POLITICAL WISHES

ECONOMIC REALITIES

 

Summary: Arkansas graduates benefit from a dynamic business climate that creates jobs and paychecks, not from political wishes that ignore economics.

 

(October 2014) An oft-stated goal of Arkansas public officials is to increase the number of students graduating from state colleges and universities.  Arkansas Department of Higher Education Director Shane Broadway, a state legislator for 14 years (1997-2010), is closely associated with this idea.

 

“The world would be a better place if everyone valued education as the key to moving our state and nation forward. Arkansas must stay on track and increase the number of degree-holders in the state and those with valuable workforce credentials to compete for jobs in the new economy.”1

 

Mr. Broadway's view, widely held within the Beebe administration can be summarized as follows: more graduates equals more high-paying jobs.  Educational achievement correlates with lifetime earnings.2  Mr. Broadway's error in economic reasoning is to assume these graduates will find gainful employment in Arkansas.  In fact, some graduates will relocate to states with more dynamic business climates. Economic realities trump political wishes.

 

Unpleasant Economic Realities

 

There is little doubt that officials like Mr. Broadway mean well in encouraging young people to enroll and earn a post-K-12 degree.  Unfortunately, sentiments, no matter how well-meaning, must confront economic reality. The most unpleasant reality is that Arkansas employment is lower than when Gov. Beebe took office.3  The civilian labor force is also contracting4 more than five years into an economic expansion.5 These facts are troubling.

 

Another unpleasant reality is a new state report on Arkansas' labor market.

 

The 71-page report, released to little fanfare by the state Department of Workforce Services forecasts Arkansas' employment market in the next decade.  A key finding, counterintuitive to the reasoning of Mr. Broadway and other officials is that "occupations that require a high school diploma or equivalent will have more annual job openings than any other education level, with 16,409 jobs expected each year."  Jobs requiring a "high school diploma or equivalent" will expand by 42,227 through 2022.  Those requiring "less than high school" will expand 44,337.  Three other education values requiring less than a bachelor's degree (associate's degree; postsecondary non-degree award; some college, no degree) will grow 21,390 through 2022.

 

DWS estimates these five categories will create a cumulative 107,954 jobs.

 

Occupations requiring a bachelor's degree, by contrast, will expand by 20,099 through 2022.6  In sum, DWS projects more than five jobs requiring less than a bachelor's degree for every degreed job created through 2022.

 

The unfortunate reality is that Arkansas' economy has not been creating new jobs, and eight in 10 forecast occupations will be filled by non-four year graduates if DWS is accurate.7

 

Solving The Problem

 

The first step toward solving a problem is to acknowledge there is a problem.  Political wishes for more graduates and high-paying jobs will not make it so.  The Beebe administration should concede a jobs emergency exists before the next governor takes office in early 2015.  The next governor, in facing this problem should communicate to the people of Arkansas the shortcomings of the state's tax,8 regulatory9 and education10 systems. Economic realities, not political wishes, should inform the solution.

 

--Greg Kaza


1  Arkansas Department of Higher Education, January 4, 2011

2011http://www.adhe.edu/newsroom/Pages/ShaneBroadwayappointedADHEdeputydirector.aspx

2  Federal Reserve Bank of St. Louis, "Lifetime Earnings: A Good Reason To Go To College," Fall 2013

http://www.stlouisfed.org/publications/itv/articles/?id=2432

3  U.S. Bureau of Labor Statistics, Arkansas payroll employment: (January 2007) 1,201,200; (August 2014) 1,190,400

4  Arkansas Department of Workforce Services, civilian labor force (January 2007) 1,368,100; (August 2014) 1,296,200

5  The NBER determined the expansion started in June 2009 when the Great Recession ended. www.nber.org

6  Department of Workforce Services, "Arkansas Long-term Industry and Occupational Projections, 2012-2022," Sept. 5, 2014, p. 62.  The 2012 Estimated Employment and 2022 Projected Employment by Education Value are as follows: (Bachelor's degree) 176,691,196,790; (Associate's Degree); 44,830, 51, 488; (Postsecondary, non-degree award) 101,905, 115,066; (Some college, no degree) 13,450, 15,021; (High school diploma or equivalent) 563,338, 605,565; and (Less than high school) 352,132, 396,469.

7  The DWS report estimates only 18% of Arkansas occupations in 2022 will require a bachelor's degree or higher educational value.

8  Arkansas taxes capital at higher rates than states with more dynamic business climates and higher jobs creation.

9  Arkansas's regulatory climate interferes with the ability of workers, from hair-braiders to yoga instructors, to earn a living.

10 Charter schools are a welcome reform but Arkansas is among the minority of states in the Southeast region that restricts competition between K-12 public and independent schools.