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Do Community College Credentials Pay Off?

Madeline TrimbleMadeline TrimbleThe returns to education have been a popular topic of study among economics researchers. However, only in the last few years has a critical mass of research begun to emerge on the returns to community college credentials. It’s about time—after all, two-year colleges enroll almost as many students in a given year as do four-year colleges across the United States.

This emerging evidence suggests three important findings. First, community college credentials on average are valuable, leading to both higher earnings and a higher probability of employment. Second, looking only at average returns can be misleading, because the program in which a credential is earned matters—a lot. Finally, even programs that do not appear to lead to higher earnings for their graduates may confer other important benefits that should not be overlooked.

Some colleges and state college systems have commendably begun to provide access to employment information for their graduates. For example, California’s website Salary Surfer allows visitors to view the median annual salary for graduates aggregated by program across the state, at intervals of two years before, two years after and five years after their awards were received. This information is an excellent step in the right direction, although whether the information is getting into the hands of those who need it the most—the students and potential students making decisions about their own educational plans and career aspirations—remains an open question.

However, descriptive information alone may be misleading. There are likely to be personal characteristics that are associated both with earning a college credential and with making more money in the labor market—characteristics like intelligence, motivation and grit. This makes it hard to tell whether graduates earn more money than non-graduates because of the education they received or because they are just the type of people who would earn more money, whether or not they had gone to college.

In the last few years, several rigorous research studies have been released that use statewide administrative datasets to estimate for a given individual how much graduating college is likely to pay off. Now that evidence has emerged from Kentucky, California, Washington, North Carolina and Virginia, we can begin to draw some cross-state conclusions. This emerging evidence suggests that community college credentials do pay off, on average, but it’s complicated.

First, community college awards benefit both graduates’ likelihood of employment and average hourly wages if employed. These benefits seem to be stronger for longer-term awards than shorter-term awards. That is, associate degrees seem to have higher returns on average than long-term certificates that take one year or more to complete, and long-term certificates have higher returns than short-term certificates that require less than one year of full-time study to complete.

Second, not all credentials (even those of the same length) are equally beneficial. Quoting statistics about average returns for a whole class of credentials covers up extensive variation by program. Many of the studies above have found strikingly high returns to associate degrees and long-term certificates in nursing, but more limited returns to associate degrees in liberal arts on their own (degrees typically intended to facilitate transfer to a four-year college rather than directly prepare graduates for employment).

Finally, there is evidence that some credentials in some programs may not lead to higher earnings on average, but that does not mean that these programs are worthless. Economists love to look at earnings.

Earnings are measurable and their benefits are fairly straightforward. But personally speaking, making the most money possible has not been my only motivation—or even my primary one—in making my career decisions. I suspect this is true for most people. We care about things like personal fulfillment, job stability, scheduling flexibility, level of daily human interaction and numerous other characteristics that are equally difficult to measure.

In my recent paper on certificates in North Carolina and Virginia, my colleague Di Xu and I found that early childhood education certificates didn’t lead to an increase in earnings on average in either state. However, when we examined the data descriptively, we did see that a high percentage of students in both states were gaining entry into their desired industry of education and childcare after earning their credential. This is an industry that has lower wages than the relatively high-wage, low-stability manufacturing industry many of the students had previously worked in, but it seems to be the one students wanted to enter and the program appears successful in helping them do so.

I therefore urge caution to policymakers when interpreting this emerging evidence on returns to community college credentials. Earnings are important, but they ought not to be the only measure used to evaluate whether community college programs are successful.

Madeline Joy Trimble is a data analyst at the Community College Research Center. She conducts research in areas such as developmental education, student pathways and the returns to community college credentials.

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