So far in this series we have looked at how we calculate an investment analysis for learners, as well as society and taxpayers, before going on to look at how we conduct an impact analysis for institution, staff and learner expenditure. There is one other major aspect of the impact analysis that needs mentioning, that of Added Workforce Skills.
The Added Workforce Skills figure is a calculation of the economic contribution made by the college’s or university’s students who find employment in the area after leaving. This figure is usually the biggest number in our studies and also the part which is unique to EMSI’s work worldwide.
So how do we calculate this? What our economists do is to look at each year of historic training at the institution — typically going back 15 years — and then use this data in conjunction with wage differential data to determine the total amount of higher earnings associated with the educational achievements of past and present learners. In other words, since there is a direct correlation between higher levels of education and higher levels of earnings, by using the training data provided to us by the college or university, we can then begin to establish the effect of the education in terms of the higher earnings this leads to within the local economy.
Of course not all ex-students will still be working locally – some will have moved away and some will be unemployed – and not all students will necessarily be working in the curriculum area in which they studied. So when making our calculations, we take these factors into consideration, using local employment and earnings patterns to discern which industries learners are potentially working in and how much they are likely to be earning in those industries.
Once we arrive at our figure, we then apply “multipliers” to calculate the effect that these higher earnings will have on the local economy as a whole. Stating the case in simple terms, the more people earn the more they will spend and this will have a positive effect throughout the local economy. However, it is important to note that the multipliers we apply are not simply a wooden “one-size-fits-all” figure, but rather a series of multipliers that take into account the nuances of the local economy.
The figure we end up with – the aggregate higher earnings as a result of the college’s or university’s training, and the impact this has on the local economy – represents the increased economic growth that the past (and present) learning at the institution is producing each year. This figure is not static, but represents ongoing contribution to economic growth. In other words, if the college or university were to close tomorrow, the economic growth stemming from the education it had provided would still be produced for years to come because of the historic training.
This figure is the really unique element of an EMSI Economic Impact Study. In theory the other measures used in the study could be carried out for most other “businesses.” This one, however, is unique and really gets to the heart of what the education sector is about – increasing employability, boosting earnings potential and raising productivity, especially in the local and regional economy.
If you would like to discuss how our EIS can help your college or university articulate its economic value, contact Andy Durman at email@example.com