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Foreword by
Leadership for
the 21st Century
James B. Hunt Jr.
How Is American
Higher Education
Measuring Up?
An Outsider's
Thomas J. Tierney
About the Authors
About the National
Center for Public Policy and
Higher Education

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     How Does It Measure Up for the 21st Century?

How Is American Higher Education Measuring Up?
An Outsider's Perspective

   By Thomas J. Tierney

I am not a leader in education, nor am I a government insider. My background is in the business world and more recently in the nonprofit sector. If I can contribute to the important work being done by the higher education board members and commissioners, it will not be by providing any expertise in higher education, but by offering the perspective of an "outsider looking in."

So let me take as my starting point not the American campus, but the American economy, which I must tell you is under tremendous new strain. From this vantage, what is clear to me and what I have to report to you is this: our country faces a new economic reality, which must significantly change what we expect from higher education.


We face, first of all, the emergence of a knowledge-based economy, whose demand for highly trained and educated workers is greater—and faster growing—than we have ever seen before. We also face fierce global competitors eager to meet this demand and land the good jobs and burgeoning opportunities that the new knowledge-based industries bring with them. Thus, the new reality: If our nation and our states can't assure employers a large and growing labor pool of people with competencies beyond those taught in high school, other nations assuredly will. With the "outsourcing" of high-end jobs, we are already seeing this happen. As Governor Mark Warner of Virginia, chair of the National Governors Association, recently said, "Knowledge-based jobs are going to go where the knowledge workers are." And the promise of economic growth and prosperity is going to go with them.

Indeed, the stakes could hardly be higher for the states and the nations in this competition. At issue is whose standard of living will rise and whose will fall in a global economic environment that demands ever larger numbers of highly trained and educated workers.

For the United States, the challenge is formidable and is rendered even more difficult by demographics-because the demand for more college-educated workers is converging with a sharp reduction in the growth of our labor force. Between 1980 and 2000, the U.S. workforce expanded by almost 50%. Baby boomers and the increased participation of women in the workforce accounted for most of that dramatic growth, which produced so many new workers that it didn't matter that our education system had moved only a fraction of them through post-high-school training or schooling. Even a small fraction added up to a lot of skilled and educated employees. But current projections forecast labor-force growth of only 16% over the next two decades. A report released in May 2005 by the Committee for Economic Development put it plainly: "The prime-age, 25- to 54-year-old workforce that increased by 35.1 million workers between 1980 and 2000 will add only 3 million workers through 2020." If I am correct that current economic realities require us to increase the country's level of educational attainment—and by a significant order of magnitude—then nearly all of our new workers must have training or schooling beyond high school. This has never been required of our education system before, but now the health of our state and national economies depends upon it.

The stakes are equally high, of course, for individual Americans, as has become increasingly obvious over the past quarter century. In this period of overall prosperity for our country, two groups have been left behind. Americans with only a high school education have not, on average, improved their economic status; and those with less than a high school education have seen their real income actually decline. The jobs that once supported a middle-class standard of living for workers with a high school degree or less—often in the industrialized, heavily unionized sectors—are the ones that have been disappearing in the new economy.

Nowadays, people with no education or training beyond high school are unlikely to even be considered for jobs that support a middle-class life. Instead, they fill most of the nation's low-wage service jobs. "Education and training beyond high school" is a broad and inclusive concept, but whether we are talking about an educational path that leads to a specialist certificate or to a Ph.D., higher education is no longer just the most direct route to a middle-class life; it has become essentially the only route. It has become a necessity.

From an outsider's perspective, I can tell you that higher education has become economically pivotal. As a nation and as individuals, we need more Americans with education and training beyond high school—more than we have ever needed before. In the economic interest of all of us and consistent with our democratic values, we must assure that the opportunity to enroll in and complete college is available to every American who can benefit from it and who is motivated to learn.

