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College Is Just the Beginning College Is Just the Beginning Employers' Role in the $1.1 Trillion Postsecondary Education and Training System Anthony P. Carnevale Center on Education Jeff Strohl and the Workforce Artem Gulish McCourt School of Public Policy College Is Just the Beginning Employers’ Role in the $1.1 Trillion Postsecondary Education and Training System 2015 Acknowledgements We would like to express our gratitude to the individuals and organizations that have made this report possible. Thanks to Lumina Foundation, the Bill & Melinda Gates Foundation, and the Joyce Foundation for their generous support of our research for the past several years. We are honored to be partners in their mission of promoting postsecondary access and completion for all Americans. We are especially grateful for the support of Jamie Merisotis, Holly Zanville, Daniel Greenstein, Jennifer Engle, Elise Miller, Matthew Muench, and Whitney Smith. We would like to thank our designer Josias Castorena and our editor Nancy Lewis. Our thanks also go to our colleagues, whose support was vital to our success: • Andrew R. Hanson provided editorial assistance and feedback. • Andrea Porter provided strategic guidance in the design and production of the report. • Ana Castañon assisted with design and other logistics. Many have contributed their thoughts and feedback throughout the production of this report. That said, all errors, omissions, and views remain the responsibility of the authors. The views expressed in this publication are those of the authors and do not necessarily represent those of Lumina Foundation, the Bill & Melinda Gates Foundation, the Joyce Foundation, their officers, or employees. Employer Training|1 Table of contents The $1.1 trillion U.S. postsecondary education 3 and training system Employers’ formal training dollars go toward both 4 in-house and outside training. The majority of formal training is for prime-age 5 college-educated workers Some industries, such as manufacturing, invest 7 substantially more in formal training than others, such as wholesale and retail trade. Appendix, data sources, and methodology 9 References 10 Figures and tables Figure 1. Annually, the United States spends $1.1 trillion 3 on formal and informal postsecondary workforce education and training. Figure 2. Employers spend one of every three formal 4 training dollars on outside training. Figure 3. Employers spend 58 percent of their formal 5 training dollars on college-educated workers. Figure 4. The vast majority of formal training is provided 6 to prime-age workers, those between ages 25 and 54. Figure 5. The manufacturing industry accounts for 11 7 percent of workers, but 14 percent of spending on formal training. Table 1. The services industry spends $91.6 billion on 8 formal training each year, accounting for 52 percent of national spending on formal training. 2|Employer Training The $1.1 trillion American postsecondary spending on formal education institutions, government grew by 82 percent, from $224 U.S. postsecondary agencies, and employers spend billion to $407 billion, over the education and $1.1 trillion annually on formal same period. Certifications, and informal higher education apprenticeships, and other training system and training. workforce training comprise $47 billion of annual spending Of that amount, $649 billion on formal training and federally goes for formal1 postsecondary funded job training programs education and training each comprise $18 billion of spending year. Colleges and employers on formal training. spend the most on formal postsecondary programs. In addition, employers spend Colleges and universities spend $413 billion on informal, on-the- $407 billion on formal education job training annually. Including annually, while employers spend both formal and informal training, $177 billion (Figure 1). Employer employers spend $590 billion spending on formal training has annually, the largest element of increased by 26 percent since the postsecondary education and 1994, when employers spent training apparatus. Employers $140 billion. By comparison, spend most on college-educated colleges and universities’ workers in service industries. Employer-provided Employer-provided training informal Four-year colleges Employer-provided training formal colleges Two-year Certifications, apprenticeships, Certifications, training and other workforce training job Federal Figure 1. The United States $413 $347 $177 $60 $47 $18 spends $1.1 trillion on formal billion billion billion billion billion billion and informal postsecondary workforce education and training annually.2 Source: Georgetown University Center on Education and the Workforce analysis of data from the Department of Education, Bureau of Labor Statistics, and Government Accountability Office. See Appendix for more detail. $100 billion Annual postsecondary education and training spending (2013$) by institutional type 1. Formal learning or training features a scheduled, regimented series of learning or training sessions, typically administered by an assigned trainer. Informal learning or training, by contrast, occurs through experience on the job; it is commonly referred to as on-the-job training. 2. Because education and training programs often span across multiple institutions, these spending categories may overlap. Employer Training|3 Employers’ formal Employers often hire other In-house training accounts for businesses, educational 46 percent of spending, and training dollars institutions, or individuals to tuition reimbursements provided go toward both train their employees. This to employees who enroll in contract training accounts for education and training programs in-house and outside one-third of annual spending account for an additional 16 training. on employer-provided formal percent of annual spending on training (Figure 2), or $60 billion. formal training. In-house Outside Tuition Other training training reimbursements Figure 2. Employers spend one 46% 32% 16% 6% of every three formal training 50% dollars on outside training. Source: Center on Education and the Workforce estimates based on analysis of data from the Bureau of Labor Statistics’ Survey of Employer-Provided Training (1995) and U.S. Census Bureau’s Current Population Survey (2013). Share of annual spending by category, 2013 4|Employer Training The majority of Employers spend most of their percent of spending on formal formal training dollars on college- training. The upshot is that formal formal training is educated workers (Figure 3). employer-provided training spent on prime-age Bachelor’s degree-holders typically complements, rather account for 58 percent of annual than substitutes for, a traditional college-educated spending on formal training, college education; employer- workers. while workers with an Associate’s provided training should not be degree or some college credit viewed as a substitute for college but no degree account for 25 or K-12 coursework. Bachelor’s High school degree or higher Some college diploma or less Figure 3. Employers 58% 25% 17% spend 58 percent of their formal 60% training dollars on college- educated workers.3 Source: Center on Education and the Workforce estimates based on analysis of data from the Bureau of Labor Statistics’ Survey of Employer-Provided Training (1995) and U.S. Census Bureau’s Current Population Survey (2013). Share of formal training spending by educational attainment of trainee, 2013 3. Formal training spending refers to wages and salaries paid to employees for the hours of training. It does not include the cost of the trainers. Employer Training|5 Whereas young adults are the employer spending on formal primary recipients of college training goes toward training education, prime-age workers4 prime-age workers, while only are the primary recipients of 3 percent goes toward training formal employer-provided young adults (Figure 4). training. Eighty-six percent of 55 years or older 25 to 54 years 24 years or younger Figure 4. The vast majority of 11% 86% 3% formal training is provided 90% to prime-age workers, those between ages 25 and 54. Source: Center on Education and the Workforce estimates based on analysis of data from the Bureau of Labor Statistics’ Survey of Employer-Provided Training (1995) and U.S. Census Bureau’s Current Population Survey (2013). Share of formal training spending by age group, 2013 4. The term “prime-age workers” refers to workers between the ages of 25 and 54 6|Employer Training Some industries, such Three industry sectors – finance, training. Three other industries insurance, and real estate; – services, construction, and as manufacturing, transportation, communication, wholesale and retail trade – invest substantially and public utilities; and invest little in formal training manufacturing – invest relative to their size within the more in formal substantially in formal training. economy. For example, the training than others, For example, the manufacturing wholesale and retail trade sector industry accounts for 11 percent of accounts for 14 percent of all such as wholesale and workers in the U.S. economy, but workers, but only 9 percent of retail trade. 14 percent of spending on formal spending on formal training. Finance, insurance, insurance, Finance, estate and real communication, Transportation, utilities and public Manufacturing Mining Construction and Wholesale trade retail Services Figure 5. The manufacturing 9% 7% 11% 8% 14% 11% 1% 1% 3% 4% 9% 14% 52% 54% industry accounts for 11 percent of workers, but 14 percent of 50% spending on formal
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