Catalina D’Achiardi, Ph.D.
NCASI Research Consultant

For years, great attention has been given to the educational system and the impact it has on the economy. Issues such as student attrition, retention, the globalization of the world’s economy, and other similar issues have been the priority of many educators and policymakers. However, it appears that now more than ever, there is awareness of the fact that students and workers are in need of significant changes in the educational system if we want to prevent the country’s economy from sliding. These modifications in the educational system will require that students have better career planning skills and vocational education (New Commission on the Skills of the American Workforce, 2006). Moreover, some of the issues raised in the past such as retention and attrition, must also continue to be addressed if we want to continue to help students attain higher educational goals (this is particularly true for those students who are not college bound). The purpose of this article is twofold: 1) to provide readers with some background on the issues described in this brief introduction; and 2) to provide a couple examples about the impact that career planning can have on a state’s economy.

A National Initiative
In recent weeks the National Center for Education and the Economy (NCEE; 2006) released a report, Tough Choices or Tough Times, in which they take an “aggressive” stance in outlining recommendations regarding the skills that will be needed of the new American workforce. These recommendations describe the views of many, including educators, leaders in business, policymakers, and former secretaries of labor and education. In this report, it becomes transparent that there are education deficits we are facing which present some serious economic threats to the country. Mostly, these education deficits are in the skill-level of American workers and the age at which they transition into technical/community or four-year colleges, if they even make this transition. There is no doubt that a large number of students drop-out prior to transitioning into higher education and even those who do make the transition have difficulty, in large part, because of their lack of early career planning.

The positive side of this report is that it also provides a refreshing perspective on an educational reform. For example, the NCEE clearly articulates the ways in which we should be able to help students gain the skills and knowledge needed to compete with highly educated and younger workers from other countries who are willing to work for low wages. One suggestion has been to cut local property taxes in order to afford the implementation of a new reform. While the recommendations made in this report will not be outlined here in great detail (although I recommend it to all educators), it is worth citing because it provides a foundation for explaining the focus needed in career planning and workforce development.

Literature on Student Attrition and Retention
Student attrition and retention at all levels of the educational system have also been a problem for years, not only because of the low-skill level that these students attain by the time they enter the workforce, but because they too have a great impact on the states’ economies. These issues are pervasive across the country and no existing educational system or economy has been able to escape the impact they can have on communities.

An extensive body of research already exists on retention and attrition but much of it is descriptive in nature. However, a few of the empirical studies conducted have been able to identify the relationship between both of these issues and student characteristics or institutional traits. More specifically, intent to persist in school has been found to be mediated by other variables such as GPA, academic integration, faculty contact, encouragement from family and friends, and institutional commitment (e.g., Perry, Cabrera, & Vogt, 1999). Perhaps more relevant to our mission is the research that has emerged specific to the relationship that exists between the use of career counseling and other career planning resources on retention.

Most of the outcomes of these studies indicate that for those students who use these resources, there is a positive relationship between that use and their scholarly achievement/retention (e.g., Anderson, 2002; Garni, 1980; Noel, 1985). For example, Pantages and Creedon (1978) reviewed the literature on attrition studies between 1950 and 1975. They found that many of these studies described the use of career planning resources as helpful because they allowed students to have vocational goals which are connected with remaining in school, perhaps because they provide motivation. In fact, not having defined career goals has been one of the number one reasons for dropping out. Astin (1964) conducted a study of 6,660 high school students where 10.4% of them dropped-out. Results indicated that 62% of the males and 32% of females who dropped out said that the number one reason for leaving was being unsure about what to study. Even though this study is now outdated, some more recent publications have provided support for this finding (e.g., Anderson, 2002; Tinto, 1993).

Oliver & Spokane (1988) conducted a meta-analysis of 58 studies containing 7,311 participants that examined the effect of career planning and intervention. Most of the participants in these studies were either high school or college age students. One of the most important results of this study was that those students who had career planning and intervention were 47% more likely to persist in school than their counterparts. Moreover, they found that, on average, these career interventions had, on average, a medium (effect size of .40) to a large (effect size of .60) effect on students.

In summary, many studies in the research literature identify students with unclear, uncertain, or undecided educational and occupational goals as more prone to attrition. Even though it is impossible to isolate a single variable as responsible for explaining student persistence or attrition, we can be certain that the prolonged uncertainty about a student’s goal often leads the student to question the reasons for their presence in the educational institution. Career planning must take a more important role in education if students are to feel less uncertain and more secure about their educational and career outlook.

