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Investing Wisely in Alabama’s Workforce

A wise investor is concerned primarily about one thing: return on investment (ROI). In Alabama, we are facing a major push to build our workforce - a positive change that could bring massive increases in income and tax dollars for a state that is always ranked near the bottom in per capita income and high in poverty statistics. As we build our workforce for the future, it is more critical than ever that we invest in a workforce that will be sustainable and have a positive ROI. It is imperative that the tax dollars our legislators invest multiply and benefit all Alabamians. Preparing the state’s workforce will require investments at all levels of education, especially higher education. It is important to remember that, on average, individuals with four-year degrees earn over $1.5 million more over their lifetime earnings than others.

2-Year Schools’ Allocations Rise, While 4-Year Allocations Fall

Recent data shows that the Alabama legislature has put increasing focus on funding 2-year schools within the state. Countless news reports have shown legislators promising yet more support for 2-year schools. The Alabama Department of Commerce shares that workforce development is a buzzword like never before. It is evident that Alabama will benefit from increased skill training. However, the growth in job demand around innovation corridors like those in Huntsville, Birmingham, Tuscaloosa, Auburn and Mobile is also significant. Therefore, the need for additional state dollars to be invested in the four-year schools is also important.

The Center for Budget Priorities reported that, while many states have not recovered from the 2007 Recession in terms of higher education funding, Alabama lags even farther than most, with funding per full-time student falling and stagnating. In the last decade, per-student funding for Higher Education in Alabama has fallen by more than 30 percent. This places the burden to pay for higher education firmly on the shoulders of students and families, making higher education harder to access and putting up significant barriers for many across the state. In a review of funding per student provided by the Southern Region Education Board, Alabama currently funds its two-year colleges at double the regional average. However, funding for four-year colleges, using a similar per-student comparison, is more than 25 percent below the regional average.

Meanwhile, funding for 2-year schools is trending upward, with more money from the legislature being poured into programming for tech schools and community colleges. Funding per student at these schools is higher than ever before, nearly meeting that of 4-year schools.

But are these investments the same? What does this mean for our state?

Well, to begin let’s look at the results for the students. The obvious outcome is the difference in the average salaries of 2-year and 4-year graduates. As mentioned before and seen in the chart, average annual earnings for four-year graduates are almost $20,000 higher than those who have an associate’s degree from a 2-year school (Fig. 2). Furthermore, a recent study from Georgetown University found that the national expanded workforce is highly correlated with the increase in higher education degrees. An increasing amount of careers require a higher education degree (Fig. 3).

Even without considering post-graduation employment results, higher education institutions have a $20 billion positive impact on the Alabama economy. For every $1 invested in higher education, Alabama receives a $12.5 return on their funding.

To create a sustainable future for Alabama, it is imperative that we fund higher education at rates that convey the value our institutions and college graduates create for our state. While 2-year and tech schools do create valuable opportunities for many Alabamians, the future will rely on increasing our workforce to include more college graduates. Currently, only 24 percent of Alabamians have a Bachelor’s degree or higher. To increase this number, legislators can implement funding platforms that would relieve Alabama families of shouldering the financial burden for higher education, creating long-term, critical opportunities for every young student across the state.

The ability to expand a career path beyond initial skill development is typically tied to a Bachelor’s degree or higher. New opportunities in fast-growing markets like software, computer engineering, aerospace, medicine, business and agriculture are demanding upwardly mobile employees. These jobs are developing in Alabama and more can be recruited into the state. Therefore, as the State of Alabama, commits more and more dollars to workforce development, the need for a significant increase for four-year students is evident. The only way to prepare Alabama for the economy of today and tomorrow is to commit significant resources in workforce development to four-year institutions, as we have done for two-year programs. The path to the future is funding progress in higher education to secure more opportunities for all of Alabama’s citizens.


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