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 by Kevin Jack, Deputy Director
In 2004, then-Federal Reserve Chair Alan Greenspan noted that “our system of higher education bears an important responsibility for ensuring that our workforce is prepared for the demands of economic change.” Chairman Greenspan went on to observe that America’s colleges and universities “serve the practical needs of the economy by teaching and training, and more significantly, by unleashing the creative thinking that moves our economy forward.”
Here, we look at the multiple roles played by institutions of higher learning in the overall economy. We also consider the potential impact of the “enrollment cliff”—a steep drop-off in the number of college-age students expected to hit our nation in the middle of this decade—which some analysts believe poses a serious threat to the survival of some colleges and universities.
Economic Roles of Higher Education
One defining characteristic of colleges and universities that makes them particularly appealing to many regions is that their economic outlook is much more closely aligned with changing demographics than with business cycle fluctuations. In effect, higher education helps to diversify a regional economy, much like adding bonds to an investment portfolio consisting only of stocks.
Economists at the Brookings Institution found that our nation’s colleges and universities are an important source of three key inputs: talent, entrepreneurship, and research and development. Together, these key inputs help to fuel prosperity in the regions that surround those universities. Clearly, institutions of higher learning play an important role in workforce development and in the broader economy.
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Anchor Institutions
Analysts at the Federal Reserve Bank of Philadelphia (FRB-P) identified universities (and hospitals) as “anchor institutions” in regional economies. FRB-P staff note that, unlike company headquarters or factories that may move in order to reduce costs, these anchor institutions are strongly connected to their local area via a combination of real estate, infrastructure, and human capital.
Another important characteristic of anchor institutions is that they tend to not only employ large numbers of workers, but also tend to be less vulnerable to recessions. As a result, anchor institutions help to stabilize regional economies. The FRB-P analysts also believe that many anchor institutions are resource- and knowledge-rich, and, as a result, have the potential to drive significant growth and innovation in their home regions.
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One significant trend driving rising employment at colleges and universities over the past few decades has been the fact that people and employers have demanded higher levels of post-secondary education. According to the American Community Survey, the number of New Yorkers aged 25 years and up with at least a bachelor's degree increased by more than 2.15 million, or 62.6%, between 2000 and 2021. As a result, the share of New Yorkers aged 25 years and up with at least a bachelor's degree also climbed over this timeframe, from 27.4% in 2000 to 39.9% in 2021.
The increase in educational attainment over the past two decades followed a rapid expansion on our nation’s college campuses due to a large influx of Baby Boomers (those born 1946-64). Undergraduate college enrollment in the U.S. increased by 45% in 1945-60, and then doubled again by 1970. Boosting this rapid increase was the passage of the 1958 National Defense Education Act, which provided the first federally funded grants and subsidized loans for college students. Later, the 1965 Higher Education Act expanded need-based grants and loans and created the work-study program for lower-income students.
New York State
Data from the Quarterly Census of Employment and Wages (QCEW) indicate that institutions of higher learning continue to help anchor the New York State economy. Preliminary QCEW data show that, in 2022, higher education (public and private) in New York State—consisting of Junior Colleges (NAICS 6112) and Colleges, Universities, and Professional Schools (NAICS 6113)— employed just under 300,000 workers and paid out more than $25 billion in total wages.
The QCEW data also demonstrate that higher education has enjoyed tremendous employment and wage growth over the past two decades. Between 2000 and 2022, statewide employment in higher education increased by 30% and increased every single year, except in 2020 and 2021 (due to the pandemic). Similarly, total wages paid in higher education grew by 171% in 2000-22 with no over-the-year declines. Gains in higher education employment and wages have helped to at least partially offset job losses due to factory shutdowns.
Employment growth in higher education has important ripple effects in the New York economy. Data from Lightcast, a data analytics firm, indicate that higher education has an employment multiplier of 1.71 in the state. This means that for every 100 jobs added in the state’s higher education sector, an additional 71 spin-off jobs are created in other industries across the state.
Higher education is also an important source of employment in many of the state’s labor market regions. In general, colleges and universities account for a higher share of jobs in the Upstate labor market regions than in the Downstate areas. The regions where higher education has the greatest share of total employment are: Southern Tier, 8.0%; Central New York, 6.2%; and Finger Lakes, 5.0%. In contrast, regions with the smallest share of employment in higher education are both Downstate—Long Island (2.1%) and Hudson Valley (2.3%). In 2000-22, higher education's share of total employment increased in 9 of the 10 labor market regions in the state, while it was flat in the tenth region, Long Island.
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Falling Off the Enrollment Cliff
Economist Nathan Grawe of Carleton College analyzed birthrates during the Great Recession and found that the number of children born in the U.S. between 2008 and 2011 dropped dramatically. According to Grawe, between 2025 and 2029, the number of 18-year-olds in the U.S. is expected to decrease by 15%. As a result, American colleges will lose approximately 576,000 students.
