*050207120* Rev 1Implications of Educational Attainment Trends for Labor Market OutcomesRichard Buddin October 2012ACT Research Report Series2012 (7) For additional copies, write: ACT Research Report Series P.O. Box 168 Iowa City, IA 52243-0168© 2012 by ACT, Inc. All rights reserved. Implications of Educational Attainment Trends for Labor Market Outcomes Richard Buddin ii Contents Abstract .......................................................................................................................................... iv Acknowledgements ......................................................................................................................... v Introduction ..................................................................................................................................... 1 Purpose ........................................................................................................................................ 4 Data Sources ................................................................................................................................ 5 Overall Results ............................................................................................................................ 6 Study Organization ...................................................................................................................... 6 High School Graduation ................................................................................................................. 7 College Enrollment ....................................................................................................................... 12 College Persistence ................................................................................................................... 20 High School Dropouts and College Enrollment ........................................................................ 21 College Degree Completion .......................................................................................................... 22 Degree Completion at 4-Year Colleges .................................................................................... 23 Degree Completion at 2-Year Colleges .................................................................................... 25 Educational Progression and Attainment ...................................................................................... 28 Conclusions and Promising Initiatives.......................................................................................... 33 Promising Initiatives ................................................................................................................. 33 References ..................................................................................................................................... 37 iii iv Abstract Well-educated workers have higher wages, higher wage growth, and lower unemployment rates than workers with lower levels of educational attainment. While earnings have traditionally grown with educational attainment, the gaps have become more pronounced in recent years. While returns to education have increased, this research shows that educational attainment has been stagnant or declining over the past decade. High school graduation rates have fallen from historic highs in the 1970’s, college enrollment rates have leveled off, and college graduation rates are stable or declining. The research also examined patterns in educational attainment by race/ethnicity, gender, and 8th grade test scores. At risk minorities, males, and students with low 8th grade test scores had much less secondary and postsecondary success than other students. The achievement gaps persisted over the decade. Low educational attainment will leave many young workers with high unemployment rates, chronically low wages, and low wage growth. v Acknowledgements The author is grateful to Jeff Allen, Kurt Burkum, Michelle Croft, Justine Radunzel, Richard Sawyer, and Jim Sconing for comments on earlier drafts of this report. Implications of Educational Attainment Trends for Labor Market Outcomes Introduction A major challenge for educators and policymakers is to prepare U.S. youth for the modern labor market. In recent years, educational attainment levels have not kept pace with increased demand for high-skilled workers, so the returns to education have risen sharply (Lemieux, 2006; Autor, 2011). Earnings have traditionally risen with worker educational attainment, but these increases have become more pronounced over the past several decades. Forty years ago high school dropouts earned 64 percent as much as other worker