SSTI Digest

With classes resuming for the fall term, SSTI thought now would be a good time to reflect on the state of higher education. In this issue and the September 5 issue, we’ll examine where higher ed has been and where it currently stands. The post-secondary education system is the cornerstone of the American innovation system—as R&D performer, moving research into the marketplace, offering technical assistance to companies, and supplying a skilled workforce. The challenges are significant—eroding public support for universities, cuts to state funding during each economic downturn that takes years to recover, and burgeoning tuition and student debt.

In today’s issue, we consider the growth in educational attainment since 1990. While those stats are encouraging, when compared to how we stand internationally, it’s clear we have significant work to do to compete with other OECD countries.

Two-year colleges have gone through various changes in recent decades. The following are highlights of some of them.

College enrollment

Encouraging more people to attend or go back to college is a vital part of ensuring individual and national economic success, but with rising costs of attending traditional four-year colleges and a public seemingly less convinced about the worth of higher education, two-year colleges, also referred to as community colleges or technical schools, are seen as a reliable alternative for a quality postsecondary education, and are valued for their affordability and accessibility to obtaining the degrees or credentials needed to ensure a dynamic and skilled national workforce.

Earlier this month, Illinois Gov. J.B. Pritzker and the Illinois Department of Commerce and Economic Opportunity (DCEO) released Open for Business: Illinois' 2024 Economic Growth Plan, a comprehensive five-year plan to guide the state’s economic development priorities, strategies, and initiatives. It emphasizes innovation, focusing on burgeoning fields, such as quantum computing, and aims to nurture high-growth sectors like the life sciences, clean energy, and advanced manufacturing while providing a 21st-century workforce equipped to meet the demands of those rapidly evolving industries.

The educational landscape of the United States has undergone significant transformation over the past three decades, with the percentage of individuals 25 and older having earned a bachelor's degree steadily increasing since the 1990s. Nationwide, 20% of those aged at least 25 had a bachelor’s degree in 1990, while in 2021 this figure jumped to 38%. However, educational attainment varies greatly across states. Many states, such as Massachusetts, Maryland, Colorado, New Jersey, and Rhode Island, alongside 15 other states, fall above the national value of 38% in 2021. However, a total of 30 states fall beneath the national value.

Below, Figure 1 maps out this data for select years between 1990 and 2021; clicking on any year beneath the title will adjust the data visualized. Note that all years operate under the same quintile scale, meaning that data points across all years were used to create five equal groupings, each representing a fifth of the data.

In 2000, the United States was among the global leaders in educational attainment, boasting the third-highest percentage of its 25- to-64-year-old population with a postsecondary degree across the 38 Organization for Economic Co-operation and Development (OECD) nations. However, over the past two decades, the U.S. has gradually slipped in the rankings, falling to ninth place by 2022 even as the percentage of the population with a postsecondary degree increased from 36% to 50%. As international competitors like Japan, Canada, South Korea, and the United Kingdom continue to outpace the U.S.’ growth, the U.S. faces many challenges in maintaining its competitive edge in an increasingly educated world.

Figure 1, below, illustrates the percentage of each nation’s population aged 25 to 64 having attained any postsecondary degree (undergraduate degree or higher) across all OECD nations in select years from 2000 to 2022.

The landscape of American higher education has transformed dramatically since Harvard’s founding in 1636. What began as a handful of institutions primarily focused on training clergymen in the American colonies has expanded into a vast and diverse system of colleges and universities. Today, students pursue degrees across a wide and ever-growing range of fields.

Since the passage of the Higher Education Act of 1965, which linked federal funding under Title IV to institutional reporting requirements, schools have been required to provide detailed data on degree conferrals, among other metrics. This section looks at the relative popularity of select bachelor’s degree fields—including STEM, liberal arts, business, and healthcare—using the degree conferral data from the National Center for Education Statistics (NCES). The analysis below focuses on academic years 1970-71 through 2017-18, as this represents the most comprehensive period for which comparable data are available across all fields examined.

Bachelor’s degrees are no longer required for many jobs

2023 was a watershed moment in the history of the bachelor’s degree. Against a backdrop of a historically tight labor market, persistent talent shortages, and rising skepticism of the value of higher education, numerous state governments and major corporations dropped college degree requirements for many of their jobs.

The Distressed Area Recompete Pilot Program, a program authorized by the CHIPS and Science Act, targets areas where the share of prime-age (25-54 years) employment is significantly lower than the national average. The program’s goal, according to a press release from EDA, is “closing this gap through flexible, locally-driven investments.”

EDA has selected six implementation awardees for funding from the 22 Recompete Finalists, with individual award amounts to be finalized in the coming months. 

Recompete implementation awardees are: 

In a recent State of the Science address, National Academy of Sciences President Marcia McNutt called attention to what she sees as an alarming trend: the federal contribution to basic research is stagnating while industry funding is rising. The federal share of U.S. spending on basic research, she said, was down from about 60% in 2011 to 40% in 2021. The fall is mostly the result of a sharp increase in basic research funding from industry (see this SSTI article and this National Science Board report for more details on this topic). McNutt proposed that a national research strategy should strive to reverse this trend so that the federal government regains its leadership position in funding basic research.

Following its announcement of implementation awards to 12 Tech Hubs regions, the U.S. Economic Development Administration made Consortium Accelerator Awards of $500,000 to each of the additional 19 Tech Hubs designated regions. This funding should enable regions to continue dedicated efforts to strengthen their strategies and partnerships and to pursue alternative sources of implementation project funding.

This year’s legislative sessions saw a handful of governors and lawmakers proposing noteworthy reforms or other changes to their states’ institutions of higher education—from system overhauls to the expansion of tuition-free community college programs—all in efforts to align their state’s education investments with current and future workforce needs, as well as address future costs under tightening budgets.

Restructuring higher education systems

In February, Oklahoma Gov. Kevin Stitt announced a general plan that called for the consolidation of his state’s 25 public universities and colleges. He called on lawmakers to craft and pass legislation that would incentivize higher education institutions to fulfill state workforce needs; tasked the boards of regents to consolidate colleges that were not meeting workforce demands; and asked both bodies to remove redundancies in the state’s higher education system by consolidating some institutions.

Note: This brief quasi-book review/book synopsis is the first item in an experimental new section of SSTI’s newsletter, potentially joining other regular sections such as Useful Stats, Fed/Leg News, State News, Member Updates, and Recent Research. Its periodic continuation after the contributions we present over the summer will depend on feedback from our members and Digest readers. Comments may be shared with skinner @ ssti.org

Balancing innovation and equity is a perennial challenge in economic development. Neil Lee’s newest book, Innovation for the Masses: How to Share the Benefits of the High-Tech Economy, tackles this issue head-on, arguing that innovation and equity are not mutually exclusive but can—and should—be pursued in tandem. For our readers, this may seem an obvious point, but innovation’s track record suggests otherwise. Lee’s thorough examination provides valuable insights into how to achieve this equilibrium.