“The Bottom Line” Does Education = Economic Growth?
By Peter Sweet Contributing writer
Every year around this time students of all ages begin to head back to their schools, universities, colleges, and training programs. This got me thinking about the economic impact of education on the Baltimore metro area and economic growth in the area. It is an undisputable fact that completion of high school and any higher education is beneficial to an individual’s overall lifetime earnings, but does this fact (1.) translate to the regional population on a macro level, and (2.) are there any unforeseen negative byproduct or effects that occur by having an increase in education level in surrounding area?
The Baltimore/Washington Metropolitan area has one of the nation’s highest percentages of residents above the age of 25 with bachelor’s degrees or higher. According to the Maryland Department of Labor over 35 percent of the state residents have obtained a bachelor or above; that's well above the national average of 28.5 percent according to the census data. This may be a byproduct of the major growing industries in the area are government, health care services, hospitals; services and education services. All which have positive projected employment growth rates over the next year.
According to Noah Berger and Peter Fisher of the Economic Analysis and Research Network in their journal article entitled “A Well-Educated Workforce Is Key to State Prosperity”; they stated the following:
- Overwhelmingly, high-wage states are states with a well-educated workforce. There is a clear and strong correlation between the educational attainment of a state’s workforce and median wages in the state.
- States can increase the strength of their economies and their ability to grow and attract high-wage employers by investing in education and increasing the number of well-educated workers.
- Investing in education is also good for state budgets in the long run, since workers with higher incomes contribute more through taxes over the course of their lifetimes.
So the benefits of investing in education for states on a Macroeconomic level, directly impact states’ overall well being and also appears beneficial to those educated individuals, but not all according to educated individuals.
According to Peter Capelli of The University of Pennsylvania Wharton School, there is a gap in supply and demand for employers in the labor market. The supply of college graduates far exceeds the demand by employers for people with a college level education. He stated that most jobs in today’s labor market don’t require a college degree. This means some individuals have to take careers that don’t require degrees which will push those without or lower education out of the job or make it more competitive for available jobs in the market.
One contributing factors to this the mismatch in skill and degrees gained by college student don’t match what employers are really in need of. An example of this given by Payscale.com is the fact that almost half of all graduates with a degree in psychology and criminal justice were underemployed. In high demand major like engineering, computer science, and other quantitative majors have a higher demand by employers and have higher better employment rates.
The bottom line is still an important indicator for growth in an area on a macroeconomic level, but on an individual microeconomic level college education may not be as beneficial as it once was because increased competition for jobs that’s require degrees. This doesn’t mean a college education doesn’t have any value at all; there are still so many non-economical benefits to obtaining higher education that I still can’t say it’s not worth the opportunity cost of going to school. Individuals should just me mindful of the major they choose and make sure that the degree and the skills they are obtaining match those that employers are looking for.
Peter Sweet is a macro economics researcher with the GBBCC he can be reached by email at [email protected]
Works Cited
Berger, Noah, and Peter Fisher. "A Well-Educated Workforce Is Key to State Prosperity." Economic Analysis and Research Network. https://www.epi.org/publication/states-education-productivity-growth-foundations/. 11 Aug. 2012. Web. 10 Sept. 2014.
Capelli, Peter. "Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US." NBER. Web. 10 Sept. 2014.
"Maryland Fact Sheet." DLLR's Division of Workforce Development and Adult Learning. Aug. 2014. Web. 10 Sept. 2014.
"PayScale | Underemployment Infographic." PayScale. N.p., n.d. Web. 17 Sept. 2014.
"United States Census Bureau." USA QuickFacts from the US Census Bureau. Web. 10 Sept. 2014.
Weiner, Joann. "Why Sally Can’t Get a Good Job with Her College Degree." Washington Post. The Washington Post, 5 Sept. 2014. Web. 10 Sept. 2014.
