(December 9, 2008) California’s supply of college-educated workers will not meet the projected demand, according to a study released yesterday by the Public Policy Institute of California (PPIC).

The study, “California’s Future Workforce: Will There Be Enough College Graduates?” shows that if past trends in worker education within and across industries and occupations were to continue, about 41 percent of workers in the California economy in 2025 would need a bachelor’s degree. 

This represents a 7 percentage point increase of the college-educated share in 2006 and continues the growth trend experienced between 1990 and 2006, when the proportion of California workers with a college education increased from 28 percent to 34 percent.

The analysis does not project a change in demand trends for college-educated workers but rather a change in supply trends. The study outlines three main reasons for the change:

1. Workers who are currently ages 50 to 64 have the highest levels of college education and these workers will reach retirement age by 2025. 
2. The share of Latinos in the working-age populations is increasing and this group has relatively low levels of education attainment. 
3. The migration of college-educated workers from other states and other countries is unlikey to increase future supply to levels comparable with past growth.

Workforce Skills Gap

The projected workforce skills gap results from a continuation of growth in the demand for college-educated workers combined with a slowdown in the growth of the share of college-educated adults in the population. One reason for the slowdown is that 34 percent of California adults in the state have a bachelor’s degree. The retirement of these workers will put a damper on growth in worker educational attainment. In contrast, California adults who reached retirement age between 1990 and 2006 were among the least-educated adults in the state, and their retirement contributed to improvements in overall education attainment of workers.

Low Levels of Latino Educational Attainment

The second reason for the slowdown in the share of college-educated adults is the low number of Latinos earning bachelor’s degrees, because this group makes up a growing share of the working-age population in California. The share of Latinos with a bachelor’s increased from 7 percent in 1990 to 10 percent in 2006 and is projected to reach only 12 percent in 2020. Despite these improvements, Latinos will continue to have the lowest college-education levels of any of the major racial and ethnic groups in California, the study found. Over this period, Latino education is an increasingly important factor in overall education levels. Latinos grew from 22 percent of the working-age population in 1990 to 29 percent in 2006 and are projected to grow to 40 percent by 2020.

 Migration Can’t ‘Fill the Gap’

The study also found that migration is unlikely to be able to fill the gap between the projected economic demand and the supply of college-educated workers. To meet the demand for college-educated workers in 2025, migration would need to increase to almost 160,000 college-educated workers annually and to remain at that level for another 20 years.

Since 2000, international immigration has brought an annual average of 56,000 college graduates to California. During this period, however, more college graduates left California for other states than arrived from other states. This is likely the first time in its history that California has sustained net out-migration of college graduates, the study found. Out-migration of college-educated workers since 2000 has been driven, in part, by high housing costs in the state and that may be temporary. Nevertheless, the study found that even if California were to return to 1980 levels of net in-migration of college-educated adults from other states, migration would not come close to filling the projected gap between supply and demand. 

Implications

The economy of the future requires a skilled workforce. As demand has shifted toward college-educated workers, growth in the supply of such workers has not kept pace, the study demonstrated. The study suggests that growth in supply will be even more constrained in the future. The study’s author suggests that effective reforms and investments today will create a workforce that will help fuel future economic growth and bestow many additional economic and social benefits on the people and state of California.

CalChamber Position

All students, whether they graduate from college, high school or technical training, should benefit if the state holds them to tough standards, especially in the lower grades, Allan Zaremberg, president of the California Chamber of Commerce, recently told the Los Angeles Times.

Studies show that children who perform poorly on a seventh-grade assessment test also fail an 11th-grade test, Zaremberg said.

"We have to have good high schools, good middle schools and good elementary schools," he said. "But we have to demand grade-level proficiency."