The Connection Between Unemployment and Higher Ed

Grant DeRoo’s experience in applied higher education research, data analytics, predictive enrollment modeling, and leading expansion strategies in new recruitment markets provides him a unique understanding of how to address institutional needs and enrollment issues through applied research.

In this podcast, Grant discusses the data behind the connection between unemployment and higher ed.

Read the transcript below:

Mariah: I’m Mariah Obiedzinski, director of content strategy at Stamats. Joining me today is Grant DeRoo, director of research and strategy at Stamats. Welcome, Grant.

Grant: Thank you.

Unemployment Rates vs. Higher Ed Enrollment

Mariah: Today, we’re discussing the correlation between unemployment rates and higher education enrollment, and what colleges and universities can do about it.

The Des Moines Register reported in December 2018 that “as unemployment decreases, fewer people are incentivized to pursue higher education and choose to work instead.” Now, Grant, what were some of your takeaways from the article? Is this similar to what you’ve observed in your career as a higher education researcher?

Grant: Yes. The article’s title really drew a connection between employment in the broader economy and enrollment in higher ed. And higher ed has this strange type of counter-cyclical relationship with employment, where when employment is really good or when unemployment is really low, which is a good thing, enrollment in higher ed declines.

Now, the flip side of that is that in times when unemployment rises, higher ed tends to benefit in this kind of perversely strange relationship that they have. We saw peak enrollment for a lot of sectors of higher ed in 2010, 2011, shortly after the recession.

Essentially what people were doing is with poor employment prospects, they would give the economy some time to improve by going to college for another couple of years and basically educating themselves into a more marketable position, by the time that the economy was in a better spot to receive them.

All this is to say the article was spot on in that. I think there are other challenges facing private and public colleges today in the U.S., other than just unemployment. And we can certainly talk about those. They’ve been talked about a lot in a lot of other spaces.

But demographics certainly, cost and concerns about costs, concerned about outcomes, etc. But there certainly is a relationship between employment and enrollment.

Effects of Unemployment on Schools

Mariah: How do changes in unemployment affect schools differently? Are certain types of schools more impacted than others?

Grant: Yes. Undoubtedly yes. So, when I mentioned that there is this relationship between the economy and enrollment, it’s really not broadly applicable across all students.

If we think about students in two buckets, traditional and non-traditional, traditionally-aged are those recent high school graduates, 18-22 going to college.

Non-traditional might be anybody else who’s taken some time between high school and college, somebody who’s older, somebody with a child, somebody who’s married.

There are all kinds of different non-traditional student characteristics. And really when we talk about changes in enrollment based on employment, we’re really talking about changes in non-traditional students, most primarily.

And from this extends the undergraduate and the graduate. So, non-traditional undergrads are less likely to pursue higher education when the economy is great and employment prospects are great. And they’re more likely when the economy is doing poorly.

Same for graduate programs we see. Especially for professionally-oriented master’s programs. All this is to say that an institution, based on who it serves, is more exposed to swings in employment and the economy as a whole.

Institutions that focus on non-traditional enrollment, particularly adult-serving institutions online or schools with a heavy graduate focus in professionally oriented master’s programs, they’re more likely to see swings in enrollment based on the economy and based on employment.

Online Education Enrollment

Mariah: You mentioned online enrollment. Could you discuss that a little bit further?

Grant: Yeah. So, online enrollment, it’s a very timely question. Just this week we saw that for the first time since data’s been tracked, the percentage of programs that are available online actually declined between 2017 and 2016. Very, very, very slightly. But it was a decline. So, it’s making people ask, have we seen peak online offerings?

But that kind of short-term issue aside, online enrollment is very popular among non-traditional students, among graduate students, those who have other commitments, be that a job, family, all the above – and often cases it is all the above. And they’re juggling multiple things. And so, online education is phenomenal in extending higher education to those who otherwise wouldn’t be able to access it.

In fact, I think you could argue that it’s probably a third wave of extending higher education to a broad mass of people who otherwise couldn’t access it.

3 Ways Higher Education Was Made Accessible

1. Land grants

The first was the development of land grant colleges and universities, which extended higher education to agricultural, mechanical programs, things focused on more trades, preparing students for pure work rather than the high flatulent education of philosophy and history and literature in the 1800s.

2. GI Bill

The second in my mind was the GI Bill, shortly after World War Two when all of these folks came back from service and entered higher education. And it provided access to this whole group of middle- and lower-income people in the U.S. to be able to study a whole variety of topics. And that’s one of the fascinating things. They didn’t just study English and history and philosophy. They really changed the game. They focused on business. And we saw the rise of business education shortly after the introduction of the GI Bill.

