Education Gaps Pose Looming Crisis for U.S. Economy

The fastest-growing segment of the workforce is also the least educated. That's a problem as employers struggle to fill high-skill jobs.


Fewer working-age African-Americans than whites hold four-year college degrees in all but one of the nation's 150 largest metropolitan areas, according to a new Next America analysis of data from the massive National Equity Atlas.

Likewise, the share of working-age Hispanic adults holding four-year college degrees lags behind the percentage of whites, often by enormous margins, in all but one of those 150 communities, the analysis found.

In each case, the sole exception was in a community with a very small proportion of minority adults. African-Americans exceed whites in college completion only in Fayetteville, Arkansas, where less than 2 percent of the total population is black. Hispanics exceed whites in college completion only in Pittsburgh, where Hispanics represent just 1.3 percent of the population. In most cities with large African-American and Hispanic populations, adults from those groups trail working-age whites in college completion by at least a double-digit margin.

These pervasive and persistent disparities underscore the growing challenge that increasing racial diversity will present for the workforce in the years ahead. Multiple studies project that through 2030, racial and ethnic minorities will account for all of the net growth in the working age population. Not only the share, but also the absolute number, of working-age whites is expected to decline over that period.

If African-American and Hispanic workers continue to lag so far behind white educational-achievement levels, even as those minorities comprise an increasing proportion of the overall workforce, employers may find it increasingly difficult to recruit the high-skill workers that many say they are already struggling to identify. "The problem is that, in the past, we could get away with low-attainment rates among minority populations given the demographic breakdown of the country," says Richard Kahlenberg, a senior fellow at The Century Foundation who studies education. "But as minorities become the majority, it no longer becomes sustainable to have these low-attainment rates."

One especially troubling trend is that African-Americans and Hispanics lag particularly far behind whites in college completion in many of the cities that are thriving the most as the economy continues to recover. The 10 metropolitan areas with the widest black-white gaps in college-attainment levels include such affluent communities as Bridgeport, Connecticut; San Francisco; Trenton, New Jersey; Washington, D.C.; Austin, Texas; New York; Ann Arbor, Michigan; and Boston. Each of those areas (except Austin) rank among the 30 communities with the highest median incomes; yet in each, the share of African-Americans holding a four-year degree or more trails the percentage of whites by at least 25 percentage points. "It is clear that growth alone does not solve these issues, and we really need to look at structural issues," says Sarah Treuhaft, director of Equitable Growth Initiatives at PolicyLink, an Oakland-based research group that provided data for the analysis.

This Next America analysis of metropolitan educational trends draws on data compiled by the National Equity Atlas. The Atlas is a joint project of PolicyLink and the University of Southern California's Program for Environmental and Regional Equity, or PERE. Using Census and other government data, the Atlas provides a detailed portrait of demographic, educational, and income trends in the nation's largest metropolitan areas.

For this analysis, PolicyLink and PERE provided Next America data on the 150 biggest metropolitan areas; the education data is drawn from the averaged results from 2008-2012 of the Census Bureau's American Community Survey. In a series of stories over the next two weeks, Next America will explore in greater detail the skill and education gaps between whites and minorities in the workforce. In the coming months, Next America will report extensively on public and private efforts to close those gaps, and the broad implications of growing diversity for the nation's workforce.

Underscoring the national breadth of this challenge, the gaps in college attainment between whites on the one hand, and African-Americans and Hispanics on the other, persist in cities of all sizes and in all regions of the country. While many of the widest gaps exist in cities that are doing well, the disparities endure in communities all across the economic spectrum, from San Francisco to Salinas, California, and from Austin to Akron, Ohio.

Huge gaps are present in the largest metropolitan areas like New York City (where 50 percent of adult whites, compared with 24 percent of African-Americans and 17 percent of Latinos, hold college degrees), Los Angeles (where the numbers are 49, 25, and 11), and Chicago (46, 21, and 13). Minorities also trail whites in much smaller places like Reading, Pennsylvania; Wichita, Kansas; and Albuquerque, New Mexico. Big disparities define Sunbelt metropolitan areas rapidly adding jobs and population, such as Houston (where 41 percent of whites but only 24 percent of African-Americans and 12 percent of Hispanics hold college degrees) and Denver (where the numbers are 49, 25 and 13). But the differences are deep as well in more weathered Rust Belt cities like Milwaukee (where 40 percent of whites, 14 percent of African Americans, and only 11 percent of Hispanics hold at least a four-year degree) and Philadelphia (where the numbers are 41, 18, and 16).

