Impact

An Economic Engine for the 21st Century

Date: October 2012

An Economic Engine for the 21st Century

How Higher Education Will Make Texas Globally Competitive

The Challenge

As the United States faces intense competition in an increasingly knowledge-based, global economy, higher education has taken on a more significant role in workforce development. In 1973, only 28 percent of U.S. jobs required postsecondary education. By 2018, 63 percent of all occupations will require some form of postsecondary training and education. Even in traditionally skill-oriented industries such as manufacturing, 50 percent of the future jobs will require some postsecondary education.i The foundation of the future U.S. and Texas’ economies have changed dramatically, and the challenge to adapt is daunting

  • According to recent reports, the United States has fallen from 12th to 16th among leading industrialized nations in the share of adults 25-34 holding an associate-level or higher degree.
  • The U.S. needs to add 20 million postsecondary educated workers over the next 15 years to remain globally competitive, meet the economy’s need for efficiency, and reverse the growth of income inequality.
  • Today, less than 6 in ten students who enroll in our universities and less than 1 in 3 who in enroll in our community and technical colleges graduate in six years.

As the Dallas Morning News editorial board made clear, Texas must graduate more students from college: “Global companies want educated workers. When they find them, they are more likely to grow jobs in those states.

Re-inventing Higher Education in Texas

Texas has made significant progress in higher education since 2000—annual enrollments are up 51 percent and annual postsecondary credentials awarded are up 38 percentvi. However, our progress is not keeping pace with demands of the 21st century economy, particularly in critical areas such as STEM, nursing and teaching, and surging demographic trends among Hispanics. To address this issue, the Texas Higher Education Coordinating Board (THECB) has recommended Texas follow a growing national trend in higher education finance by tying a portion of state funding to student outcomes—specifically degrees—rather than on enrollment trends alone.

For public universities, the THECB is recommending that 10 percent of state formula funding be allocated based on degrees awarded, with special emphasis on degrees in STEM and critical workforce fields, as well as degrees awarded to at-risk populations. For public community colleges, the THECB is recommending the same percentage of funding be allocated based on key educational milestones aligned with the community college mission, such as completing credits on way to a degree or certificate, and transfer to a university. The remaining 90 percent of funding for both sectors would continue to be based on enrollment trends.

The goal of these policy recommendations is to drive higher education to intensify its focus on helping more students complete high-quality certificate and degree programs in alignment with, and in support of, the current and future Texas economy.

The Role of the Business Community

The Texas business community must take an active role in helping shape a better, more productive alignment between higher education and workforce development. Higher education does have a reputation, particularly in the community college sector, for working with local chambers and economic development corporations to tailor outcomes in support of local economic development efforts. However, there is no unified, statewide strategy to produce the volume of high-quality outcomes the Texas economy must have to be globally competitive.

Ultimately, this is not a challenge for higher education; it is a challenge to the Texas business community. For this reason it is critical that thought-leaders from business and industry throughout Texas engage this issue in the lead-up to the 83rd Texas Legislature. This issue is a natural fit for The Texas Business Leadership Council which has made education a key component of our agenda.

Foot Notes:

  1. Anthony P. Carnevale, Nicole Smith, and Jeff Strohl, “Help Wanted: Projections of Jobs and Education Requirements Through 2018,” Georgetown University, Center on Education and the Workforce, June 2010.
  2. Daniel de Vise, “U.S. falls in global ranking of young adults who finish college,” The Washington Post, September 13, 2011.
  3. Anthony Carnevale and Stephen J. Rose, “The Undereducated American,” Georgetown University, Center on Education and the Workforce, June 2011.
  4. Texas Higher Education Coordinating Board
  5. William McKenzie (Editorial Columnist), “Going to college is great, but graduating matters more,” Dallas Morning News, October 4, 2011.
  6. Texas Higher Education Coordinating Board. Data reflects through FY 2011.