Economic Impact at the State Level
Iowa and Texas are two states which we have been researching and evaluating recently. Both of them are good examples to illustrate how the lack of change in the educational system and career planning can lead to a stagnant economy. Below is a summary of some of the research we have encountered.

Most of the challenges faced by the state of Iowa are very similar to those being faced by many other states across the country. For example, even though Iowa’s economy is growing and diversifying, and job growth is ubiquitous, it has uneven benefits for workers. Iowa’s workers are still working several jobs and longer hours to maintain their same lifestyle. This is, in part, because of the rapid changes in the state’s population: 1) currently, there are approximately 137,000 fewer Iowans under the age of 19 than there were in 1980; 2) about 9,500 students from Iowa colleges and universities annually leave the state upon graduation; 3) the average age of an Iowa farmer is 58; and, 4) 40% of the state’s workforce is comprised of John Deere workers, many of whom will be “retiring boomers” by the year 2010 (Swenson, 2006). It is anticipated that Iowa will be next to last in population growth among the upper Midwestern states after 2010 and employment needs by that same year will exceed the worker capacity. More specifically, Iowa has a projected attrition of 369,000 workers by 2010 and it also anticipates that there will be a growth of 12% in employment needs (i.e., about 567,000 workers will be needed by that year); however, the projected population growth for the state is only 115,000 workers. In addition, Iowa’s working-age population (i.e., ages 18 to 64 years old) is already employed at nearly full capacity (Siegelman, 2002). Low wages in Iowa is one of the reasons for the high rate of out-migration. The decline in population has prevented large industries from wanting to come to Iowa, which in turn, also leads to the absence of higher paying jobs. Moreover, the decline in the population, particularly that of young Iowans, is obviously leading to a quick and significant shortage of workers (Swenson, 2006; Siegelman, 2002).

So, how do these changes impact the state’s economy? The economy of the state will not lead to community stability unless the state is able to attract new industries, make Iowa more receptive to international migrants, make the state more attractive to its educated youth and to young families, and prepare students to make career transitions at an earlier age than in the past. The latter is crucial because attracting youth to remain in the state will not be sufficient. We must help them prepare to attain higher educational and career goals so they are employable by new and existing industries within the state. This is going to be a challenge because not many youth are trained to make smooth career transitions even in their early educational training. Most do not know enough about themselves and about the world of work.

Another good example is the state of Texas. Even though there is great vitality in the Texas economy because of the labor market’s job growth in combination with a decline in unemployment rates, this does not preclude Texas from also being a state at risk of future stagnation (Texas Workforce Commission Annual Report, 2006). The National trends described earlier by the NCEE and the literature on retention and attrition suggest that all must take action if workers are to compete in the 21st century workforce.

The Texas Comptroller released a special report in February 2005 in which she provided some support through her research regarding the remarkable return on every dollar spent on education. She described that “every dollar invested in the state’s higher education system returns more than $5.50 to the Texas economy.” It is not difficult to conclude based on this figure that if the state is able to increase the number of students that reach higher education goals, then the Texas economy should see a better return on its money. For example, it is explained in this report that in 2003, even just one year post graduation from a Texas higher education institution with a bachelor’s degree, the average internal rate of return for a male is of $21,846 and for a female is $12,422. Perhaps most interestingly, the Texas higher education system yielded an average gain of just over $27.3 billion dollars in 2003, but of this amount, $21.3 billion was gained by undergraduates (i.e., community college certificates, some college, or an associate’s degree). We suspect that if we go even a step further, it would be possible to produce the approximate dollar amount that is generated in the Texas economy by students who have only attained their high school diploma.

So, what would be the economic impact if we helped to get just one more student through high school and help them with the transition into higher education? The Texas Comptroller also provides us with a sense of the dollar amount that just one student’s revenue would have on the economy of the state. She explains that the net productivity gain per student prior to graduating from higher education (but post-high school degree) is $3,500 per year. However, persistence in school obviously leads to increase educational and income gains. The latter gains rise throughout the years with inflation, which is assumed to be 3% annually. If we consider that the Texas workforce is presently of 490,000, then working students that are taught by higher education institutions within the state will yield a net gain of $18.9 billion dollars in the Texas economy (Office of the Comptroller Special Report, 2005).

