California's need for college-educated workers is outpacing the state's ability to produce them,
and the gap is expected to widen in the future, says a report released by the Public Policy
Institute of California (PPIC).

Four in 10 (41 percent) California workers will need a bachelor's degree to meet the state's
projected economic demand in the year 2025 if current trends continue. But changes in the
workforce make this an unlikely outcome, PPIC says.

Although the percentage of college-educated workers has increased significantly in recent
years — from 28 percent in 1990 to 34 percent  in 2006 — that growth is expected to slow.
There are two main reasons:

• California workers who are now age 50 to 64 have the highest levels
  of education of any age group in the state. They will reach retirement
  age by 2025

• Hispanics, a group with low levels of education, make up a growing
  share of the state's workers. They made up 29 percent of the working-age
  population in 2006 and will make up 40 percent by 2020. Just 7 percent
  of Hispanics had a bachelor's degree in 1990, a percentage that increased
  to 10 percent in 2006 and is projected to reach only 12 percent in 2020

At the same time as the growth in college-educated workers slows, the supply of workers
with a high school diploma or less is projected to exceed economic demand, says the
PPIC report. The results: Lower wages and fewer job opportunities for these workers, and
higher wages for college-educated workers as demand for their skills  increases.

The growing mismatch between the needs of the economy and the education levels of the
workforce is likely to put pressure on state social programs, increase economic inequality,
and limit the path of the state's economic growth, the report says.

"California may not be able to close the workforce skills gap, but the state's leaders should
look for ways to reduce it," says economist Deborah Reed, author of the report and a senior
fellow at PPIC. "By focusing on the quality of education at all levels, from preschool to the
state's universities, policymakers can improve opportunities for Californians and create a
workforce to fuel future economic growth."

The report, “California's Future Workforce: Will There Be Enough College Graduates?,”
points out that in 1980, a California man with a bachelor's degree earned 39 percent
more than a man with a high school diploma. By 2006, the difference was 86 percent
— an indication that the demand for college-educated workers grew faster than the
supply. This trend is expected to continue.

In the past, the migration of college-educated workers to California has helped reduce the gap.
But in the future, this may not be the case, the report says.

A major expansion of international immigration is unlikely because of increasing global
competition for skilled labor and relatively restrictive U.S. immigration policy. Furthermore,
since 2000, more college graduates have left California than have arrived. Even if this
trend changes and migration to California returns to high levels, the numbers would not
come close to filling the projected gap between supply and demand, says PPIC.

The report points to the need to find ways to invest in education that feed workforce development.
"California's fiscal emergency is keeping leaders focused on the immediate future," says Ms. Reed.
"It's important for leaders to end the crisis soon so that they can begin to focus on the long-term
needs of the state and its workers." 
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The Public Policy Institute of California describes itself as a nonpartisan, nonprofit organization
dedicated to informing and improving public policy in California through independent, objective,
nonpartisan research on major economic, social, and political issues. The institute was established
in 1994 with an endowment from William R. Hewlett.