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Education Never Goes Out of Style :: September 26, 2013 :: Federal Reserve Bank of Cleveland home | news & media | careers | site map FEDERAL RESERVE BANK OJ CLEVELAND A bout U Tours For the Public News & Media Com munit y D e velopm ent S tream ing Media Forefront M agazine Speakers Bureau I Our IRegion I Research I Ban kin g I Learning Centter Savings Bonds _________________ Home > For the Public > News and Media > Speeches > 2013 > Education Never Goes Out of Style D _ SH RRE ^ f ... Education Never Goes Out of Style Additional Information Sandra Pianalto I can’t tell you how thrilled I am to be here today. It is a treat to be able to speak before an audience dedicated to a cause that I personally hold so dear. College Now plays a crucial role in providing guidance and access to funds that help Cleveland-area students pursue educational opportunities. And if there is a consistent message I have been emphasizing during my 10 years as president of the Cleveland Federal Reserve, it is that education is the key to successboth for individuals and for regions. P resident and CEO, Federal Reserve Bank o f Cleveland College Now Greater Cleveland Bag Lady Luncheon Cleveland, OH September 26, 2013 I was asked to share a few observations about the role education plays in our region’s economy. Let me cut to the chase. We have a problem in Greater Cleveland. Not enough of our residents have a college degree. I know you understand that—you would not be at a College Now event otherwise. But I want to illustrate the gravity of the problem in crystal clear terms. Only about one in four adults in Cleveland has a college degree. That puts us in the bottom half of America’s largest 100 cities. Our state also has plenty of room for improvement. Right now, Ohio ranks 39th out of the 50 states in adults with a college degree. For individuals, the benefits of education are straightforward: higher pay and better job prospects. College graduates earn more than those with high school diplomas. In fact, they earn about a million dollars more on average over their careers. College graduates are also about half as likely to be unemployed as those with just a high school degree. They tend to be healthier and more involved in civic activities, making them stronger assets to their communities. If a city lacks educated young people, it will be a challenge for it to prosper. There is an overwhelming amount of research that demonstrates the importance of educational attainment in helping cities grow and thrive. Some of that research was performed by my staff at the Federal Reserve Bank of Cleveland. Economists in my Bank have done extensive research on how education affects communities. We looked at the 50 states over a 75year period, and throughout that entire period two factors stood out as the most important for driving income growth: education and innovation. And since innovation rarely happens without education, those two factors really go hand in hand. That has been true for 75 years. And there is mounting evidence that education and innovation are going to play an even more important role in the future. So what our research basically says is that if we want to improve our region’s economy, if we want people here to have higher incomes, we need to improve the educational attainment of our citizens, especially our http://www.clevelandfed.org/For_the_Public/News_and_Media/Speeches/2013/Pianalto_20130926.cfm[4/29/2014 1:17:32 PM] Education Never Goes Out o f Style :: September 26, 2013 :: Federal Reserve Bank of Cleveland young people. Just 20 years ago, this country had one knowledge job for every one manufacturing job. A knowledge job is one that relies on human capital, innovation, and ideas. Manufacturing jobs produce physical goods in a plant. Today, there are 2.5 knowledge jobs for every one manufacturing job in this country. That is just an extraordinary shift, and it suggests to me that we need to do more to help our region’s students compete and prepare for knowledge jobs. Helping students prepare for knowledge jobs would also benefit our region. Places with a higher concentration of knowledge jobs than the national average of 2.5, which we call “brain hubs.” are seeing the largest increases in jobs and incomes. Pittsburgh, a city which is also in my District, was once a steel manufacturing center, and is now on the brain hub bandwagon--it has 2.9 knowledge jobs for every manufacturing job, more than the national average. But Cleveland lags the national average; we have only 1.8 knowledge jobs per manufacturing job. We have to continue to work on transforming our region into a brain hub because the bottom line is that if we want to grow, we need more knowledge jobs. We need to become a brain hub. And I am optimistic that Cleveland can become a brain hub. We have the tools to get there: Access to colleges and universities is a trait that most brain hub cities have in common. Conveniently, the Cleveland area has many outstanding public and private educational institutions. Generating a more educated workforce can create a virtuous circle of growth. Over time, regions that develop educated labor pools also attract employers looking for skilled workers. Simultaneously, highly skilled workers will flock to these areas where the jobs are. So to improve our own region’s economic outlook and prosperity, we must reinvent ourselves. To do that, we need to help more young people acquire the skills and education required to flourish in today’s economy. At the risk of preaching to the choir, I want to point out some of the concrete steps we can take to expand educational attainment levels here in Cleveland. The first is helping students pay for college. I w on’t spend too much time on this area, since that is one of College Now’s main goals. Everybody knows that tuition at both public and private institutions has risen dramatically in recent years, and such a heavy financial burden is especially challenging for low- and even middle-income families. Financial aid is wonderful when it’s available, but signing up can be a confusing process. Aid packages differ widely, making it hard to compare costs between schools in an apples-to-apples way. Our region’s students and families deserve financial aid system that is easier to understand and access. Another area where we could do better is with programs that help high school graduates earn certificates through training so they can smoothly transition to the workforce. I hear from manufacturers all the time that in today’s high-tech factory environment, a high school degree no longer cuts it. But a four-year degree may not be essential, either. The training recent high school graduates need can come in the form of certificate-type programs that equip workers with the skills necessary to handle sophisticated machinery—and earn a wage sufficient to support a family. Our community colleges are making great strides in this area. And everything I have been hearing from manufacturers tells me that the demand for such programs will only grow. Let’s look for more opportunities to