What is the economic payoff to attending community college? This turns out to be a rather complicated question to answer. One reason is the lack of available data. Until 1990, the U.S. Census Bureau recorded only the number of years of education, making it impossible to identify individuals attending specifically community college. In the 1990 and 2000 U.S. Censuses, the highest educational attainment was recorded instead of years of education. This makes it possible to focus on individuals with a completed associate’s degree. Still, this information does not make it possible to identify an institution students attended if they did not complete a degree.

Several available studies used data from surveys instead. Most of the surveys recorded data on various characteristics of respondents, starting with their teenage years and following them over the years.

One limitation of these studies is that, given the timeline of surveys, they include only students who enrolled in community college soon after graduating from high school.

Most studies found that students who attended community college, but did not complete a degree, earn 9 to 13 percent more than those with a high school diploma only. The estimation technique usually attempts to control for differences in academic preparation between the two groups as measured by test scores and class rank. Furthermore, researchers found that there is an increase in annual earnings of 5-8 percent associated with each year of education at community college. This finding is particularly interesting because it is very similar to the return to a year of schooling in a four-year college.

Economists Louis Jacobson, Robert LaLonde and Daniel Sullivan looked at a very different group-older, high-tenure displaced workers. Much of the retraining efforts for this group is done at community colleges.

Researchers found that one year of community college schooling increases long-term earnings of displaced workers by about 9 percent for men and about 13 percent for women compared with earnings for similar workers who did not attend community college. Another important fact reported by the authors is that while there is a high return to technically oriented and math and science courses (about 14 percent for men and 29 percent for women), less technically oriented courses yield very low and possibly zero returns.

Returns to an Associate’s Degree

Another way to think about a value of community college education is to ask how much more a person with an associate’s degree earns compared with a similar person who has only a high school diploma.

Studies done separately by researchers Kane and Rouse and by Duane Leigh and Andrew Gill estimated the labor market return to an associate’s degree of about 16-27 percent.

Using the much larger data set from the U.S. 2000 census, more detailed questions can be answered. For instance, are there differences in labor market returns to an associate’s degree between different demographic groups? Are the returns the same across different cities? Data also allow looking at the differentials in hourly wages rather than annual earnings.

One immediate feature of the results is that though the estimated average returns to an associate’s degree are consistent with other researchers’ findings, there are significant differences between demographic groups. Women of all races have higher returns to an associate’s degree than men do, mostly because women are more likely to major in nursing and related fields. There is also variation in the return to an associate’s degree among racial groups. Hourly wages of white men with an associate’s degree are 18 percent higher than wages of white men who stopped their formal education at high school. The returns are much higher for black and Hispanic men-25 and 27 percent, respectively.

The article also presents estimated returns to an associate’s degree in the 20 largest metropolitan areas, including Minneapolis-St. Paul. White men with an associate’s degree earn on average 17 percent more in the Twin Cities metropolitan area than similar men with only a high school diploma. For black men, returns to an associate’s degree are 27 percent. For Hispanic men, returns to an associate degree are 32 percent. White women in Minneapolis-St. Paul with an associate’s degree earn 23 percent more than white women with only a high school education. For black women, returns to an associate’s degree are 28 percent. For Hispanic women, returns to an associate degree are 24 percent.