Does Career Technical Education Pay?

The Issue:

For the past half-century, the earnings of Americans with no more than a high-school education have stagnated or fallen. And, while workers with college degrees have consistently earned higher wages, a sizable share of students does not complete a college degree. These trends have been accompanied by an increased demand for a more skilled workforce with postsecondary training. Career technical education (CTE) programs are seen as part of the solution to workforce training needs. Do the vocational or career technical education programs at public community colleges provide an alternative path to higher earnings for people without four-year college degrees?

CTE programs offer an alternative to a four-year degree. Their impact on worker earnings depends on discipline, program length, and type of institution.

The Facts:

• Despite widespread increases in postsecondary participation, the fraction of Americans completing bachelor's degrees has not risen substantially in decades. The share of nineteen-year olds with any college experience increased from 27 percent to nearly 60 percent between those born in 1940 and those born in 1987. However, the proportion of students that completed a bachelor’s degree by age twenty-five only increased from 10 percent for those born in 1940 to 27 percent for those born in 1987. And the pattern of low college completion has continued. Thus, the proportion of students with some college experience who have completed their degrees has stayed at around 30 percent, even as the economic returns to a college education have generally risen.
• Vocational or career technical education (CTE) programs offer an alternative to a four-year degree, and completing these programs can address workforce training needs. Vocational and career technical programs train students for specific occupations in a broad range of fields such as police, prison officers, health care providers, or construction workers, among others. These programs can represent up to half of community college enrollments. Community colleges are more accessible and affordable than four-year colleges, which is especially important for students with limited means and time constraints. Consequently, a disproportionate number of older, lower-income, and first generation students opt for this type of post-secondary education. Technical programs also offer a way to meet the changing demands in the job market for particular skills. The number of students graduating with certificates and Associate degrees has grown 54 percent between academic years 2002–03 and 2012–13. (The number of students graduating with bachelor’s degrees increased by 36 percent over this period.)
• Does career technical education pay? Systematic information on the returns to specific CTE programs is rare. Our research studies whether completing a CTE program leads to higher earnings. This goes beyond the question of whether there is simply an association between having a CTE degree and higher earnings for the relevant population (that is, those without a four-year college degree) since the people who complete a CTE degree might, on average, have had a higher earnings than those without even if they had not earned a CTE degree. Our analysis is based on information from California, which has the largest community college system in the country, enrolling over 2.6 million students annually (about one-sixth of all community college students nationwide). We use individuals’ own earnings prior to CTE enrollment to estimate the path their earnings would have followed had they not enrolled in CTE. We find that completing a CTE program does, in fact, raise a person’s earnings. In general, there is a higher earnings effect with longer programs. Our results suggest that, on average, a CTE degree can increase earnings by approximately 14 percent for shorter-term certificates (representing 6 to 17 credits) to 45 percent for associate degrees (which require 60 or more credits). The returns net of tuition costs could also be substantial given that California Community Colleges’ tuition is approximately $600 per semester for full-time study, and many colleges waive these fees for low-income students.
• The estimated earnings effect varies substantially across disciplines. We estimate that a certificate in health care earned through taking 30-59 credits can raise a student’s earned income by nearly 50 percent, while the earnings effect of completing a public and protective services certificate with the same number of credits is 17 percent, and that for business is 11.5 percent. Part of the differences in earnings across types of certificates (as well as across college majors) may reflect differences in student characteristics across disciplines and programs. Attempts to assign or encourage students to enter higher-return fields must recognize the potential connection between student characteristics and preparation and those higher earnings. It is also true that, students may not choose programs based solely on anticipated higher earnings; for example applicants who are rejected from nursing associate degree programs do not necessarily enter programs like dental hygiene or radiologic technology even though these careers offer similar starting salaries, are easier to be admitted to, and are often offered at the same college (see here). 
• CTE degrees can provide important benefits to society, in addition to increasing the income of their graduates, by training people for jobs in which there are a shortage of workers. A key example of this is nursing, the most popular career in the California Community College system. The state awarded more than 5,500 associate degrees in nursing in the 2013-2014 period, representing a sixth of vocational associate’s degrees. But the demand for this degree exceeded that level, and public community colleges must often ration acceptances, sometimes through mechanisms such as lotteries. Given the high student demand for this type of program, the potential shortages of skilled healthcare workers in some states, and the social and private benefits of this type of program, why aren’t colleges expanding their nursing program capacity more aggressively? One reason may be that colleges receive funds based on overall enrollment, not on enrollment in specific programs. This, then, reduces the incentives for colleges to expand costly programs, such as nursing, or other technical fields.
• The returns to CTE programs taught at public community colleges differ from those to programs offered at for-profit institutions. A number of other studies of public community college CTE programs also show positive returns, though with variation by type or program and length of the degree. On the other hand, many private, for-profit schools also offer CTE programs that have not been found to increase earnings. Recent research on 2-year and shorter degrees within the for-profit sector finds little evidence of positive effects for typical enrollees.