But I must also tell you that in the face of this challenge, America is underperforming. The nation, the states, and our institutions of higher education are not making the gains in college access and completion that the new global economy requires. We are performing at a level that might have been adequate a quarter century ago, but that falls far short of what is required for the future.

Some background is important here. Over the course of the 20th century, the United States became the world's unquestioned economic leader, and our two- and four-year public and private colleges and universities were central to that accomplishment. Particularly after World War II, these institutions extended higher education to a greatly expanded swath of the American population, creating the workforce that made our economic growth possible. The system had its flaws, of course, not least of which was its failure to include many low-income and minority Americans. Nonetheless, its successes were great, and we could claim without exaggeration that it was "the best in the world."

But what was once best is no longer good enough. In today's economic environment, two issues require particular and urgent attention:

  1. First, our education pipeline leaks badly. Of every 100 ninth graders, only 18 come out the other end 10 years later with a college degree! Only 68 of every 100 ninth graders graduate from high school on time; of the 68 graduates, only 40 enroll directly in college; only 27 are still enrolled the next year; and only 18 of the original 100 ninth graders complete an associate's degree within three years or a bachelor's degree within six years of enrolling. Eighty-two out of 100 ninth graders don't make it.

  2. The second issue requiring urgent attention is that, increasingly, the young people available to enter college and the workforce are coming from the population groups that are currently the least well-served and least successful at all levels of American education. Over the next two decades, all of the growth in the U.S. population is projected to come from minority groups, primarily from Hispanics. These are also our lowest-income populations. More than 60% of Hispanic and black families are in the bottom two quintiles of family income, earning less than $42,000 annually. More than a third of black and Hispanic families are in the lowest income quintile, with annual incomes below $25,000.

    Thus, to produce the workforce we need, we will have to provide higher education to substantial numbers of students from those groups who have been least likely to enroll and graduate. The task is not easy. Besides serving the most heterogeneous student bodies in history, colleges and universities will have to work with public schools to assure that low-income and minority students are ready for college when they leave high school. And, by the way, we must also make sure that these students can afford college.


Perhaps the most powerful evidence that American attention to these issues is presently inadequate is found in the 10-year retrospective in Measuring Up 2004, the National Center for Public Policy and Higher Education's latest report card on higher education. Measuring Up focuses on how well the nation and the states are performing—not how well individual colleges and universities are doing—in providing education beyond high school and up through the bachelor's degree. In the 2004 edition, we looked back to the early 1990s and asked what progress has been made over the past decade. I'd like to discuss our most important findings in four of Measuring Up's categories of performance.


In the first category, college preparation, there has been some progress over the past decade, but not nearly enough. Compared with a decade ago, young people who graduate from high school today are much more likely to have taken courses that are correlated with college readiness. This is a real accomplishment. But far too many high school students are still not taking courses that prepare them for college-level work. And, as I mentioned before, nearly a third don't graduate from high school on time at all. Nonetheless, the bottom line is that those who do graduate are more likely than a decade ago to have taken a curriculum that includes, for example, upper-level math and science courses.

Unfortunately, the college preparation category of Measuring Up is pretty much where the good news ends.


The second category is college participation. How well have we done in assuring college access to young Americans and working-age adults? The answer to this question is sobering. Although more students take courses to prepare for college than was the case a decade ago, and though more students than ever aspire to attend college, rates of participation in higher education have been flat. We might once have claimed proudly that every generation of Americans was better educated than those that came before. But this is no longer true. For an entire decade—and probably for the first time since World War II—we made no progress at all in expanding college opportunity. In a number of states—including California, Illinois, Oregon, and New York—the likelihood that ninth graders would be enrolled in college four years later actually declined. And this was during a decade that enjoyed the greatest economic growth of our post-war history.


During a decade of exceptional economic prosperity, college preparation improved some, while participation rates stagnated. What about college completion rates? Bad news again. We have made only very small gains in associate, baccalaureate, and certificate program completion-nothing commensurate with the improvements we've seen in high school course taking.