In many cases, the gaps are smallest only in cities that are struggling to attract and hold college graduates of any race: Of the 67 metro areas with the smallest disparities between white and black college-completion levels, about three-fourths rank in the bottom half of college attainment among adult whites. These include places synonymous with postindustrial decline like Flint, Michigan; Youngstown, Ohio; and Allentown, Pennsylvania.

Probably the best news in this city-by-city comparison of the adult workforce is the clear signs of progress for minorities in high school achievement. The gap in attainment between adult whites and African-Americans is much lower at the high school level than the college level. Though wider differences remain with Hispanics, the picture for them also looks brighter than at the post-secondary level.

Across the 150 largest metro areas, the share of adult African-Americans holding at least a high school degree trails the portion of whites by more than 20 percentage points only in Naples, Florida (where the gap is 29 points). Blacks trail whites in high school completion by between 10-20 percentage points in another 27 communities (including Miami, Minneapolis, and Milwaukee). But the gap is a less-imposing 5-10 percentage points in 72 cities, including many of the nation's largest, such as New York, Chicago, Los Angeles, and Denver; in 39 more cities, including Houston, Dallas, Atlanta, and Phoenix, the gap is fewer than five percentage points. African-Americans exceed whites in three—Fayetteville, Arkansas; Honolulu, Hawaii; and Modesto, California. (Though all three have very small black populations.)

Hispanics haven't matched those gains. Looking at all adult Hispanics, the share holding a high school degree trails the proportion of whites by at least 20 percentage points in fully 111 communities. But those figures include Hispanic immigrants, both legal and undocumented, many of whom arrive with low educational levels that depress the overall average.

Among native-born Hispanics, the gaps aren't quite as daunting, though they remain troubling. High school completion among native-born Hispanic adults trails the level among whites by at least 20 points in 12 of these top metropolitan areas (including Des Moines and Philadelphia); and by between 10-20 percentage points in another 56, including many of the large Sunbelt cities where Hispanics have clustered, including Houston, Dallas, San Antonio, Phoenix, Las Vegas, and Los Angeles. In 72 other metropolitan areas, the gap between native-born Latinos and whites in high school achievement stands within single digits; native-born Latinos exceed white high school education levels only in Fayetteville, North Carolina.

Eric Rodriguez, vice-president for research, advocacy, and legislation at the National Council of La Raza, says those findings track with national data showing rising high school graduation rates for Hispanics. "If you look at anything longitudinal, you would see some improvements over time for Latino kids in high school completion and college entrance, but you continue to see huge problems in college completion," Rodriguez says. "A higher share of Latinos are getting into college. The issues are the quality of the education they are receiving at the high school level, because there continues to be a need for remedial education for a lot of kids. You are seeing college-going and college experience on the rise, but college completion continuing to be a huge challenge for the Latino community."

And indeed, it is at the level of college completion that the gaps among working-age whites, African-Americans, and Latinos widen into a chasm.

While the share of working-age African-Americans who have completed high school trailed the shares of whites by more than 20 percentage points in only a single metropolitan area, blacks trail whites in four-year college completion by that much in 38 of the 150 largest communities. The racial gap in college completion ranges from 10-20 percentage points in another 83 communities (triple the number with such a racial gap in high school completion). The share of African-Americans holding college degrees trails the percentage of whites by fewer than double-digits only in 20 communities and exceeds them just in that one: Fayetteville, Arkansas, home of the University of Arkansas.

The picture is even bleaker among the Hispanic population. Adult Hispanics trail whites in college completion by at least 20 percentage points in 74 metropolitan areas, and by 10-20 points in another 56. Only in 19 cities do Hispanics trail whites in college attainment by fewer than 10 percentage points; they lead them, as noted above, only in Pittsburgh, which in recent years has had great success in recruiting high-skilled immigrants. While native-born Hispanics perform significantly better, they still trail whites in college attainment by at least 20 percentage points in 42 metropolitan areas, and by between 10 and 20 points in 59 more.

"The nature of the problem has changed," says Kahlenberg. "We have done a fairly good job of getting students from various demographic groups through high school, and we are actually doing a pretty good job of [advancing] more students into college. It's that once they get into college, there are massive drop-out rates. That's where we are losing the most students—not in high school, not in the transition to college, but once they enter college."

