Higher ed tied to our economic vitality

January 2017

Minnesota’s high level of educational attainment has been critical to our state’s economic strength and standard of living. Today more than 50 percent of Minnesotans between the ages of 25 and 44 have an associate’s degree or higher, ranking Minnesota second in the nation in terms of educational attainment. States like Minnesota — with higher levels of educational attainment — have higher median household incomes and lower levels of unemployment.

Our educated workforce has made us a competitive and thriving state. Minnesota has benefitted from a strong K-12 system and a set of diverse higher education institutions, including both two-year and four-year, public and private colleges offering a wide range of degrees and certificates. Together, these institutions have provided our economy with the well-educated workers needed to thrive. However, the demographic trends facing Minnesota are a threat to our continued economic competitiveness.

Slowing workforce growth

Between the 1980s and the 2000s, Minnesota’s workforce grew on average by more than 31,000 workers per year. According to Minnesota’s state demographer, our labor force growth will dramatically slow in the next three decades, due to a combination of an increasing number of workers reaching retirement age and little to no growth in the number of younger workers. The result is an average of only 8,000 new workers per year in the 2010s, dropping to 4,000 per year in the 2020s.

New employers and those that want to expand need communities with an abundant supply of well-educated citizens who can bring knowledge, talent and creativity to the business challenges of our globalized economy. With a workforce that is growing slowly, it will be increasingly difficult for Minnesota employers to find and hire the employees needed to grow and expand their businesses in our state.

According to the Georgetown University Center for the Study of Education and the Workforce, Minnesota will need 74 percent of its workforce to have at least some college education by 2020, and more than half of those jobs will require a bachelor’s degree or higher. For all of Minnesota to continue to compete economically in the next decades, we must further boost our level of educational attainment.

Looking back over the recent recession and recovery, we see the high value that employers already place on those with bachelor’s degrees. As shown in the graph, a 2016 analysis from the Georgetown University Center for the Study of Education and Workforce reported that:

The number of jobs for those with a high school education or less dropped by 5.6 million jobs during the recession (2007-2010) and grew by only 80,000 during the economic recovery (2010-2016).
The number of jobs for those with some college or an associate’s degree dropped by 1.8 million jobs in the recession and grey by 3.1 million during the recovery.
The number of jobs for those with a four-year degree or higher did not drop during the recession and grew by 8.4 million during the recovery.

employment trends by education through the recession and recovery

Economists predict that the rapid pace of technological innovation and globalization means that the jobs of the future will require a more highly educated workforce. According to Janet Yellen, chair of the Federal Reserve, “economists are not certain about many things, but we are quite certain that a college diploma or an advanced degree is a key to economic success.”

Minnesota’s persistent educational achievement gaps

Against the backdrop of a labor force that is barely growing, it is clear that our economy needs every worker to be fully prepared. If we are to remain competitive, Minnesota simply cannot afford to waste the potential of anyone in our state.

Unfortunately, at the same time that Minnesota’s labor force growth is slowing and the economy needs more skilled workers, too many Minnesotans — particularly those from disadvantaged families — are falling behind.

Minnesota students from lower-income families tend to have lower academic achievement than their classmates from higher-income families, resulting in increased barriers to college access and degree attainment. And these students are disproportionately students of color and from families where they are the first to go on to college. These achievement gaps represent a major challenge to preparing students to enter the workforce with the skills necessary to meet the state’s current and future needs.

Looking across the income spectrum, there is a stark contrast in bachelor's degree attainment rates. According to a national study, 77 percent students from with families that are in the top 25 percent — or quartile —of incomes earn a bachelor’s degree by the age of 24. Contrast that with 9 percent and 17 percent for the lower two quartiles. The educational success of these lower- and middle-income students is essential to meeting Minnesota’s future workforce needs.

To reach higher levels of college attainment in Minnesota, the Minnesota Private Council encourages the 2017 Legislature to target investments in higher education to the students who most need additional support through the Minnesota State Grant program. One in three Minnesota college students benefits from the program. And more on the Council’s request to policymakers is available here.