Over the past several decades, the demand for high-skilled labor has grown dramatically. While earnings have traditionally grown with educational attainment, the gaps have become more pronounced in recent years (Autor, 2011; Lemieux, 2006). Well-educated workers have much better labor market outcomes than workers with lower levels of educational attainment. In 2010, 23 percent of high school dropouts age 25 to 29 were unemployed as compared with the unemployment rates of 15 percent for high school diploma graduates (HSDGs) and 6 percent for workers with a bachelor’s degree. Weekly earnings also differ substantially with education. HSDGs earn 18 percent more than students who leave high school early. Workers with 4-year degrees earn 60 percent more than HSDGs with no postsecondary training.
In addition to the financial advantages for individual workers, education provides substantial nonpecuniary and societal benefits.Several studies have shown that health behaviors and outcomes are positively related to educational attainment (Cutler & Lleras-Muney,2010; Oreopoulos & Salvanes, 2011). Education also has positive effects on voting participation, community involvement, and crime (Moretti,2004). Lochner and Moretti (2004) estimate that a one-percentage point increase in high school completion rate would save about $1.4 billion per year in reduced cost of crime.
Despite these benefits, educational attainment has been stagnant or declining over the past decade. High school graduation rates have fallen from historic highs in the 1970’s, college enrollment rates have leveled off, and college graduation rates are stable or declining.
Based on current completion rates, 24 percent of current high school freshmen are unlikely to complete high school and another 27 percent will earn a high school diploma but not pursue postsecondary education (see Figure 1). While 65 percent of HSDGs continue directly on to college, few of these students persist to earn college degrees. This evidence suggests that the influx of new workers entering the labor force will do little to meet growing demand for high skilled labor. Rather, low educational attainment will leave many young workers with high unemployment rates, chronically low wages, and low wage growth.Read More