Arizona’s overall educational achievement level is below the national average, with a lower share of the state’s workers having a college degree. That is only getting worse over time. Dennis Hoffman, an Arizona State University economist and director of the L. William Seidman Research Institute in the W. P. Carey School of Business, will explain his report.
CHRISTINA ESTES: Arizona has fewer college graduates in the workforce compared to the national average and that's costing our state, according to the author of a new report. Dennis Hoffman is an Arizona State University economist and director of the L. William Seidman Research Institute in the W.P. Carey School of Business. He joins us now and thanks for coming in.
DENNIS HOFFMAN: Great to be with you Christine.
CHRISTINA ESTES: Tell me about this report. What was the focus?
DENNIS HOFFMAN: Well, this report grows out of some literature that we've been following say over the last 10 to 15 years and there's a couple of economists, one in particular, that has really studied this workforce composition question. So this is about just simply changing the composition of the Arizona labor force. Everybody knows if we had more college graduates, then we could just dump them into Arizona or attract them somehow, that things would get better but what we did is we focused on a really kind of interesting experiment where we converted partial college degree holders at a faster pace, we converted them into full college degree holders.
CHRISTINA ESTES: So people who have gone to some school but haven't completed?
DENNIS HOFFMAN: Yes. We're actually above the national average in the partial degree holder category, which is kind of interesting. There's this pool out there that hasn't completed. So what we've done is done a simulation where we get those folks completed and we raise over time the labor force share of people with a college degree. And things get better in the state, markedly better. It's about a 5% bump overall in real terms. And that's a lot of money.
CHRISTINA ESTES: I looked at your report and it says the national average for bachelor's degree or average is 36%, Arizona's 32%. Doesn't seem huge to some people but it is, right?
DENNIS HOFFMAN: And we're not narrowing the gap right now. We're kind of losing on that. The nation's growing faster than we are.
CHRISTINA ESTES: Why is that?
DENNIS HOFFMAN: Well, historically, what we've done is we've -- our job base, a lot of this is driven by what jobs are available. Our job base has been closer to, let's say, population growth serving jobs that don't require college degrees and so therefore, we kind of get by. Teaching for 37 years now at ASU, I've encountered many, many students, really the mind set was â€˜hey, I need a little bit of college and I'm going to go back and work in the local business, maybe the family business or work where I know somebody and do fine.' That's really changing. I think our landscape now in Arizona is changing dramatically, and I think it's the imperative now that we aspire to find more job opportunities for those college-educated kids. So this isn't about just producing more students by the way. That's only half the battle. You have to also produce job opportunities that employ them because if you just produce more and you don't have the job opportunities, they go elsewhere.
CHRISTINA ESTES: And we all know, we've seen statistics over and over that show someone with a college degree is going to earn more over their lifetime.
DENNIS HOFFMAN: Correct, that's the easy piece.
CHRISTINA ESTES: But you also talk about this spillover effective.
DENNIS HOFFMAN: Yes, yes.
CHRISTINA ESTES: And so what does that mean and why should I care if there are more people who have college degrees? What's in it for me?
DENNIS HOFFMAN: Well, if you have a college degree obviously you're reaping the benefits, but the interesting things is benefits do accrue to the existing partial degree holders, high school degree recipients and even high school dropouts. If you look at geographies, if you look at economies that have higher labor force shares of college grads, everybody benefits. So the cliche is rising tide lifts all boats. How does it work? It's about productivity. It's about knowledge, it's about synergies in the workforce. It's about attracting with higher numbers of college grads in the workforce, that means you have higher margin firms, you have firms that pay higher wages, you have firms that have the wherewithal to pay higher wages not just to the college grads but to the rest of their workforce because they're more productive, higher margin firms. And so it's about knowledge, skills and they cascade through the economy. And the literature here is very strong both geographically in terms of where these college grads reside and in the industries in which they permeate.
CHRISTINA ESTES: Geographically, where are they if they're not in Arizona?
DENNIS HOFFMAN: Well, this has been a challenge for us. Everybody knows about the bay area, the bay area is huge. California is really very interesting. The west side of California attracts far more college graduates than does the east side of the state. And the east side is of course more like the economy if you would of Arizona or of Nevada. So the urban centers have really been key recently. The Seattles, of course, the bay area and California, San Diego, Boston, Austin, research triangle, that kind of thing. These are great aspirant places I think for Arizona to be thinking about. We need to be thinking about being more like those places than, you know, just a place where Donald trump and Joe Arpaio want to come to party.
CHRISTINA ESTES: So how do we do that? How do we get people to finish those degrees?
DENNIS HOFFMAN: It's a lot of work. It's a lot of work. It's incumbent upon the education establishment, the universities, it all begins in the K-12's but then the community colleges, the universities, and actually let me back up, it begins before the K-12's. It actually begins at home and setting these bars, setting these goals to aspire to more and more college degrees or technical routes or training to fill high-margin labor force opportunities. That's really where it begins, and then on the other side our economic development effort has to be geared towards attracting these high-margin firms.
CHRISTINA ESTES: A topic we'll certainly address again in the future. Thanks so much.
DENNIS HOFFMAN: Indeed we will. Have a great evening.
CHRISTINA ESTES: Thanks very much appreciate it.
DENNIS HOFFMAN: Thank you.
Dennis Hoffman:Economist and Director of L. William Seidman Research Institute, W. P. Carey School of Business, ASU