support these training programs. http://www.clevelandfed.org/For_the_Public/News_and_Media/Speeches/2013/Pianalto_20130926.cfm[4/29/2014 1:17:32 PM] Education Never Goes Out of Style :: September 26, 2013 :: Federal Reserve Bank of Cleveland I also want to put a plug in for support of early childhood education. Economists have found that children enrolled in pre-kindergarten programs are more likely to graduate high school, get a job, and pay taxes. Early childhood development iseconomic development, and it is economic development with a very high public return. Taking these steps to improve educational attainment is easier said than done. And it is especially difficult when cultural barriers to higher education exist. Consider this: Nationally, one survey found that about 80 percent of students whose parents have a college degree enroll in college immediately after they graduate high school. But for those whose parents did not attend college, the percentage drops dramatically to about 50 percent. Other recent surveys have found gaps just as large. That is a cultural problem—too many kids grow up not knowing about the opportunities that college can afford them. These statistics make it clear that we have a big challenge on our hands in Greater Cleveland because the majority of the region’s parents are not college graduates. That means that without some type of intervention, their children are unlikely to attend college, and this cycle is likely to continue. But I am here to tell you that the cycle can be broken. In fact, I am the poster child for first-generation college students. My parents had the opportunity to attend school only through the fifth grade in Italy. They moved our family from Italy to Akron when I was 5 years old because they knew that their children would have better educational opportunities in America. Even then, it was not a given that I would go to college—good Italian girls at that time often did not earn much more than a high school degree, and they certainly did not move away from home at age 18 to go to college! But I was fortunate to have support from my family and I had the University of Akron in my backyard. I enrolled right after high school, majored in economics, and never looked back. So cultural barriers to higher education don’t scare me, but I realize they are very real. I think our approach should be to instill positive ideas about college in our children from an early age. I think about my nieces and nephews and how from the time they were in kindergarten, their parents started talking to them about college. It was just assumed that they would go! Today, I have a niece who is a Clemson Tiger, a nephew who is a Dayton Flyer, and another niece who is following in my footsteps as an Akron Zip! The remaining seven are still deciding which college to attend, and our family has fun learning about and talking about different colleges. But that is just not the experience for so many children in inner-city Cleveland. Cultural change definitely starts at home. It did in mine. But institutions can play a role, too. In a new program, students who graduate from Akron Public Schools with a 3.0 GPA or who meet other academic requirements can receive scholarships to the University of Akron.1 The University of Pittsburgh’s medical center, UPMC, is doing something similar with its Promise program to subsidize college tuition for Pittsburgh city students.2 These institutional-level steps eventually trickle down to the household level. Parents come to understand that their children will have opportunities if they are ready for them. It can become part of the cultural fabric for families of all socioeconomic backgrounds to talk to their kids about going to college beginning in early childhood. Let’s help foster this cycle by seeking more institutional arrangements that can change our cultural attitudes about college. I am talking about helping to steer kids down the right path, and informing them of the possibilities, from the time they are toddlers http://www.clevelandfed.org/For_the_Public/News_and_Media/Speeches/2013/Pianalto_20130926.cfm[4/29/2014 1:17:32 PM] Education Never Goes Out of Style :: September 26, 2013 :: Federal Reserve Bank of Cleveland until they are teenagers. Over time, that is the way we can best prepare our young people for college, and over time, that is the way we will build a more diverse, innovative workforce, right here in Northeast Ohio. I would like to close on a somewhat personal note. I plan to retire as president and CEO of the Federal Reserve Bank of Cleveland early next year. Among other factors, I have decided that I would like to devote more time to my civic and non-profit activities here in the region. I am especially looking forward to doing more work with College Now and focusing on improving the educational attainment of the residents of Northeast Ohio. As I have noted, I have been extremely fortunate in my upbringing and in my career. I have been afforded so many opportunities and encouragement from so many people. I do not take any of them for granted. I would not be up here today without the help of countless others, which is why it is so important to me to stay involved in the community. Federal Reserve Chairman Ben Bernanke perfectly captured my feelings on this topic in a recent speech to Princeton’s graduating class: He said that those of us who have been luckiest in health, careers, and family support—and I’ll quote him directly here--“have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others.” You would not be here today if you did not agree with that sentiment. Whether you are volunteering in the classroom, donating your time to a school fundraiser, or even purposely overpaying for a great handbag today—you are doing your part. College Now as an organization would not exist if not for efforts like these, large and small. These contributions add up. Education is an investment in human capital that ultimately makes our region’s workforce more valuable in the highly competitive global economy. It is one of the most effective ways to better ourselves, and our neighborhoods. But there are no quick fixes. It is relatively easy to identify gaps in our region’s education strategies; the difficulty lies in developing and implementing solutions that will be far-reaching and long-lasting. Tackling these issues will take extraordinary commitment, patience, and endurance. I hope you will join me on the front lines. Know that the objective of helping students prepare for and graduate from college is not only admirable, but essential. Higher educational attainment offers both financial and social benefits. It can change people’s lives and the direction of entire communities—both today and in future generations. It certainly changed my life. 1. UA deal will generate $13.5 million in scholarships for APS students. 2. The Pittsburgh Promise Careers | Diversity | Privacy | Terms of Use | Contact Us | Feedback | RSS Feeds http://www.clevelandfed.org/For_the_Public/News_and_Media/Speeches/2013/Pianalto_20130926.cfm[4/29/2014 1:17:32 PM]
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