Worse still is our performance on college affordability. The Measuring Up reports use family income in each state and the net cost of college attendance—after receiving financial aid—to assess the affordability of two- and four-year public and private colleges and universities. Our 10-year analysis asked whether it is easier, about the same, or more difficult for families to pay for college today compared to in the early 1990s. The answer was clear: State, national, and institutional policies have made it harder for many families to afford college. Measured against our 1992 benchmark, 47 states received a D or an F in Affordability.

Across the country, the cost of sending a child to college has outstripped the growth of family income. In part this is a reflection of financial aid, which now covers a smaller portion of tuition than it did 20 years ago. And in part the problem is simply that tuitions have been rising steeply, even at public institutions. Over the last decade, while the nation's median family income increased by 6%, the average tuition at four-year public colleges and universities increased by 44%. For middle-to-low-income families, the results were particularly harsh. The median annual income of the bottom 40% of families was $20,157 in 2003; the net cost of sending a student to community college averaged 34% of that income. It should come as no surprise, therefore, that the gaps in college attendance between affluent and poor students have widened in America.


So here's where we stand: This nation, its 50 states, and its entire workforce now compete in a demanding, global, knowledge-based economy; and to succeed we must provide education and training beyond high school to a significantly greater proportion of Americans than we ever have before—including large numbers from groups that have been left behind in the past. Yet based on the track record of higher education over the past decade, it is apparent that America is not accomplishing this goal. And in my opinion, the country's current public policies will not enable us to achieve this goal in the future. I do not, let me emphasize, question the quality or effectiveness of many individual institutions. By virtually any criteria, many of our colleges and universities measure up to any foreign counterpart. In the aggregate, however, and measured by the civic and economic needs of society, American higher education is underperforming.

A business analogy seems relevant. One of my first lessons as a management consultant at Bain & Company was that every company in every competitive marketplace is gaining or losing share. Although the gain or loss might be slow and invisible, it is always happening. And the stronger the market leadership position an organization or industry enjoys, the less likely its individual leaders and employees are to appreciate that they may have to adjust to changing circumstances. The curse of a strong market leadership position is that it fosters satisfaction with what is actually underperformance—satisfaction with doing only what's necessary to maintain the status quo, listening only to customers who are content with existing products, and failing to react to emerging needs, competitive risks, and potential new customers. We don't have to look any farther than our steel, consumer electronics, and automobile industries for examples. And I fear that this may also be the curse of higher education in America today. Rather than forcefully addressing the needs of the future, we are resting on the achievements of the past.

The consequences are already worrisome. In the 1990s, while our college participation and completion rates were flat, international indicators show that we lost our world leadership in both of these areas. Other countries, with greater urgency, are working to expand their educated population, while in the United States, uniquely among major industrial nations, the educational attainment of young workers is declining. We are, in effect, creating the opportunity for our economic competitors to catch up with us and surpass us educationally.

Last year, when IBM's personal computer business was acquired by a Chinese corporation and when Unocal, with its enormous oil and gas reserves, was courted by a corporation controlled by the Chinese government, the headlines were a surprise to most Americans. They should not have been. The year before, Chinese companies made 312 major acquisitions of foreign firms. In fact, China's GDP tripled between 1980 and 2003—growing from $12 trillion to $36 trillion. By 2020, it is expected to reach $60 trillion, gaining market share in industry after industry.

This is no fluke. During a recent visit to Shanghai, I met with numerous business and government leaders and found them suiting up for combat and determined to win. They are hungry, not complacent, and their education policies reflect that. In 2001, China had about 50 million people with a college education—a small proportion of the overall population, though still a larger number in absolute terms than America's 31 million college-educated individuals. But by 2008, the college-educated population in China is projected to climb to about 90 million, almost doubling in seven years—while projections for the United States show a growing shortage of workers with postsecondary education. Of course, this American deficit is unlikely to manifest itself as unfilled jobs in America; instead, employers will move jobs to the places in the world where they can find workers with college-level skills.

