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An Upside Down Economy-Education Cycle

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Recent economic indicators, some familiar to many and few not so, are pointing toward our nation’s economy having finally come out of the recessionary woods. However, one important aspect is going in the wrong direction and for a reason that can be a real game changer.

The jobless rate fell from 7.3 percent in October to 7 percent in November, a five-year low. Job openings, positions waiting to be filled, were at 3.9 million which is a level not seen since May of 2008. And, inventories held by wholesalers and distributors - a generally accepted sign of increased confidence in consumer demand - were up in October to the highest levels in two years.

One uncommon statistic, the “quits rate” or the number of persons who voluntarily left their jobs, was up in October. As reported by Bloomberg, a higher quits rate is good because it suggests that a “willingness to leave a job shows workers are feeling more confident in finding other employment.”

While things may be looking up, all may not be as they appear.

Historical trends suggest that when the economy takes a dive, more people seek improvement in their education as a means to provide them with a competitive edge when the economy returns. As the economy improves, enrollments decline under the theory that plenty of jobs will be available and a higher education may not be as important in a job search. This trend appears to be repeating. According to data released by the Census Bureau earlier this year, college enrollment for fall 2012 was nearly half a million lower than the year prior. This decline, it reported, was driven by students 25 and older who accounted for almost 90 percent of the decrease.

The trouble with trends is that they may hold true when the influencing factors remain the same, but when they change, what was once a positive can quickly become a negative. Enter the game changer.

What is noticeably different this time around than during previous recoveries is that the number of jobs requiring a postsecondary credential is higher now than ever before and will continue to be the case. For example, data from the middle of September to December of 2013 in a Labor Insight report from Burning Glass shows that of the job postings it tracked listing a preferred or required educational level, 53 percent or 1.3 million openings called for candidates to have at least a bachelor’s degree. Overall, 2.2 million jobs required either an associate degree or higher.

Granted, not everyone may need a college degree but it is clear that education beyond the high school level is and will continue to be essential for continued economic growth to be successful and sustained. According to a study by the Center on Education and the Workforce at Georgetown University, workers with a bachelor’s degree or higher actually gained jobs during the recovery period of January 2010 to February 2012 while those with lesser educational credentials continued to suffer losses.

The historical, counter-cyclical relationship between an economic upturn and college enrollments is now upside down. The level of education that jobs in our new economy require is contrary to past cycles. The decline in college enrollments, especially for the over 25 adult learner, is counter-productive for them and the nation. Increasing focus on helping the 34 million Americans who have some college credit but no degree (Lumina Foundation) to further their education must be made or we risk losing the economic momentum that we have fought so hard to create.