Author: Neil Harrington
In today’s tight labor market, people entering and reentering the workforce across the country often face two choices. On the one hand, record high job openings present opportunities to earn higher wages than they would otherwise. On the other hand, some workers might consider returning to school to earn a degree or workforce credential that would improve their earnings potential in the long run. Of course, there are additional options beyond these two, but this scenario is common for thousands of people across the country, North Carolina included.
A recent New York Times article describes such choices in the current economy. Nationally, university and community college enrollments are declining as workers enjoy the benefits of a tight labor market, including a plethora of job options—some sectors have nearly twice the number of job openings per available worker—and strong wage growth. Add to the mix high inflation that increases the cost of making ends meet for families and the choice between higher wages now and higher wages in the future via continued education and skills development becomes even easier for workers.
As job openings increase, community college enrollment tends to decrease
Trends in labor market strength and higher education enrollment in North Carolina follow the same patterns seen nationally. Available jobs at North Carolina employers are plentiful in today’s economy, but finding available workers is more difficult for businesses. As Figure 1 shows, there were nearly 400,000 job openings in North Carolina in March 2022, more than double the pandemic low point in May 2020. However, for every job opening in the state, there is less than one worker looking for a job, marking the first time the job seekers per job opening measure has dipped below one in more than 20 years (see Figure 2).
While jobs have become more plentiful as the economy hums along, North Carolina community college enrollment has declined.1 As Figure 3 shows, Fall enrollment among not dually enrolled students in curriculum programs—the primary education programs conferring associate degrees, diplomas, and certificates—at North Carolina Community College System (NCCCS) schools steadily declined between 2013 and 2021, dropping by nearly 30 percent.2 If dually enrolled students are included in enrollment figures, the decline between 2013 and 2020 is less severe, only 12 percent. North Carolina’s community college enrollment reflects trends observed nationally over the last decade (see Figure 4). Similarly, continuing education and basic skills programs at North Carolina community colleges have experienced enrollment declines of 20.3 and 34.4 percent, respectively, over the last five years.3 Continuing education programs are critical to workforce training efforts across the state. While these programs experienced sharp enrollment declines between Fall 2019 and Fall 2020 (-30.4 percent), continuing education enrollment increased by about 15 percent between Fall 2020 and 2021 as enrollment in the larger curriculum programs continued to fall.
People foregoing educational and skills development opportunities for higher wages when labor markets are strong is not a new development. Researchers in the early 2000s found that colleges experienced enrollment declines when real wages increased, while more students enrolled in higher education as local unemployment rates rose. Similarly, the weak job market during the Great Recession led to significant increases in higher education enrollment—particularly at community colleges—before stabilizing as the economy recovered and employment opportunities expanded in 2011.4 Community colleges in North Carolina experienced similar trends during and after the Great Recession. NCCCS enrollment increased sharply between fall 2007-2008 and 2008-2009, then remained steady before gradually declining as job openings picked up. In short, the current trend observed in North Carolina—community college enrollment decreased as job openings increased—was anticipated given trends from earlier business cycles.
COVID-19 related class cancellations, online courses, and public health concerns over indoor gatherings forced enrollment trends during the brief economic downturn of 2020 to break from historical patterns. As concerns of the virus forced businesses to close shop and lay off employees, enrollment at higher education institutions across the country dropped by 4.5 percent in Fall 2020, with a 9.5 percent enrollment decrease at community colleges alone. Community colleges in North Carolina experienced slightly smaller enrollment decreases between 2019 and 2020 (-6.5 percent), but declines, nonetheless. The drop in enrollment when, historically, more people should be pursuing further education combined with a surging labor market recovery following the brief economic downturn presents unique challenges for workers and community college program administrators.
Foregoing education and skills development now will produce a less economically resilient workforce
When hot labor markets entice people away from further education, fewer workers will have the necessary skills and credentials to weather the next economic downturn. Research and data show people with higher levels of education tend to fare better during economic contractions than people with lower levels. During the Great Recession’s labor market slump, people without high school diplomas had unemployment rates nearly double that of individuals with some college education or an associate degree and more than triple those with bachelor’s degrees or higher. The pandemic-induced recession of 2020 showed similar trends. From a broader economic perspective, a less skilled and resilient workforce will curtail economic and business growth by limiting employers’ ability to hire the people they need and negatively affecting the state’s potential to attract and grow new industries.
