On how a bronze is really a gold


  • July 29, 2015
  • /   Shannon Nickinson
  • /   economy

Dr. Rick Harper serves as senior research fellow with the Studer Community Institute, a Pensacola-based organization that seeks citizen-powered solutions to challenges the community faces.

How can that  be?

In discussing Pensacola State College’s showing on new state performance based funding metrics, college President Ed Meadows noted that PSC’s score put it in the bronze tier of community colleges in Florida.

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But take PSC’s score on the four measures— completion rate, retention rate, job placement and entry level wage for graduates — and compare them to the national averages for community colleges and PSC would a “gold tier” school, Meadows said.

"We're being compared to the best of the best," Meadows said.

We asked Studer Community Institute Senior Fellow Rick Harper about that. Here is his answer:

“I heard John Holdnak, President at Gulf Coast State College (in Panama City, a gold tier school) say exactly the same thing at a Workforce Innovation and Opportunity ACT meeting in Tallahassee on July 16.

“He noted that our lowest ranking school would be in the top quarter of community colleges in the nation and that the score band is quite narrow between the top and bottom performers in Florida.

Having said that, performance metrics are getting attention from college and university administrators.

The metrics are far from perfect. I think that the best predictor of whether a young person will finish college or university in a given amount of time is their educational attainment and ability at the time they are accepted, and their family income.

The latter is important because it determines whether a young person has to drop out to make their car payment, versus being able to take a family car to campus, and whether they need to work to pay for their apartment/dorm or whether the family helps them pay. The former (attainment and ability) is extremely highly correlated with family income.

I think of it like this: Imagine that the surgeon general says people with certain body mass index are more healthy, and that the legislature says ‘Achieving target BMI is good for our nation, and those weight loss clinics that achieve target BMI for their customers get state dollars, while those whose customers have high BMI do not get state dollars.’

That metric means that no weight loss clinics would ever accept people who need to lose weight. They would instead accept only skinny people to make their target BMI. So overweight people need not apply, because they would destroy the ranking of a clinic.

BMI is the wrong metric. We should look at change in BMI, rather than level of BMI. In the same way, we should look at improvement in youngsters educational attainment relative to where they would have been. But the University of Floridas of the world accept only kids who were already going to graduate in four years no matter what, because that's what high achieving kids from upper income families do - they graduate in four years (or in six).

Another key issue is the cost of living differential between metros. I suspect that accountants earn more money in Miami than they do in Pensacola for doing the same job. You have to pay people more to live and work in Miami because they have a limited supply of real estate and so houses and rents cost more there. If a primary purpose of getting a degree is to increase your earning power, then regional differences in affordability matter.

The median earnings of graduates with bachelor’s degrees from UWF in the most recent Economic Security Report from the Florida Department of Economic Opportunity were $31,684.  This is 5.2 percent below the statewide median and ranks (UWF) eighth out of 11 schools. But it’s not an accurate reflection of the true purchasing power of wages.

It is interesting to note that the two universities with the highest median first-year earnings are Florida International University and Florida Atlantic University — the two Miami schools — coming in at $35,632 and $35,040 respectively.

UWF’s median is 11.1 percent below the FIU number.

“Average wages of graduates one year after graduation” was one of the measures on which UWF got dinged in the new State University System performance metrics. Unfortunately, the new statewide performance funding metrics fail to recognize regional price level differences.

The U.S. Bureau of Labor Statistics in 2014 began publishing an “implicit regional price deflator” that allows us to compare price levels across the several hundred different metro areas of the country. Miami, not surprisingly, comes in highest in the state. Compared to a national average of 100, BLS calculated the price level in Miami in 2012 to be 110.7, while the Pensacola price level was calculated to be 99.6.

That is, the price level in Pensacola is 11.1 percent lower than in Miami.  After adjusting for this difference in the cost of living, UWF’s median earnings are exactly the same as those of the highest-ranked school.

In a way, this is the answer to the question, “how much would they have to pay you to live in Miami?”

Economics suggests that wages in different metro areas will in fact reflect things such as differences in the cost of living. It is likely that a UWF grad taking a job in Miami will earn more than a UWF grad taking the same job in Pensacola. The same logic applies for the FIU grad. Employers find they have to pay more to compensate for the higher cost of living down south.

It is unfortunate that Florida’s new performance metrics system doesn’t account for regional price differences. If it did, UWF wouldn’t be penalized for graduating students who have excellent earning power.

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