3. Online Education

Now, I’m digressing a little bit, to bring this back, the third big wave has been online education and extending higher ed to those people who otherwise couldn’t take the time to go to class at 2:30 in the afternoon because they’re working or because they have kids that need to be picked up from daycare. This whole range of different time constraints that weigh on people and online education is outstanding for extending it to those people.

But still, when the economy is good, convenience doesn’t really matter. And that’s more about the opportunity cost of going to college versus working. And sometimes it’s not a both/and. Sometimes it is neither/or. And for somebody who’s already working 40 hours a week and the economy’s good and unemployment is low, and the stock market has been up and down, but when the stock market is doing well, there’s less of a motivator to pursue higher education.

How the Changing Job Market Affects Employment at Higher Ed Institutions

Mariah: This is sort of a double-edged sword because thinking about those individuals whose livelihood depends on these enrollment numbers, how do you feel that the changing job market affects individuals who are employed at colleges and universities?

Grant: Yes. So, that’s one of the things that I love about that Des Moines Register article. And in other places as well, is we do need to think about how many small private colleges throughout the entire country are one of the economic drivers for their communities. And that’s a really big thing to think about as we look ahead and there’s a lot of people who have forecasted XYZ number of closures or mergers in higher education.

And certainly, that impacts students, it impacts the landscape. But it impacts a lot of employees. It impacts them. The ripple effects throughout the community. Right?

So, if the large employer goes out in the community, what then does that do for the quality of the schools? The economy? And all of the restaurants and businesses that rely on people being there?

All this is to say, yes, there are big ripple effects to institutions facing struggles based on enrollment.

Now, I will say, however, that the sector of schools that are mostly impacted by changes in the economy are not going to be your private colleges that largely serve traditional-aged undergraduate students.

The 18-22-year-old crowd is going to go to school pretty much at the same rates that they do today, regardless of what unemployment looks like. Those people who are going to pay $45,000 a year for private education are not going to be dramatically impacted by swings in the unemployment rate.

So, I think that any enrollment challenges at those schools is less due to employment-unemployment and much more likely due to the cost of the education, perceptions of value, the ability to deliver a desirable outcome, so how well their students for jobs. So, all those things combined are much more driving any challenges that private colleges are facing less so than unemployment.

But to get back to your question, all this is to say that those schools are really important for their communities and they’re important economic drivers for a lot of the U.S. And so, we need to think about when we think about mergers and what that means for operational efficiencies. We need to think about what that means for employment for the staff and the faculty of those places as well.

Research When Enrollment is Down

Mariah: Right. When market fluctuations affect revenue, the knee-jerk reaction often is to cinch the purse strings. However, in uncertain times, research can help uncover vital, actionable data. What research areas have your clients found most applicable when enrollment is down?

Grant: When enrollment is down, one of the things that schools want to know is, where are we going in the future? What’s going to happen now? One of the things that research does really well is that we can’t tell you what’s going to happen in the future. We sure as hell can tell you what’s happening in the present and how people feel about you. And that’s really important for a lot of colleges and universities to understand, what are their current perceptions?

So, a lot of the work that we do right now for institutions that are struggling with enrollment is to assess brand perceptions among perspective students, parents of perspective students, high school counselors and anybody else who really has a formidable role in shaping opinion as well as shaping any student’s enrollment decision. So, that’s really valuable.

It’s really important to know where you stand in terms of how aware and familiar the market is with you as well as how they perceive you on really important factors like quality of the academic experience and the value for money, opportunities to work with faculty, the quality of the student life experience. It’s all these things that are so important in choosing a college.

Understanding baseline, where you are today is the best place to start for understanding where you can go in the future. And it also points to areas of opportunity, right? So, if you know what are some of our perceived strengths in the market? Then it gives you the opportunity to leverage those and communication in the future.

If you see areas of weakness, gives you opportunities to improve, either in terms of substance, what you’re actually doing in that area or how you talk about it and being able to communicate your strengths more effectively.

So, it’s really helpful in determining what is important to target audiences? What is really strong about the institution or perceived to be strong? And how do you wed those two things so that you can put together a really compelling marketing for the perspective students.

Relationship Between Economy and College Enrollment

Mariah: Now, as you’re looking ahead, what gives you hope about the relationship between the economy and college enrollment? Or what makes you concerned?

Grant: One of the things that gives me hope about the relationship between the economy and college enrollment is that first of all, a college education is still an outstanding investment in one’s self. You get tremendous return on your investment over lifetime earnings. And there’s nothing that’s even comparable to that.

But in terms of our broader economy right now, our economy is increasingly demanding a master’s degree for desirable employment. Automation is impacting both blue-collar and white-collar jobs for sure. But it’s going to disproportionally affect those jobs that don’t require a bachelor’s degree or any sort of advanced higher education.

