent. Nationwide, roughly half of all renters pay more than 30% of their income in rent. Paying so much in rent makes saving for a down payment difficult. 

And, according to the experts at Zillow (quoted here), this rental affordability crisis is here to stay and it’ll probably get worse before it gets better. If it’s true that high rents are contributing to low homeownership rates, it means we may see homeownership rates drop even further, at least in the near future. 

Let’s jump back to 2012. Back then, economists were saying the economy wouldn’t recover until the housing market did. And that had a number of people, including me, questioning the role of homeownership in our society/economy. Here’s a quote from my 2012 blog post: 

“To be sure, homeownership is part of the American dream, but bad policy and lack of oversight has turned that dream into a millstone around our necks. Is it possible to reconceive that dream? What would an America with a lot more renters look like? Would it spur a move away from the suburbs to central cities? Would it free us up to invest our money in other sectors of the economy? How might a move to a more renter-heavy society change the way we do economic development? “ 

Fast forward three and a half years. Homeownership seems to have held on as an integral part of the American dream, at least thus far, but for now you might have to settle for renting that white picket fence (if you can afford it). 

This is what an America with a lot more renters looks like and the coming years will likely see even more. While at first it seemed cities had a lock on growth and were drawing people away from the suburbs, last year we saw the gap between urban and suburban growth narrowing. TIME magazine reported that it could indicate a return to more traditional patterns of city-suburban growth. Renting has most certainly not freed us up to invest our would-be down payments in other sectors of the economy—it’s costing us a fortune. 

How might the move to a more renter-heavy society change the way we do economic development? In 2012, that question called for some imaginative speculation. Today, the question is pressing. How can we change our thinking in order to deal with the reality that we are a growing nation of renters?