Sunday, Oct. 16, 2011 | 2 a.m.
Education and the economyWe’ve heard and received several comments over the past several months about how higher education does, or doesn’t, contribute to the economy and economic development in Nevada. The Sun asked three people for their insight: Gov. Brian Sandoval, Nevada System of Higher Education Chancellor Dan Klaich, and writer Patrick Gibbons. Here are their thoughts. What are yours? Send us a letter: 2360 Corporate Circle, Henderson, NV 89074; e-mail: [email protected]; or post your comments on these pieces online.
The idea that higher education can be an engine of economic growth is an appealing one. There is some compelling evidence supporting this theory. Sandy Baum, an economist for the College Board, found that college graduates earned about $300,000 more over their lifetimes than high school graduates. College graduates are also less likely to be on welfare or go to prison, tend to live longer and are more likely to be employed.
But don’t jump to conclusions just yet. There are several major problems with higher education, including a decline in the value of a college degree, rapidly rising costs, administrative bloat and mission creep.
First, college degrees no longer hold the value they once did.
A recent Rutgers University report found just 53 percent of recent graduates surveyed had full-time jobs. Forty percent of the employed graduates reported holding jobs that required no college degree. Nine percent of recent college graduates reported being unemployed — a rate on par with high school graduates.
Richard Vedder, an economics professor at the University of Ohio, found that 17 million college graduates now work in jobs that require no college degree. This means higher education is leaving millions with nothing but debt and disappointment.
Higher ed also seems to have little effect on state economies and overall unemployment rates.
Since the recession began, there has been no statistical correlation between the number of graduates in a state and the unemployment rate, or even GDP growth. There is also no correlation between the amount spent on “education and research” in higher education and unemployment rates and GDP growth rates. In other words, spending more money on higher education in Nevada in order to produce more graduates would likely have no positive effect on Nevada’s overall economy or unemployment rate.
In fact, states with a top-tier national research university as ranked by U.S. News & World Report have an average unemployment rate that is 1.1 points higher than states with only middle- and bottom-tier universities.
Next, higher education costs are growing at unsustainable rates.
Mark Perry, an economist at the University of Michigan, compared higher education costs with housing costs from 1978 to 2010. Perry discovered a “higher education” spending bubble that is now 2.5 times larger than the housing bubble was at its peak.
Numerous studies report that higher education costs have increased faster than inflation and personal income. Nevada System of Higher Education Regent Ron Knecht reported this year that NSHE’s total operating budget grew by 18 percent between 2000 and 2010 — significantly faster than Nevada’s per capita income.
Jay P. Greene at the University of Arkansas reached similar conclusions in his review of more than 400 major universities. According to Greene, inflation-adjusted spending grew 140 percent at UNLV and 69 percent at UNR between 1993 and 2007.
Compared to the rest of the nation, Nevada’s “education and research” spending per student ranks 19th-highest in the nation according to the Delta Cost Project report “Trends in College Spending.” Despite above average spending, not a single Nevada university graduates more than 50 percent of full-time students after six years. Apparently, the spending never helped.
Where did all the money go?
Greene found that universities across the country rapidly expanded their operations beyond education and research. This included increasing the number of administrators and professional staff faster than the student population. UNLV, for example, increased the number of administrators per 100 students by 90 percent between 1993 and 2007. Benjamin Ginsberg, a political scientist at Johns Hopkins, found similar results in his study of national universities between 1975 and 2005.
The administrative bloat found is the direct result of mission creep — that is, the universities are focusing on far more than just education and research.
UNLV officials, for example, want to expand the university by creating a domed athletic stadium, business/research park and business incubator.
Aside from gambling tuition and tax dollars on risky business ventures, should we really allow a university that can’t even graduate half its full-time students after eight years of college to expand its mission even further?
Criticism of higher education does not mean education is unimportant. Education is very important. The problem is that, at best, higher education is seeing diminishing rates of return on the investment. At worst, we may already be overinvested. Something must be done, but spending more money on an institution that is already bloated, wasteful and ineffective is not going to benefit anyone but the university administrators.
Patrick R. Gibbons is an independent researcher and policy consultant in Las Vegas.