We must face up to our current educational underperformance—and turn it around. Otherwise, America, the world's economic leader for most of the 20th century, will "lose share" in the decades ahead to nations that are more aggressively educating their future workers.

Perhaps even more important, unless we improve our educational system, many individual Americans will find that a middle-class life is hopelessly beyond their reach. Five years ago, I co-founded the Bridgespan Group, a company dedicated to improving the performance of the nonprofit sector. My work there has given me extensive experience with the portion of society that is most likely to be denied this American dream. I have worked at length, for example, with youth development organizations that are struggling to help disadvantaged youth graduate from high school, earn a college degree or specialist certificate, and productively enter society. From them, I have learned a thing or two about hope, which I would like to pass on to you.

I am thinking, in particular, of a Bridgespan client named Geoff Canada, who grew up in Harlem and now runs Harlem Children's Zone, an organization whose mission is to improve the lives of children in America's most devastated communities. For many struggling, low-income Americans, Geoff reminded me not long ago, hope is what gets them out of bed every day. Hope for a brighter future, if not for themselves, then perhaps for their kids. But where is the hope for tomorrow? For someone in the bottom reaches of American incomes, earning a high school diploma means struggling like hell, perhaps achieving what no one in the family has ever achieved before, resisting peer pressure, and studying hard. And the result upon entering the workforce with that high school diploma? A better chance to earn the minimum wage.

For a chance to share fully in the civic and economic benefits of a middle-class life in America, the struggle is much greater. It requires somehow navigating entry to our higher education system, spending savings that your family doesn't have, taking on part-time jobs and mind-numbing debts. And only if you can stick that out for many years, often feeling totally alone and unprepared, can you possibly gain entry, at long last, into the beckoning knowledge economy. Is it any wonder that so many lose hope? And what happens when entire segments of our society lose hope for their future? For their children? What happens when the ladder to a hoped-for better life is missing all the higher rungs? We are fostering a divided society of haves and have-nots. It's a division easily seen in the economic statistics. But economic measures are cold reflections of a more critical division between those who have real hopes of climbing the education ladder to a better life and those who live without them.

As a businessman and as a citizen, I conclude that if we lose jobs and we lose hope, we will have a problem in this new century which reaches beyond the competitiveness of our industries. We will have a problem with the very future of our country.

But I also believe that this need not be our fate. New public policies for higher education, which respond to the new economic and demographic reality, can prevent it.


I do not mean to imply that there are simple policy formulas that every state can or should follow. But it seems clear that three issues should be high on every state's policy agenda.

  • The education pipeline. We must repair it. Its leaks from beginning to end suggest that we would be well served by a K–16 approach to framing our educational issues. Focusing exclusively on one section of the pipeline at a time-as have most of the educational reform efforts of the past quarter century—won't get a skilled workforce flowing.

    For colleges and universities, repair of the pipeline will take closer collaboration with public schools to raise high school graduation rates and improve the college readiness of high school graduates. It will also require improving their own programs and increasing the proportion of college students who complete degrees and certificates.

  • College affordability. The requirement here is twofold. The rate of increase of institutional costs and prices must be constrained, and—at the same time—policy leaders must continue to advocate public investment in higher education, with, I suggest, particular emphasis on need-based student financial aid.

  • Accountability. States need to hold themselves and their colleges and universities responsible for monitoring progress on the critical aspects of higher education performance on which the future of the nation and the states really depend. The State Higher Education Executive Officers-sponsored National Commission on Accountability in Higher Education has, I believe, made a major contribution to the rethinking of accountability. Its conclusion is that accountability must focus on explicitly stated, core public purposes and on reporting specific outcomes. The primary purpose should be to produce information that will lead to improvement at the policy level and at the institutional level.

These tasks are daunting indeed, but I believe we can accomplish them. America's past success may have led to present complacency, but it also has left us a strong foundation on which capable and committed policy leaders can build. You, in other words, can make an enormous difference, and our country needs you to.


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