Improving opportunity through better human capital investments for the labor market

Abstract

While education levels in the U.S. have risen in recent years, students from disadvantaged backgrounds have fallen behind other Americans in college attainment amid increasing college dropout rates. The causes of this growing gap include weaker academic preparation in their K-12 years (and earlier); lower wealth and liquidity that make it harder to pay tuition and other costs; worse information about and lower familiarity with higher education; and pressure to work full-time while being enrolled to help support their families. In addition, disadvantaged college students are heavily concentrated in weaker and under-resourced institutions such as community colleges, which generate fewer graduates. Even when students gain credentials like associate degrees, the degrees often do not have strong labor market value because of students’ poor labor market information and the weak incentives of public institutions to respond to the labor market by creating more classes in high-demand fields. And high-quality career and technical education opportunities in the U.S., such as “sectoral” training and work-based learning, have not been developed to the extent possible to provide students a wider range of pathways to careers from which to choose. Efforts to improve these outcomes must therefore focus on three goals: (1) improving completion rates at our public colleges by strengthening student supports; (2) expanding postsecondary options, at the bachelor’s level or below, that have labor market value; and (3) developing additional pathways to good-paying jobs through work-based learning and high-quality career and technical education, beginning in secondary schools.