The next economic downturn poses disproportionate risks for historically marginalized people delaying education in the current hot job market
Furthermore, the demographic characteristics of the people delaying education or skills development for employment opportunities matters for the long-term health and equity of the state’s economy. In tight labor markets, employers typically increase hiring of workers of color, people with disabilities, those with criminal records, and other historically marginalized groups. Discrimination, employment gaps, lack of credentials, criminal records, and other factors typically lead employers to overlook historically marginalized workers when the supply of jobseekers is higher. The same workers are often the first people employers let go during economic downturns. Similarly, young people who often lack work experience and skillsets that employers look to hire have benefited from the current strong labor market, as evidenced by an unemployment rate among teenagers ages 16-19 near its 68-year low. The same trends have held in North Carolina. Since total employment in the state bottomed out in April 2020 and the labor market regained its footing, employment among Black workers has increased by about five percentage points more than white employment, while the number of employed people between ages 16 and 24 has nearly doubled.5
While gains in aggregate employment for historically marginalized or hard-to-hire populations are certainly positive developments, it also means these same populations might be turning down educational opportunities that could make them more economically resilient. During the next economic downturn, longstanding biases might lead to layoffs for these workers first and they could find it hard to find a new job without advanced skills and credentials.
How North Carolina can combat enrollment declines
Beyond the economic concerns from fewer people earning credentials and associate degrees, decreased community college enrollment threatens the state’s ability to align with the state’s legislative goal of 2 million individuals between ages 25-44 with high-quality credentials by 2030. Businesses unable to fill open positions are increasing wages to attract new hires. This makes turning down a good paying opportunity difficult for people, especially in the current inflationary climate, and can obscure their perception of the long-term benefits of higher educational attainment. This dynamic places greater urgency and importance on education and workforce strategies identified in North Carolina’s First In Talent Plan and ongoing initiatives of the state’s education leaders such as NCCCS, the College Foundation of North Carolina (CFNC), myFuture NC, the UNC System, and the Department of Public Instruction. North Carolina is well positioned to increase education enrollment and attainment while helping individuals take advantage of the hot job market, while it lasts.
Expand earn & learn opportunities
Work-based learning (WBL) programs provide an option for people to both accept new job opportunities and continue education through community colleges. Already offered at many NCCCS colleges and high schools, WBL aligns employment and educational programs by awarding course credits for hours worked. For example, NCCCS’ ApprenticeshipNC is a successful WBL program that develops work ready and skilled talent to meet the needs of workers and businesses. Further implementation of the WBL strategies outlined in North Carolina’s First In Talent Plan can help enhance and expand access to these programs.
Additionally, encouraging employers to support less skilled and entry level workers’ educational goals like pursuing an associate degree while working would improve their economic resiliency and simultaneously allow people to take advantage of the strong labor market. It would also improve workplace environments and employee retention and development, which could benefit companies themselves in the long run.
Promote the value of education credentials
Greater investment in outreach activities to potential students and workers is critical to ensure they are aware of the longer-term benefits of earning a degree or certification beyond high school and can help promote enrollment. For example, North Carolinians ages 25 and over with some college education or an associate degree earn about $4,600 per year more than those with just a high school diploma and are more likely to remain employed during a recession. With the current tight labor market, NCCCS along with other workforce entities could intentionally increase their messages touting the impact and benefits of further education and training. They could further encourage enrollment by promoting financial assistance or grant programs such as the Longleaf Commitment Grant which enables recent high school graduates to attend a North Carolina community college debt free. Historically, marketing efforts around the long-term benefits from higher education have been beneficial in encouraging enrollment. The current argument to forgo immediate employment for long-term investment in higher education may not be as persuasive in the current environment—with increased employment opportunities and accelerating wages. More may need to be done to ensure higher education and skill development opportunities are not bypassed permanently.
Prepare for change
Looking toward the future, the state has an opportunity to be proactive and prepare for an inevitable increase in enrollment when the labor market cools off. Economic trends tend to normalize with time. When the labor market and larger economy crashed during the Great Recession, NCCCS enrollment jumped by 20 percent over a three-year period. Just as the decrease in enrollment is expected during strong labor market periods, community college program administrators will need to anticipate an enrollment increase when the economy starts to slow down, and people turn back towards education and reskilling. In anticipation of that turning point, workforce entities in the state might consider reviewing successes and challenges from the higher education enrollment boom during the Great Recession. Leaders can take the opportunity to shore up program offerings and align training and education programs with changing workforce needs to prepare a well-educated and highly trained workforce to continue North Carolina’s economic success.
1This analysis focuses on community college instead of university enrollment in North Carolina because community colleges serve more people, and current economic conditions are more likely to influence these students’ higher education decisions.
2Curriculum enrollment data on the NCCCS analytics dashboard only spans 2013-21, while continuing education and basic skills enrollment data is only available over the last five years (2017-21). For this reason, the change in enrollment for these program types are reported over differing periods.
3Continuing education programs include single courses meant to teach students new skills for their current occupation or retrain workers for employment in a new occupational field, while basic skills courses allow individuals to pursue high school equivalency, general education development (GED) certifications, English as a second language (ESL) programs, and the like.
4Barr, Andrew and Sarah E. Turner. “Expanding Enrollments and Contracting State Budgets: The Effect of the Great Recession on Higher Education.” The Annals of the American Academy of Political Science and Social Science. November 2013.
5Author’s analysis of Current Population Survey microdata, April 2020 to May 2022. Employment estimates for Hispanic and Asian populations are not reported here due to small sample sizes for these populations.