Younger residents’ schooling boosts the region’s economic prospects
Though a high school diploma is an important milestone, its economic value has been declining for decades.
In 1973, an estimated 70% of jobs required no more than a high school diploma. By 1992, workers at least 25 years old with no more than a high school diploma accounted for just 48% of the workforce, and as of 2016 this cohort was just 33.5% of the U.S. labor force.
That’s made educational attainment vitally important for the economic well-being of individuals and their communities. In his 2008 book “Triumph of the City,” urban economist Edward Glaeser laid out a case that human capital was a central driver for a metropolitan area to succeed. A rule of thumb used by labor economists is that each additional year in school increases an individual’s wages by 10%, controlling for a bunch of variables.
And on that front, Los Angeles has long struggled.
In 2012, UCLA Anderson’s William Yu introduced the City Human Capital Index and has continued to track the metro region’s educational attainment level as part of the UCLA Anderson Forecast.
In 2011, Los Angeles’ human capital was the third lowest among the nation’s 30 largest metropolitan areas. The 127.1 index level for L.A. residents translates to an average of 12.7 years of schooling — high school with a brief visit to college, essentially.
Today, Los Angeles remains behind the national curve. While its index reading had improved to 14.4 years of education attainment in 2020, every other metro area improved as well. Los Angeles’ rank rose just one spot, to 26th.
Millennials to the Economic Rescue?
According to Pew Research, the millennial cohort became the largest slice of the U.S. workforce in 2016. That makes this age group central to economic growth.
And here’s where L.A.’s story may be brightening. Yu’s analysis shows that between 2013 and 2020, the millennial cohort in L.A. — age 25 to 44 — had the largest jump in educational attainment among the 30 largest metro areas. The CHCI for L.A. millennials increased nearly eight months (the blue bar in the graphic below).
And as the red line below shows, over the 10 years through 2020, L.A. millennials are closing the gap on the national trend toward higher education. As more older workers (see the green line) leave the workforce, that suggests L.A. might just have a workforce better built for the moment.
A Mix of Drivers
After decades of underinvestment in education, California has been refocused on spending levels and how better to deploy funds. According to the Education Law Center, California’s per-student spending ranked 47th in the 2012-2013 school year. By 2018-2019, it ranked 30th.
And that may be helping drive state educational levels higher. While L.A.’s millennials had the biggest jump in education levels between 2013 and 2020, San Francisco and San Diego were No. 2 and No. 3 among the 30 largest metro areas.
There are some encouraging signs of progress for L.A.. Research from Drexel University reported that the high school dropout rate in the Los Angeles metro area fell from 18% from 1990-2001 to under 8% from 2013-2015. And enrollment among 16- to 24-year-olds rose from 50.5% to 59.4% in the same time periods.
Yu says L.A. is also benefiting from more educated millennials moving to the area. While net migration in Los Angeles has been falling (see: astronomical home values and more acceptance of remote work) those millennials who are landing in L.A. seem to have more education, which makes some sense if you need to earn enough to handle the cost of living that has gone from high to higher.
While intra-U.S. movement is part of the story, the nonpartisan Public Policy Institute of California notes that recent immigrants to California are more educated (or seeking more education) than past immigrants.
- In 1990, 29% of immigrants in California did not have a high school diploma. In 2019 that was down to 17%.
- In 1990, 51 percent of immigrants in California had attended college or earned a degree (associate, bachelor or graduate). In 2019 that was up to 66%.
The fact that L.A. is still below the national average for adult educational attainment is a clear sign of the need for a lot more progress. But the “encouraging growth” of human capital among L.A.’s millennials Yu found, is a trend all Angelenos invested in the region’s economic prosperity should hope will continue with future generations.
Economist, UCLA Anderson Forecast