So, we need to think then about 10, 20, 30 years from now, what does the labor market look like? Are more jobs going to require bachelor’s degrees than they do today? I think so. And that type of labor market demand will trickle down to the college market and will continue to drive demand for higher education.

Now, in terms of concern, I think there’s always going to be short-term fluctuations in the desirability or demand for higher ed for all the reasons that we talked about, among adult students, among those thinking about professional master’s degree, for instance.

So, I’m concerned about what this means for some colleges that will struggle with enrollment. They’re going to increasingly need to focus on retention and graduation rates. I think they need to demonstrate ROI on somebody choosing them. I think they’re going to have to hold on tighter to those students they do get so that even if the incoming class is smaller than they wanted or expected, if they can keep a higher percentage of the students that they already have enrolled, then they’ll be doing okay.

So, I think we’re going to see a greater focus on retention, which is really important. I think that’s one of the lost things in all of higher ed. We focus so much on recruiting new students and probably not as much as colleges should on retaining the students that they do have.

Other things that make me concerned include what this means for faculty and staff. One of the big challenges that arose in the wake of the recession is that college went to adjunct appointments, were using TAs more so for teaching classes. And it never really rebounded in 2011, 2012, 2013, all the way to present day. All it did was establish a new normal. Colleges saw that they could rely on those people, adjuncts and TAs to teach classes.

Mariah: Do you feel like that was a primarily financial driven decision?

Grant: Absolutely. So, yes. It was a financial decision and it never really changed in the wake of the recession. And it’s been really hard, not only for full-time faculty today, but for newly minted PhDs. They spend seven years getting this degree, working 80-hour weeks with $20,000 stipends, only to emerge on the other side of it, not being able to find a job in the field that they wanted. And so, that makes me concerned.

I think when the economy in higher ed is as it is today and there’s increasing challenges for enrollment, I think that more and more schools are going to rely on teaching assistants and adjunct appointments rather than full-time faculty and probably make some staff cuts as well.

So, I think operationally, I’m concerned about faculty and staff at colleges and universities. And I’m also concerned for what that might mean for the student experience too, right?

If we know, for instance, that it’s more financially sensible for a college to cut a section of a class and just increase class size in XYZ program, that’s all well and good, right? They’re saving money. But it also means that now there’s 55 students in that class versus 28. What does that do for the student experience?

First of all, it’s not what they signed up for if a school was promising smaller classes. But secondly, what does that do for their ability to engage? I’m a big proponent of smaller class sizes, as I think a lot of people are. And so, there’s things like that, that we can’t even think of all the possibilities of how higher ed will change because of financial constraints. But those are just a few that come to mind that concern me.

Overall, long term, I’m bullish. I’m optimistic. Short term, I think there’s going to be challenges. So, the first thing and probably the most important thing is to clarify objectives.

And it’s often the case that an institution will come to us and will ask, “What do you want out of this? Do you want more students or better students?”

And they say, “Yes.” And for us, it’s really critical to clarify what exactly you aim to do with the research and how it’s going to contribute to enrollment? Because in the end, everything has to be driven toward enrollment. So, is it a marketing campaign? Is it how you present your price? Is it a change in the substance of what you offer, your academic programs or perhaps how they’re oriented?

Whatever it might be, we need to understand what are those objectives? And what is your capacity to implement change?

So, those two things are critical in preparing to do research and most importantly, act on the findings.

Mariah: So, the thing that spurred this conversation initially was the Des Moines Register article. But what have been some of your favorite resources for higher education research?

Grant: Some of my favorite resources for research have been Brookings Institute, FiveThirtyEight,which does excellent work on higher education data, and they have a specific sub-section for higher ed. Washington Post, New York Times, Raj Chetty, who’s a famous researcher. He put out great research on the equality of opportunity, which they look at the ability of an institution to advance students from lower incomes up to higher incomes throughout their lives after college.

But really in terms of resources, some of the staples are going to be the best aggregators of information. Inside Higher Ed does a tremendous job of aggregating a variety of different research reports from all kinds of sources, be they think tanks or other non-profits, some for-profit companies, but mostly they do a really great job of using unbiased research and reporting on some of the key findings.

So, those have been some of my favorite resources. In fact, I’ve started recently compiling some of my favorite news of the week in a weekly LinkedIn article, in which I just talk about five little brief snippets of news organized by the data that made the headlines.

And we also have our Stamats Insights as well, it’s our monthly newsletter, focusing on a variety of different topics, be they recruitment, marketing or some of our own research that we put out there about different higher education happenings and things for higher ed marketers and administrators to know.

Mariah: Thank you so much for joining us today, Grant.

Grant: Thank you very much. I appreciate it.

Join Grant at the 2019 Adult Student Marketing Conference.