Cities across the nation are in a brutal race to produce jobs and get people back to work, while slashing municipal budgets to match plunging tax revenues.
Every mayor is expected to have a three-point plan that is the magic elixir for economic development, usually headlined by “Attract new industry.”
Bagging the buffalo may sound like a good plan. We can all hope for the best. But hope is not a strategy.
What ought to headline every local economic development plan is not sexy. It doesn’t generate headlines. No consultant can trademark it. But it is the one strategy that is a sure winner, and it is a strategy that makes not just one city richer but all of America richer.
The strategy? Increase college attainment rates.
(I told you it wasn’t sexy.)
Here’s why it works. It turns out that 58 percent of any city’s success as measured by per capita income can be explained by the percentage of college graduates in its population. (And that’s conservative. Some economists calculate the impact at 80 percent.)
Why? Because every one percentage point increase in college attainment is associated with an increase of $763 in per capita income. That’s not just a result of moving a certain number of people over the four-year college finish line, but of shifting the entire education distribution curve forward.
Increasing college attainment rates isn’t easy. But it is easier than we think. It turns out that millions of Americans started college. They raised their hands and said, “I want to go to college.” They got in to college. They paid for classes. They earned college credits. They just didn’t finish.
And finishing is what counts.
Amazingly, even in this lousy economy, Americans with college degrees have an unemployment rate that is almost half the rate of those who attended but did not complete college. The median annual salary for a college graduate is $20,000 more a year than someone who started college but didn’t finish. So the financial impact finishing college has on families and on cities is significant.
That’s why CEOs for Cities, with the support of the Kresge Foundation and Lumina Foundation for Education, is launching a $1 million prize competition today to drive increased degree attainment in America’s major metro areas.
The Talent Dividend Prize will be awarded to the metropolitan area with the greatest increase in the number of post-secondary degrees granted per capita over a four-year period.
Even small gains in college attainment yield surprisingly big financial gains. In cities across the nation, just a one percentage point increase in residents with college degrees can yield increases in personal income that rival the local payrolls of the largest local non-government employer. This one percentage point is what CEOs for Cities calls the Talent Dividend.
In Chicago, achieving the Talent Dividend would result in a $7.2 billion annual increase in personal income. In Indianapolis, $1.3 billion. In Memphis, $1 billion.
Registration for the prize opens today and will close on May 1, 2011. The $1 million prize will be used to launch a national promotional campaign for the winning city.
The Talent Dividend Prize competition is open to all U.S. cities with a metropolitan population of 500,000, or the largest metropolitan area in a state based on 2009 American Community Survey data. Eligible cities can register at www.TalentDividendPrize.org.
The next time you see a proposal for how to fix the economic woes in your city, look for increasing college attainment to be at the top of the list.
Because if increasing college attainment is not at the top of your city’s economic development agenda, then your city doesn’t have an economic development agenda.