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Study Shows Education Grows Economies

Not only is state investment in education beneficial to students, but also it can help regions grow their economies, according to a new study by the Economic Analysis Research Network (EARN), a coalition of national and state think tanks.

The study followed state wage increases and productivity growth from 1979 to 2012. It found that high-wage states have a more educated workforce, and states can build those workforces through expanded access to low-cost two- and four-year colleges.

Stephen Herzenberg, executive director of the liberal-leaning Keystone Research Center, a member of EARN, said even though Pennsylvania had the 12th largest increase in people with college degrees, it was only 28th in productivity and 33rd in compensation.  

He said this is partially because the state’s community college system is geographically limited.

“We have a community college system that doesn’t reach big parts of the rural regions in the state,” Herzenberg said. “So getting a low-cost, two-year education is tough for a lot of high school graduates and families in those parts of the state.”

Out of Pennsylvania’s 67 counties, only 14 have community colleges.

Herzenberg said many states are held back by the “industrial recruitment game,” where states hope to lure companies away from others by offering tax incentives. He said research shows that the best way to have thriving companies is by growing them locally.

He said when a state invests more in education, they create a population that expects higher wages.

“Even within an industry you may have some companies that have lower productivity and lower wages, but then you have other companies that are really well run and invest in technology and invest in the skills of their workers,” Herzenberg said. “Those companies are going to be delighted to come to a high wage region because they know there’s a payback to that educated workforce.”  

Herzenberg said he would like to see Pennsylvania do more investing in two-year colleges and K-12 education. He believes the state’s recent policies reflecting education funding are “very much at odds” with what the study shows.