U.S. colleges face other challenges. For example, many high schoolers are now questioning the value of a four-year college degree, as not every job of the future requires one. In addition, many potential college students are reluctant to take out loans to pay for college as the total inflation-adjusted price to attend a four-year college in the U.S.—including tuition, fees, and room and board—almost tripled from $10,231 in 1980 to $28,775 in 2019-20, per the National Center for Education Statistics.
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With fewer births and the factors outlined above contributing to a looming drop-off in college enrollments, many institutions of higher learning have been forced to innovate in order to become more competitive and to attract new students. As a result, some colleges are expected to increase their marketing efforts, which will likely emphasize skills over credentials. Other colleges may add new academic programs in high-demand fields, such as business, information technology, and healthcare. Other institutions, especially community colleges, will likely increase their focus on vocational training, work ready certificates, and education in the trades to attract new students.
Conclusion
Colleges and universities play key roles in many regional economies as anchor institutions. Over the long term, job growth in higher education has helped to offset employment losses in manufacturing. However, a decline in birthrates starting about the time of the Great Recession of 2008-09 means that many colleges and universities will need to establish innovative programs in order to retain and attract students.
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  by Shital Patel, Labor Market Analyst, Long Island
“Women are a vital part of Long Island’s workforce, and their earnings are essential to family economic security.”
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Women on Long Island play an important role in the workforce but continue to face persistent disparities and inequities that prevent them from reaching their full potential. The COVID-19 pandemic, which sent shock waves through the U.S. economy and labor market, brought increased attention to the role of women in the workforce. Overall, Long Island lost nearly 320,000 jobs between February and April 2020, and the region’s unemployment rate peaked at 18.4% in April 2020. However, women were disproportionately affected when much of the economy shut down. The sudden closing of schools and child care centers left many women with no choice but to leave their jobs to take care of their children.
This expectation for women to perform the majority of child care, due to long-standing gender inequities and social norms, brought renewed focus on the “motherhood penalty”—where women’s pay decreases once they become mothers—and the gender wage gap. Women that live on Long Island who work full-time are paid just 81.2 cents to every dollar earned by men. This difference has profound implications for women’s economic security.
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Labor Force Participation
Women’s labor force participation (age 16+) on Long Island was 61.3% in 2021, growing over the past decade from 59.0% in 2011, and higher than that of the nation (58.2%). Men’s labor force participation, which is generally higher than that of women, was 71.3% in 2021, slightly lower than in 2011 (71.7%). In 2021, the unemployment rate for women on Long Island was 5.6%, while the rate for men was 6.7%.
Mothers in the Workforce
The lack of affordable, quality child care has long been a barrier preventing mothers of young children from entering the workforce. In 2021, just 72.6% of Long Island children under age 6 lived in a household with all available adults working. However, in the same year, there was a large difference in labor force participation rates (LFPR) of mothers in Nassau County compared to mothers in Suffolk County. In Nassau County, the LFPR of women aged 20-64 with children under 6 was 83.7%. In Suffolk County, it was 77.4%.
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This difference in LFPRs may be due to the higher cost and lower availability of child care in Suffolk County. While the median annual price of center-based infant care was almost the same in both Nassau ($20,736) and Suffolk ($20,437) counties, the median income for families with children under 18 was nearly $5,000 lower per year in Suffolk County. Similarly, both counties had approximately 85,000 children under 6, but Suffolk County has nearly 3,200 fewer child care slots compared to Nassau County. Overall, Long Island still has a child care “supply gap” of more than 68,500 day care slots.
Educational Attainment
In 2021, 46.6% of women on Long Island aged 25+ held a bachelor’s degree or higher, compared with 43.1% of men. The region’s women are also more highly educated compared to women in both New York State (41.4%) and in the nation (36.1%). Moreover, 7.4% of women on Long Island aged 25+ had less than a high school diploma in 2021, compared to 9.0% of men.
While women are earning postsecondary degrees at a higher rate than men, they are still subject to a pay gap upon graduation. In Nassau County, women with a bachelor’s degree earned 32% less than their male peers, while women with a graduate or professional degree earned 20% less. In Suffolk County, women earned 27% and 29% less, respectively.
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Occupation and Industry
The large gap in earnings between men and women is also attributable to variation in college majors and career choices. On Long Island, the percentage of women employed in higher paying occupations has been low compared to the number of women in the workforce. Women tended to be underrepresented in science, technology, engineering, and mathematics (STEM) fields like Architecture and Engineering (15.9%) and Computer and Mathematical occupations (18.6%). By contrast, 81.9% of Community and Social Service, 80.3% of Healthcare Support, and 72.5% of Educational Instruction and Library workers were women.
