Report | Tulsans with Some Postsecondary Education Have Roughly Maintained their 1980s Wage Levels

Report | Tulsans with Some Postsecondary Education Have Roughly Maintained their 1980s Wage Levels

Education attainment is the KEY to regional prosperity and individual opportunity—now more than ever. John Tapogna with ECONorthwest, an economic development firm, takes a look at Tulsa education and wage data in the attached analysis. He clearly shows that regional prosperity and individual opportunity is undeniably tied to educational attainment. Tulsans with some postsecondary education have roughly maintained their 1980s wage levels. Those with a bachelor’s degree or more have experienced gains. His analysis underscores the opportunity the IMPACT!Tulsa partnership has to make a difference.

– Kathy Taylor, CEO, IMPACT!Tulsa

Regional Prosperity, Individual Opportunity, and the Education Imperative

By John Tapogna, President, ECONorthwest

IMPACT!Tulsa (Impact Tulsa) seeks to improve the productivity of the region’s education system with a goal of dramatically increasing the share of Tulsans with postsecondary credentials and degrees. Not long ago, it was thought by some that too many people had college degrees. But times have changed. Global and technological forces have made education the key to regional prosperity and individual opportunity.

In 1976, economist Richard Freeman published The Overeducated American and made the case that post-World War II investments in higher education and grant programs had encouraged too many Americans to pursue college [i]. A glut of college graduates put downward pressure on wages of accountants, architects, engineers, and managers. And too many degree holders were working in lower-paid occupations that didn’t require one. College education’s role—as a major route for social and economic improvement—was significantly diminished.

The economic tides changed in Tulsa and across the United States shortly after Freeman published his book.

What happened?

Two forces—globalization and technology—drove the change. Together, they allowed US businesses to significantly boost productivity—or, the amount of goods and services they produced with a given amount of workers. Through globalization, many manufacturers relocated lower-skill, lower-value added work to Asia, Latin America, and elsewhere. The manufacturing work that remained in the US required workers was more productive and required more complex and flexible skills.

Technology’s impact on jobs and wages has been more widespread. First felt on the factory floor with the introduction of assembly-line robots, technology is gradually eliminating most forms of routine work. Software has reduced the need for accountants, architectural drafters, paralegals, parking lot attendants, and grocery store clerks. In the near future, self-driving vehicles will reduce demand for long-haul truck drivers and eventually, intra-city bus, taxi, and delivery drivers. As Internet pioneer and venture capitalist Marc Andreessen puts it: “Software is eating the world.” [ii] And economists and technologists don’t see an end to the trend.

In Tulsa and elsewhere, education is losing a race with technology  [iii]. Technological change demands workers with higher skills. For much of the 20th Century, education systems kept pace with technology through expansions of the high school, community college, and university systems. But around 1980, high school graduation rates plateaued, college attainment rates slowed, and the US failed to deliver the skills that technology demanded.

So, how have globalization and technological change played out in the Tulsa labor market? During 1940-1980, Tulsans at all levels of educational attainment enjoyed inflation-adjusted gains in average wages (see Figure X). But since 1980, workers with a high school diploma or less have seen wage losses relative to inflation—in part because of the offshoring of low-value added manufacturing work and technology’s elimination of routine work. Tulsans with some postsecondary education have roughly maintained their 1980s wage levels. And those with a bachelor’s degree or more have experienced gains. Technology has benefited these higher skilled workers. They have incorporated technology into their work, become more productive, and demanded higher salaries. In some cases, they have designed and own the technology they are using.

Figure X. Average Wages by Level of Educational Attainment IMPACT Tulsa Average Wages by Level of Educational AttainmentTulsa’s higher college wage premium since 1980 signals an oversupply of workers with a high school diploma or less and undersupply of college graduates.

The call for more talented, flexible workers came through loud and clear in the recently-released Tulsa’s Future report [iv]: “Now more than ever, a highly skilled, knowledge-base labor pool is central to the economic vibrancy and future competitiveness of Northeast Oklahoma.” The relationship between a region’s level of educational attainment and economic outcomes is undeniable (see Figure Y). Education is the key to the region’s prosperity. It’s also a key to individual opportunity.

Figure Y. Average Annual Wages and Educational Attainment IMPACT Tulsa Average Annual Wages and Educational Attainment A recent, landmark project assessed income mobility for communities across the US[v]. The highly detailed conclusions were facilitated by identifying early 1980s children on their parents’ IRS tax records and then locating the child in the tax rolls at age 30.  Millions of individual taxpayer-level records allowed researchers to track children moving from poor to affluent conditions and vice versa.

What did the study show for Tulsa?

A Tulsa child born to parents in the bottom fifth of household incomes had a 66 percent chance of escaping the bottom fifth. They had an 8 percent chance of moving all the way to top fifth. On the bottom-to-top mobility measure, Tulsa compares well with its peer region but is well behind highly mobile San Jose (see Figure Z).

Figure Z. Odds of Reaching the Top Fifth Percentile Starting from the Bottom Fifth IMPACT Tulsa Odds of Reaching the Top Fifth Percentile Starting from the Bottom Fifth What makes some regions more income mobile than others? Answers are still evolving, but early research shows a strong correlation between K12 school performance (i.e., strong test scores and graduation rates) and regional income mobility. Other non-school, factors also appear (e.g., marriage rates, share of single parents, teenage labor force participation), which underscores the need for a collective impact approach to improving economic opportunity in the region.

Freeman’s The Overeducated American accurately described the history leading up to the 1970s, but it couldn’t foresee the global and technological changes that were about to unfold. Almost four decades later, it’s clear that Tulsa and the US need workers with significantly improved skills. It’s a national challenge that requires an aggressive, coordinated local response.

 

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[i] Freeman, Richard B. (1976) The Overeducated American. Academic Press, Inc.

[ii] Andreessen, Marc. August 20, 2011. “Why Software is Eating the World”. The Wall Street Journal

[iii] Golden, Claudia and Lawrence F. Katz. (2008) The Race Between Education and Technology. The Belknap Press of the Harvard University Press

[iv] Market Street. (June 2014). Tulsa’s Future III Phase 1: Competitive Dashboard.  Page 8.

[v] See http://www.equality-of-opportunity.org/

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