These widespread disparities present employers and public officials with two distinct workforce challenges, perhaps best summarized as problems of today and tomorrow.

The today problem is finding ways to improve the skills of the workers already in the workforce who have limited formal education. The good news, says Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce, is that U.S. business does a better job of upgrading the skills of workers on the job than is commonly recognized. "We do a lot more than people think we can do, because people don't get focused on learning on the job," he says. "One of the things that people forget when we talk about education [is that] the big university is in the workplace.

The bad news, Carnevale continues, is that such training often works more to exacerbate than to narrow these racial disparities, because companies tend to spend the most to upgrade the workers who arrive with the most education and skills in the first place. With the exception of a few blue-collar fields that require advanced technical aptitude, Carnevale says, companies now direct their training budgets more toward high-skill employees who can advance innovation rather than toward workers with limited education, like the assembly-line members who auto companies once molded into skilled and valued employees. "You've got to get some post-secondary to get into the game [inside most companies]," he says. "That old model is gone where you trained low-skill workers over long periods of time. Now you train high-skill workers, and not necessarily [even them] over long periods of time."

The tomorrow problem is that the supply of future workers is tilting increasingly toward the groups on the short end of today's educational disparities. That could further tighten the squeeze on employers already complaining about finding enough high-skill employees. The Census Bureau has projected that minorities will constitute a majority of the under-18 population nationwide by 2018. Brookings Institution demographer William Frey has calculated that if college completion rates among Hispanics and African-Americans don't increase, the share of all adult Americans holding college degrees may start to decline around 2020—for the first time in at least decades, and perhaps ever.

Concerns about the skill levels of both the current and future workforce are central to the longstanding debates about education reform at all levels. But those worries are especially sharpening the debate over how to improve the performance of community colleges, potentially a key mechanism both for upgrading the skills of mid-career workers and providing a bridge to higher education for many low-income young people. "If you combine the achievement gap with the demographic changes, that is not a recipe for success economically if something doesn't shift," says Cecilia Munoz, the chief domestic policy adviser to President Obama.

Obama's response includes his recently proposed community-college reforms, which would allow many students to attend tuition-free and would also pressure institutions to improve completion rates. "With community colleges, we want to make sure we are providing them incentives not just to enroll students but to help students finish," Munoz says.

Often in tandem with Obama's "Promise Neighborhoods" initiative, more cities are also examining "cradle-to-career" programs that attempt to connect more low-income families with educational and career opportunities at every stage of development. "Cradle-to-career is a new wave of thinking that says, if you want a pathway into the middle class in some of the most distressed communities, that pathway has to be a seamless system of support from the time a child is conceived," says Michael McAfee, a senior director at PolicyLink. "When we look at these [distressed] places, families are not delusional about the heavy lift it is if you are not prepared [with education]. But we are excited by what we are seeing in many of these communities."

Still, these persistent educational gaps have left many major cities facing a glum equation: Even when they generate overall economic growth, those new jobs often do disappointingly little to lift their most impoverished neighborhoods, because the people living there are not equipped with the skills to compete for employment. In a recent PolicyLink analysis of the fast-growing San Francisco Bay area, for instance, "we looked at dozens of indicators of inequities by race and income and what really stood out in that data is how many gaps there are in an economy that is booming," notes Treuhaft.

Such disparities haven't held back growing cities, because their vibrancy is attracting large numbers of college graduates from elsewhere. Those places "are masking a lot of their problems with the importation of highly skilled labor," says Manuel Pastor, director of the PERE program at USC.

But the gulf between reviving urban cores and isolated neighborhoods of concentrated poverty has contributed to the political and social turbulence that has manifested in everything from the populist upheavals in the most recent mayoral elections in New York and Chicago, to the violent street protests in Baltimore. Economically, socially, and politically, these disparate events suggest that such uneven patterns of growth may increasingly destabilize even cities where the overall tide is rising.

"When these students who are very poor and largely black and brown are lagging behind, it's detrimental for them, but also for everyone else," says Dr. Ruth N. López Turley, who directs the Houston Education Research Consortium (HERC), a partnership between Rice University and the Houston Independent School district to close educational-attainment gaps. "We have these large gaps that have to be addressed or else this is going to be really bad for all of us. Sometimes people are tempted to think, 'It's too bad for them.' Well, yes. But it's also too bad for all of us."

Andrew McGill and Stephanie Stamm contributed to this article