By industry, women on Long Island accounted for more than half of all workers in only one sector—Educational Services, and Health Care and Social Assistance (68.8%). Comparably, women were substantially underrepresented in Construction (9.4%), Transportation, and Warehousing and Utilities (17.3%), Wholesale Trade (28.0%) and Manufacturing (33.2%).
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Looking Ahead
Women are a vital part of Long Island’s workforce, and their earnings are essential to family economic security. New York State is prioritizing initiatives to eliminate barriers facing women so they can realize their full potential. This includes making child care accessible and affordable, raising the minimum wage, promoting workplace flexibility practices and expanding family-friendly policies, like paid sick days and paid family and medical leave. Efforts should also be made to increase opportunities for women to pursue careers in higher-paying technical fields and other non-traditional careers.
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 In March 2023, New York State’s seasonally adjusted private sector job count increased over the month by 19,100, or 0.2%, to 8,259,700. In addition, the state’s seasonally adjusted unemployment rate decreased from 4.2% to 4.1% in March, while New York’s seasonally adjusted labor force participation rate rose from 60.6% to 60.7%.
Capital
Over the past year, the private sector job count in the Capital Region rose by 14,900, or 3.6%, to 432,900 in March 2023. Job gains were largest in leisure and hospitality (+5,700), education and health services (+2,700), natural resources, mining and construction (+2,600), professional and business services (+2,100), financial activities (+600), other services (+500) and trade, transportation and utilities (+500).
Central NY
The number of private sector jobs in the Syracuse metro area increased over the past year by 6,100, or 2.5%, to 254,700 in March 2023. Over-the-year job gains were greatest in trade, transportation and utilities (+2,500), professional and business services (+1,600), leisure and hospitality (+1,300), natural resources, mining and construction (+400) and other services (+400). Employment losses occurred in manufacturing (-400).
Finger Lakes
Over the past year, the private sector job count in the Rochester metro area rose by 4,500, or 1.0%, to 444,600 in March 2023. Job gains occurred in education and health services (+3,300), leisure and hospitality (+1,600), financial activities (+500), other services (+500) and manufacturing (+400). The largest employment losses occurred in professional and business services (-1,100) and trade, transportation and utilities (-600).
Hudson Valley
Over the past year, the number of private sector jobs in the Hudson Valley grew by 10,500, or 1.4%, to 787,000 in March 2023. The largest job gains occurred in natural resources, mining and construction (+4,500), education and health services (+4,300), leisure and hospitality (+3,900) and financial activities (+200). Employment losses were greatest in trade, transportation and utilities (-1,400) and information (-800).
Long Island
For the year ending March 2023, private sector jobs on Long Island increased by 26,700, or 2.4%, to 1,129,400. Gains were greatest in professional and business services (+9,400), education and health services (+7,400), leisure and hospitality (+6,800), natural resources, mining and construction (+3,100), financial activities (+1,500), manufacturing (+1,200) and other services (+1,200). Losses occurred in trade, transportation and utilities (-4,100).
Mohawk Valley
For the 12-month period ending March 2023, the number of private sector jobs in the Mohawk Valley region rose by 2,700, or 2.0%, to 138,700. Over-the-year employment gains were greatest in education and health services (+1,000), leisure and hospitality (+800), trade, transportation and utilities (+500) and information (+200).
New York City
The private sector job count in New York City rose over the past year by 179,600, or 4.6%, to 4,078,300 in March 2023. Gains were greatest in education and health services (+73,500), leisure and hospitality (+45,800), professional and business services (+27,900), financial activities (+16,800), other services (+9,000) and natural resources, mining and construction (+5,400). Job losses were focused in trade, transportation and utilities (-600).
North Country
For the 12-month period ending March 2023, the number of private sector jobs in the North Country region rose by 1,200, or 1.2%, to 104,700. Over-the-year employment gains were greatest in education and health services (+700), leisure and hospitality (+300) and trade, transportation and utilities (+200).
Southern Tier
For the year ending March 2023, the number of private sector jobs in the Southern Tier increased by 2,600, or 1.2%, to 214,600. Employment gains were greatest in leisure and hospitality (+2,000), natural resources, mining and construction (+600), manufacturing (+300), other services (+200) and professional and business services (+200). Losses were largest in education and health services (-600).
Western NY
Over the past 12 months, the private sector job count in the Buffalo-Niagara Falls metro area rose by 7,600, or 1.7%, to 457,200 in March 2023. Gains were largest in professional and business services (+2,100), manufacturing (+1,900), natural resources, mining and construction (+1,700), leisure and hospitality (+1,500) and other services (+1,000). Job losses occurred in financial activities (-700), trade, transportation and utilities (-400) and information (-300).
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