The Changing Role of Community Colleges in Economic Development

September 2006

By John Warren, Project Manager

AngelouEconomics

The important relationship between four-year colleges and universities and economic development is well established. The relationship is particularly clear in two areas. First, the value of a college degree to the individuals receiving them and society at large are readily apparent. A study conducted in 2005 by Arizona State University estimated that "discounted lifetime benefits from a university degree – including combined individual and societal benefits – exceed $600,000 per worker, a combined internal rate of return of about 16 percent."1 However, the study also points out the limited scope of these great benefits, citing the statistics that "only one quarter of the U.S. adult population has at least a bachelor's degree. Academic ability and information barriers limit the number of individuals who attain a university degree."2 The study maintains that there are also financial barriers, but that government programs to promote access have been effective. With increases in tuition and, in some states, tuition deregulation, financial barriers may become even more formidable.

Second, the economic benefits of research conducted by four-year colleges and universities are also vital to the economic health of the regions in which they operate. Some key examples are the University of Texas, the colleges in the Research Triangle of North Carolina (Duke, the University of North Carolina, and North Carolina State), MIT, Stanford, and many other major colleges and universities across the United States. Research conducted at these institutions have resulted in commercialization of products and processes that have fueled the economies not only of the regions surrounding these colleges and universities, but of the entire country.

With the high visibility of four-year institutions and their importance to economic development, it is sometimes easy to overlook the contribution of community colleges to the economic landscape. Particularly in areas with major four-year colleges and universities, community colleges can be viewed as second-class institutions and only as institutions of last resort whose students are not "good enough" to get admitted to a prestigious college or university. This perception is absolutely wrong.

In fact, community colleges are on the cutting edge of economic development. Many states have found that effective community college programs can provide great benefit in generating economic growth. In fact, many precision manufacturing and technology intensive companies have found community colleges are better suited and more adaptable to change than universities for educating the technicians needed to operate and repair machinery.

The most critical role community colleges play in the economic health of their communities is in ensuring that workers have the skills industries need to remain competitive in the global economy. In many cases, "by offering programs on a contractual basis for public and private employers, they are becoming the primary providers of workforce training."3 Not only do community colleges do an effective job of providing workforce training, they do so at a significantly reduced cost compared to many private sector providers (in some cases 10 to 20 percent less,)4 and about half the cost of four-year colleges.5

There are many examples of effective community college systems across the country. One of the national model systems is the North Carolina's New and Expanding Industry Training Program (NEIT). NEIT supports free training projects for approximately 200 companies and 20,000 trainees per year. NEIT is not only the oldest customized training program in the United States, it's also the national pacesetter. Offered through North Carolina's 58 community colleges, NEIT has been ranked the nation's number one worker training program. In order to qualify for the program, companies must create 12 or more new jobs in a North Carolina community in a given year that fall into one of the following categories: manufacturing, technology, distribution, customer service, or air courier service. The training services provided through the program are diverse, and may include elements such as customized curriculum and training media development, temporary training facilities, pre-employment orientation and training, technical and performance skills training, and reimbursement for specific company instructional expenses.

The greatest asset that community colleges have in their favor is their flexibility. Community colleges can be more responsive more quickly in meeting industry's changing skill needs. In a rapidly changing global economy in which innovation means the difference between business success and failure, the skills industries require of their employees change even more rapidly. Community colleges can put together and deliver new training programs in a matter of weeks. In comparison, the time needed for a four-year college or university to revise a degree program can take years.

As valuable as community colleges are in preparing the workforce, scholars argue that their importance is even greater, playing roles not only in workforce development but also economic development and community development – becoming, in effect, an "entrepreneurial college."6

A paper developed for the League for Innovation in the Community College, the National Center for Research in Vocational Education, and the National Council on Occupational Education suggests that community colleges can and should fill several key roles:

• Workforce development, which provides training for employees of particular firms;

• Economic development, in which colleges act in various ways (other than providing courses) to stabilize or increase employment in their communities; and

• Community development, in which colleges promote the well-being of their communities in political, social, or cultural areas.7

The paper states, "The entrepreneurial college shows great promise for serving local community needs, including groups that may have been neglected prior to its emergence, and suggests that greater attention should be paid to this emerging college role. Careful assessment of community needs and strategic planning to decide which responses to make – epitomized by Sinclair Community College's motto, 'Find the need and endeavor to meet it – could help institutions expand their entrepreneurial activities."8

As community colleges move into the future, they have continued to move into these additional areas that are considered "non-traditional." As industries and their needs continue to evolve, they will continue to require more from community colleges across the country. As many community colleges have demonstrated, they are up to the task.

1 Kent Hill, Ph.D., Dennis Hoffman, Ph.D., and Tom R. Rex, MBA, The Value of Higher Education: Individual and Societal Benefits. L. William Seidman Research Institute, W.P. Carey School of Business, Arizona State University, October 2005.

2 Ibid.

3Richard L. Drury, "The Entrepreneurial Community College: Bringing Workforce, Economic and Community Development to Virginia Communities." Inquiry Magazine, Volume 6, Number 1, Spring 2001.

4 Ibid.

5 A. Cohen, "Projecting the Future of Community Colleges." ERIC Digest, 1995: ERIC Clearinghouse for Community Colleges (ED 388351).

6 W.N. Grubb, N. Badway, D. Bell, D.D. Bragg, and M. Russman, "Workforce, Economimc, and Community Development: The Changing Landscape of the Entrepreneurial Community College." League for Innovation in the Community College, National Center for Research in Vocational Education, and National Council on Occupational Education (ED 413033), 1997.
7 Ibid.
8 Ibid.