A Hypothetical Example
At NCASI, we wanted to know what the real economic impact would be on a state’s economy if we could help decrease attrition rates by 10% at the high school level. Moreover, we wanted to know what would be the impact if we helped those students make a transition into higher education. The National Center on Educational Statistics (NCES) publishes a report every year of national trends in education and labor markets. This report highlights the relationship between educational attainment and income. Both of the Tables below reflect real national statistics and average annual incomes; however, for the purpose of this illustration we assumed a sample of 1,000 students.

Table 1, below, describes the total annual income earnings generated by a sample of 1,000 students. On average, across the nation we have a 35% dropout rate at the high school level. Using the sample described above this would mean that approximately 350 of the 1000 students do not complete their high school education. The average annual income that a student who drops from high school generates is approximately $19,364.80 ($6,777,680.00 total for 350 students). Obviously, the other 650 (65%) students who do graduate from high school have to make decisions of whether to pursue more education or enter the workforce. From this 65% of students, approximately 36% (234) of students do not go to college and the other 64% (416) do go on to pursue some advanced education. The average annual income for a student who has a high school degree but no other education is approximately $29,185.00 ($6,829,290.00 total for the 234 students). The average annual income for a student who has a high school degree and pursues some higher education but does not complete a degree is approximately $35,068.80 annually. The latter is true for approximately 53% (220) of the students yielding a total annual income of $7,731,969.02. About 33% (51) of students who go on to community colleges do complete a degree or certification. These students earn an average annual income of $35,590.00; meaning that these 51 students yield a total earning amount of $1,807,744.22. Finally, about 55% (144) of students who go on to four-year colleges do complete a bachelor’s degree. The latter generates a total income earning of $7,654,478.83. If we add the total annual income amounts generated by these 1,000 students at different levels of educational attainment, the total income earning amount is approximately $30.8 million a year.

Table 2, below, was developed to demonstrate the potential economic impact that the Kuder Career Planning System can have on the state if we are able to help decrease 3% of the dropout rate at the high school level and help that 3% in making the transition into higher education. This hypothetical 3% is based on the sample of 1,000 students, meaning that we could potentially help retain 11 out of the 350 students who dropout. Moreover, we also suggest that by helping some of these students make the transition into higher education, we may also increase the number of students who get some college education even if they do not go on to complete their degrees (hence the 3% improvement rate under the subheading “some college”. As results of Table 2 indicate, this small difference in a sample of 1,000 students would yield a 4% increase in total earnings (approximately $1.1 million dollars). Please refer to this table for specific figures.

Acknowledgements
Phil Harrington, Len Harrington, Angie Overton, Bethney Larson, Breanna Wetzler, and Larry Murphy contributed many ideas and research resources for this article. Their help was greatly appreciated.

References
Anderson, T.B. (2002). The effects of career counseling and its process on retention. An unpublished Dissertation from Southern Illinois University—Carbondale.

Astin, A.W. (1964). Personal and environmental factors associated with college dropouts among high aptitude students. Journal of Educational Psychology, 55, 219-227.

Astin. A.W. (1973). Student persistence: Some stay, some don’t—Why? College and University, 48, 298-306.

Garni, K.F. (1980). Counseling centers and student retention: Why the failures? Where the successes? Journal of College Student Personnel, 21, 223-228.

Holland, J.L. (1996). Integrating career theory and practice: The current situation and some potential remedies. In M.L. Savickas and W.B. Walsh (Eds.), Handbook of Career Counseling Theory and Practice (pp. 1-11). Palo Alto, CA: Davies-Black.

Noel, L. (1985). Increasing student retention: New challenges and potential. In L. Noel, R. Levitz, D. Saluri, & Associates, Increasing student retention (pp. 1-27). San Francisco: Jossey-Bass.

Oliver , L.W., & Spokane, A.R. ( 1988 ). Career-intervention outcome: What contributes to client gain? Journal of Counseling Psychology, 35, 447-462.

Pantages, T.J., & Creedon, C.F. (1978). Studies of attrition: 1950-1975. Review of Educational Research, 48, 49-101.

Perry, S.R., Cabrera, A.F., & Vogt, W.P. (1999). Career maturity and student persistence. Journal of College Student Retention, 1, 41-58.

Siegelman, H. (2002 ). A lesson to Iowa legislators from Alice in Wonderland. Unpublished manuscript.

Swenson, D. ( 2006 ). The changing Iowa Economy and Its Challenges. Unpublished manuscript.

Tinto, V. (1993). Leaving college: Rethinking the causes and cures of student attrition (2nd Ed.). Chicago: The University of Chicago Press.

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