Tools You Can Use: NCAN Releases New State Analyses of Economic Value of College

NCAN members and partners understand that higher education leads to economic mobility for individuals and families and that investing in higher education drives economic gains for communities, states, and the United States as a whole. But what, exactly, is the value for each state, in strictly economic terms, of making college more accessible? That’s what we set out to learn in a new analysis. The result of our seven-month partnership with Recon Insight Group is a set of state cards that make a clear case that investing in college pays off – not just for the people who pursue and attain a degree, but for the taxpayers and residents of the state doing the investing.

Our new state profiles show the economic benefit of additional postsecondary graduates in each state.

This research bolsters advocacy efforts aimed at reducing the cost of college by quantifying the long-term gains to state economies of producing more postsecondary graduates. Put simply, these state cards allow NCAN members to say precisely how many more jobs are created, how much the state GDP grows, and more, for each additional college graduate (defined as someone with an associate or bachelor’s degree.)

For each state, the analysis quantifies the economic contributions per postsecondary graduate on a broad range of metrics, including:

• Contributions to a state’s GDP, both annually and over their lifetime
• The creation of supportive jobs as a result of the employment of each postsecondary graduate
• Increased spending on housing, and higher home values for residents and taxpayers
• Expansion of the state tax base
• Increased spending on auto and transportation costs, compared to those without postsecondary education

These metrics demonstrate that when students can afford college, state economies benefit. In a broad variety of areas, including housing, transportation, and the job market, the new state profiles provide further evidence of the widespread economic value of education beyond high school – and particularly, how state economies benefit from additional postsecondary graduates.

Methodology: Quantifying the Economic Effect of Postsecondary Educational Attainment 

This analysis demonstrates the direct economic consequence of postsecondary graduates on each state’s economy. This effect was quantified by matching GDP-industry data, industry-to-occupation data, and occupation-to-education data for each state, then adjusting the GDP, earnings, and tax data to account for known biases (e.g., ability biases.) It is best to interpret the results as the average difference in economic activity between the state’s graduates and non-graduates. The differences were forecasted and then discounted to present value terms to estimate the additional lifetime contributions to GDP from each graduate. With the exception of the support jobs metric, the results on the fact sheet should be viewed as marginal gains to both the average postsecondary graduate and to society as a whole.

Data sources used in this study are as follows:

• Unemployment and earnings by educational attainment: Current Population Survey, U.S. Department of Labor, U.S. Bureau of Labor Statistics
• Educational attainment by occupation: American Community Survey Public Use Microdata, U.S. Department of Commerce, U.S. Census Bureau
• Industry-occupation staffing matrix: Employment Projections, U.S. Bureau of Labor Statistics
• Gross state product and taxes by industry and state: Bureau of Economic Analysis, Lightcast, Department of Commerce, Census of Governments, and IMPLAN
• Annual expenditures by education level: Consumer Expenditure Survey, U.S. Bureau of Labor Statistics
• State higher education funding and degrees conferred: U.S. Department of Commerce, Census Bureau, Governmental Finances and U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System

The economic value state profiles can be found below.

State Economic Value of College Profiles

This research underscores the critical role of postsecondary education as a driver of economic activity across the country. In each state, postsecondary graduates contribute more to the GDP, expand the tax base, and spend more on housing and transportation than those with no postsecondary education. This research adds compelling evidence of the pivotal role of higher education in fueling robust economic prosperity at the state level. When college is within reach for students, states win, too.

See here for detailed information abut the methodology used in this analysis.

Questions about the research can be directed to Catherine Brown, Senior Director of Policy and Advocacy, at brownc@ncan.org or Louisa Woodhouse, Policy Associate, at woodhouse@ncan.org.