ECONOMIC GAINS VARY BY PROGRAM AND ACROSS REGIONS AND DEMOGRAPHIC GROUPS
Press Release from the Public Policy Institute of California
SAN FRANCISCO, June 26, 2019—A majority of students who complete career education credentials at California community colleges earn middle-income wages within one year of finishing their first career education program. The economic returns vary by field of study, with health yielding the largest benefits on average and business and information technology (IT) yielding the smallest.
These are among the key findings of a report released today by the Public Policy Institute of California (PPIC).
The report underscores the importance of community college programs in career education, also known as career technical education or vocational education, in preparing Californians for jobs that are critical to the state’s economy. Currently, about one-third of California jobs are considered “middle-skill” in that they require more than a high school diploma but less than a four-year college degree. And these jobs are expected to comprise a similar share of the economy in future years.
PPIC examined enrollment and earnings information for more than 250,000 students who earned their first career education credential between 2003 and 2010, also taking into account additional credentials these students earned through spring 2017. The report finds that the majority of students begin earning middle-income wages within one year of completing a career education program, although this varies across programs and pathways. For example, students who complete short-term certificates take almost two years on average to reach middle-income earnings. And students who complete credentials of any length in family and consumer sciences—70 percent of which are in early childhood education—also take longer.
Middle-income earnings are defined as falling between 200 percent and 700 percent of the California Poverty Measure threshold, which varies by region due to differences in cost of living. Middle-income earnings start at $23,400 annually for a single person in the Central Valley, ranging up to a minimum of $32,800 in the San Jose region.
While career education credentials in general provide earnings growth over time, there is wide variation by program area and pathway. Health students on average realize the largest earnings returns—compared to what students would have earned without the credential—with students seeing 138 percent growth in earnings for an initial associate degree and 63 percent growth for an initial long-term certificate. In contrast, career education credentials in business and IT on average provide more limited wage gains, compared to what students would have been expected to earn without the credential.
Among the report’s other key findings:
- “Stacking” credentials provides additional economic gains. On average, an associate degree offers a greater earnings boost over time (32%) than does a long-term certificate (21%) or a short-term certificate (8%) alone. However, students who initially earn a certificate can further boost their earnings with a second career education credential in the same field of study. This yields an additional 20 percent wage gain for students who start with a long-term certificate and an additional 6 percent for those whose first credential is a short-term certificate.
- Economic returns vary across demographic groups. Overall, earnings gains from a first career education credential are largest for female students, Asian/Pacific Islander students, and those who earn their first credential between the ages of 23 and 27. While much of this variation can be explained by differences in how common specific programs and credentials are among different demographic groups, the report also finds that some groups see different returns even within the same program. For example, African American students generally see smaller returns than their peers do for an associate degree in the same program area, and older students generally see smaller gains than younger students do.”A number of factors could explain why different groups see different gains from the same career education program, including regional labor market conditions, discrimination, or skill level,” said Sarah Bohn, PPIC director of research and report coauthor. “However, students should be equipped with information on what careers and college pathways do pay the most, regardless of these factors.”
- Wage gains are seen across all parts of California, though with notable regional variations within certain pathways. In each region, at least half of students earn middle-income wages—as defined above—within one year of completing an associate degree. However, there are regional differences. For example, in the San Jose region, more than half of short-term certificate earners make middle-income wages within half a year of completing their credential, compared to two full years in the Sacramento region. Similarly, the wage gains from an associate degree vary substantially across regions. For example, the returns to an associate degree in an engineering field range from essentially zero in the Central Coast to a high of 23 percent in the Sacramento region. It is important to underscore, however, that on average the differences in wage gains by region are smaller than the differences by program.
“Taking an in-depth look at earnings before and after program completion offers insights into how career education can help Californians climb the economic ladder,” Bohn said. “This provides guidance for students, parents, administrators, counselors, and others about which credentials and fields of study can best meet student needs.”
PPIC’s analysis provides a number of recommendations for policymakers, educators, and other stakeholders. One key recommendation is advising students on the expected economic returns from their desired pathways and fields of study as well as on the timeframe involved in completing credentials. In addition, colleges should look toward streamlining stackable credential pathways so that disadvantaged students and working students can more quickly realize the economic benefits. The report also calls for boosting access to high-return credentials—for example, by expanding financial aid—and for engaging with employers to ensure that pathways are aligned with regional workforce needs.
The report, Career Pathways and Economic Mobility at California’s Community Colleges, is supported with funding from the ECMC Foundation, the James Irvine Foundation, and the Sutton Family Fund. In addition to Bohn, the coauthors are senior research associate Shannon McConville and research fellow Jacob Jackson, with research support from research associate Courtney Lee.
The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research. We are a public charity. We do not take or support positions on any ballot measure or on any local, state, or federal legislation, nor do we endorse, support, or oppose any political parties or candidates for public office. Research publications reflect the views of the authors and do not necessarily reflect the views of our funders or of the staff, officers, advisory councils, or board of directors of the Public Policy Institute of California.