Increasing the number of Arizona college graduates to meet future workforce needs could double the state’s current economic growth rate, according to a new report released Wednesday by College Success Arizona.
Raising Arizona’s postsecondary attainment across all levels is key to the state’s continued economic competitiveness, because research shows education is one of the most important drivers of economic development and growth, according to “Doubling Arizona’s Economic Growth: The Potential Fiscal and Social Gains from Increasing Postsecondary Attainment.”
A well-known Georgetown University study projects that almost 70 percent of Arizona jobs in 2020 will require a higher level of postsecondary attainment, said Rich Nickel, president and CEO of College Success Arizona.
“Today, Arizona has a domestic economic product of about $290 billion, which grows at about 1% to 2% annually,” Nickel said.
“If we raise attainment levels to meet these opportunities, we can double or even triple the annual growth rate,” Nickel said.
The social and fiscal gains associated with increasing Arizonans’ postsecondary attainment to meet national norms would equal about $660,000 per college graduate, “an excellent return on investment since most reforms to increase attainment will cost significantly less,” according to the report.
Four steps to raising Arizona’s economic growth rate:
- Equalizing college-going rates among all race and ethnic groups
- Meeting the national average for degree attainment
- Meeting future workforce needs
- Achieving similar attainment rates for Arizona’s peer states
If Arizona could equalize college-going rates by race, especially by increasing the number of Latinos enrolled in postsecondary education, it could lead to a four percent increase in annual economic activity, according to the report.
Latinos will soon be the majority of the working-age adults in Arizona, but Latinos drop out of high school at higher rates and complete postsecondary degree programs at lower rates than white students, according to the report.
“Increasing Latino educational attainment in Arizona is vital to the economic and social future of the state,” Nickel said.
Currently, fewer than 40% of Latino adults in Arizona have attended a postsecondary institution, and only 17% hold at least an associate’s degree or above, Nickel said.
“When coupled with the fact that Latinos currently constitute the majority of Arizona’s high school students, it becomes clear that to increase attainment, Arizona must pay special attention to increasing attainment rates among Latinos,” Nickel said.
“The upside of this strategy is compelling. If we raise college going rates among all races in Arizona to the current level of white Arizonan’s, the economic impact is over $2.3 billion dollars,” Nickel said.
That $2.3 billion over the lifetime of each graduating class includes additional earnings, taxes paid, and decreased crime and health burdens as well as fiscal gains of $346 million at the state and local levels and $707 million at the federal level, according to the report.
“The personal impact is also crucial. In general, bachelor’s degree holders can expect to earn three times more than a person with a high school diploma,” Nickel said. “But, for Latinos, the economic returns are even greater, with Bachelor’s degree holders earning 3.5 times more than person earning a high school diploma.”
Prepare for future workforce needs
Arizona’s postsecondary attainment rate of 36 percent is much lower than the projected 68 percent of all jobs in Arizona in 2020 that will require some form of postsecondary education, according to Georgetown University’s Center on Education and the Workforce estimates.
“There is a lot of momentum and groundswell of support around the importance of increasing attainment in Arizona,” Nickel said.
While 60 percent of Arizonans have some postsecondary education, nearly half have not completed their degree programs.
“One of the most crucial reasons to increase attainment in Arizona, is to take advantage of the inviting business environment in Arizona,” Nickel said.
“Our state leaders and talented economic development experts predict we can expect hundreds of thousands of new jobs and current jobs that will need to be refilled in Arizona in the coming years,” Nickel said.
“If we could increase attainment to ideally match the levels needed to support the great influx of expected jobs, it would be an economic boon to the state,” Nickel said. “Because we know that a more educated populace reduces state and personal spending on healthcare, welfare, and corrections, this outcome produces both great fiscal gains, along with tremendous social savings.”
Recently, the Arizona Board of Regents made increasing university-level attainment a priority, with benchmarks for increased enrollment and degree completion rates, and more degrees being earned in high-demand fields.
“Just this month, we have heard Dr. (Michael) Crow at Arizona State University call for an attainment goal,” Nickel said.
“We have seen polling data from Expect More Arizona that tells us the public understands the alignment between attainment and a better economy,” Nickel said.
“We have heard Eileen Klein of Arizona Board of Regents talk about the importance of increased attainment, and back that up by convening a group of practitioners and policy makers to talk about actually setting a statewide attainment goal,” Nickel said.
Also, the Arizona Commission on Postsecondary Education is taking another look at possible recommendations around how we build financial aid programs that target low-income and first-generation students to increase access, Nickel said.
“With the release of this report we hope to keep the conversation moving toward eventual policies and investments that will help produce some of the major economic outcomes that are available to Arizona with increased educational attainment,” Nickel said.
Match attainment rates for peer states
Five states – Colorado, Indiana, Kentucky, Tennessee and Texas – which have set statewide postsecondary education goals have found increased attainment to be a powerful economic driver.
If Arizona matched Kentucky’s attainment rate, social gains would total $2.7 billion and fiscal gains would be $924 million per age cohort, according to the report.
“The combined fiscal gains earned through increased incomes, and tax revenues, and the accompanying social savings achieved by spending less on healthcare, welfare, and corrections, could mean an economic influx of almost $7.6 billion dollars,” Nickel said. “This outcome would roughly triple the current annual growth rate of Arizona’s gross domestic product.”
By creating new pathways, and strengthening existing ones, Arizona can improve access to postsecondary education for all students, according to the report.