1. Raising the Labor Force Share of College Graduates
Economic Minute January 2016

2. Development Community
Considerable Interest in setting goals for increasing the share of college degreed Arizonans
Where is this coming from and why?
President Klein ABOR
President Crow
Rich Nickel
College Success AZ
Business Community
GPL
Chamber
Development Community
ACA
GPEC
Cities
What is the Value Proposition?
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3. Degreed people have Positive Social Outcomes
Fewer Behavior Health Issues
Health and Longevity
Social and Civic Engagement
Family Stability,
Marriage and positive
Inter-generational outcomes
Lower Divorce Rate
Less Incidence of Crime
All lead to lower fiscal burdens
But private value of these
outcomes could be huge
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4. Degreed people have Positive Private Monetary Outcomes
Worth over a million
over a lifetime
Several 100k in net PV
12% IRR to investing
in a degree
College Success Reports
suggest big fiscal impact
and faster economic
growth
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5. So attracting and retaining degreed people is good for the economy
Summing up big private returns
Avoiding Social Costs
Means big numbers
2012 data suggest that ¼ of all
BA degreed workers in AZ were
ASU alumni
In 2016 that’s some 14 billion
In wages just from ASU grads
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6. Studying hundreds of metro-regional economies over decades,
Social Monetary Returns not just private returns.. So How Do we measure them. There are several ways
Studying hundreds of metro-regional economies over decades,
Professor Enrico Moretti of UC Berkeley found that in economies with higher shares of college grads in the workforce, the wages of ALL workers were higher.
Indeed higher shares of college grads boosted wages of both non-degreed and partial degreed workers.
So why does this happen?
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7. What yields Social Monetary Returns
Both their degreed and non-degreed workers reap higher wages due to these productivity enhancements.  
Other businesses in the area compete for talent at all levels and overall wages rise as does the standard of living in the region.  
So a rising tide does lift all boats!!
Businesses in search of skilled productive workers expand in regions that have high levels of educational attainment. 
These businesses operate at high margins, retain productive workforces and pay excellent wages and salaries.  
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8. So How Big might these Social Returns be for Arizona?
Simulation tool
Focus on the labor Force
Allow for changes over time in
in realistic scenarios
Apply Moretti methodology to AZ
specific data
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9. Findings Simulation tool Focus on the labor Force
Allow for changes over time in
in realistic scenarios
Apply Moretti methodology to AZ
specific data
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10. Aspirational Policy Scenarios
Aspirational AZ Trend
Aspirational AZ Trend
Current US and AZ Trends
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11. So What happens if we go from yellow to red
By 2025 cumulatively over 20 billion
In additional wages will accrue
to AZ workers generating nearly a
billion in new GF revenue over the
period
In 31 years, annual earnings in
Arizona would be $22.6 billion higher,
in today’s dollars
Annual State government GF
revenues would be $1.1 billion higher
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12. So What happens if we go from yellow to red
8% of the new wages will go to
workers without a HS degree
About 20% of the new wages will be
earned by workers with a terminal HS
degree
Over 30% of new wages will be earned
by workers with some college credits
So more than 50% of the new wages
accrue to people without a BA!!
And these numbers do not include
fiscal cost savings from the positive
societal impacts
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13. Much easier to set the goal than to attain it
Results are based on college degreed people
in the workforce, not just in the population
We need to increase production and in-migration of college degreed workers
We need to attract and retain those employers who are looking to hire college degreed workers
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14. But as we have seen The Benefits of attaining the goal are huge
The Benefits accrue across the entire workforce including both degreed and non-degreed workers
So this is a goal we should all embrace.
For alternative scenarios experiment on your own at
Enjoy your lunch
11/23/2018