Perry Wong lores
Perry Wong
Managing Director, Research
Asia and California and China and Energy and Human Capital and Regional Economics and Technology
Perry Wong is managing director of research at the Milken Institute. Wong is an expert on regional economics, development and econometric forecasting and specializes in analyzing the structure, industry mix, development and public policies of a regional economy.
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The California example proves paying for free community college would be a bargain

By: Perry Wong
January 27, 2015

In his State of the Union address, President Obama proposed making community college free. What he didn’t say was that his proposal is the best way to ensure poor people get a college education. We’ll look at the situation in California as an example that we believe applies nationwide. For many disadvantaged Californians, a free community college education may be their only shot at joining the middle class.

California’s community college system is the largest provider of higher-education in the nation: one in four U.S community college students attends a California community college. California also leads the nation in poverty. When income and cost-of-living are taken into account, California ranks first, with nearly a quarter of Californians living in poverty (8.9 million residents out of 38 million).

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Community colleges in California help train the most diverse and impoverished people to help them reach a living wage. Due to their socioeconomic status, most community college students are place-bound, and few are likely to have had the advantage of attending a charter or private school, instead attending public high schools. With nearly 60 percent of California’s K-12 students qualifying for free or reduced-priced lunches, it’s not surprising to learn that full-time students attending California community colleges earn about $16,000 annually, or that one in four take home less than $5,500 a year. Sixty percent of students in California community colleges are minorities, many of whom must overcome their limited exposure to the norms that help smooth entry into middle class employment.

Yet, for those who can afford it, community college is a good investment. Graduates with a two-year degree or certificate can see their wages increase by 86 percent.

Increasing educational attainment among California’s disadvantaged populations has become an economic necessity. California is the seventh largest economy in the world, yet faces a potential shortage of one million college degree and certificate holders that will be needed by 2025 to help sustain and drive growth. California community colleges are up to the task of addressing this achievement gap.

Not only are community colleges the largest providers of publicly-supported higher education in California, they are also the cheapest. With rising tuition costs at other state-supported schools, community colleges provide a cost-effective model with an ability to train students – often in partnership with local employers. In fact, community colleges are benefiting from the more than $500 million that has been made available in federal monies to strengthen their industry partnerships.

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Further, strengthening public-private partnerships can provide additional revenue streams in the future. The California Community Colleges Chancellor’s Office revealed that businesses in California see income and employee wages rise by $12 (with the accompanying tax revenue) for every dollar invested in a workforce development program at a community college, making the cost of subsidizing an education worth the investment.

President Obama said that no one can be certain which industries will create future jobs. One thing we can be sure of, however, is that the jobs in the 21st century that give workers of diverse backgrounds a shot at the middle class will require more formal education and experience. Strengthening and expanding the scope of community colleges in California makes sense. For the nearly 9 million Californians living in poverty, it’s their greatest shot at being ready.