A new report from the Thomas B. Fordham Institute, authored by Jay Plasman from The Ohio State University, estimates the value of earning industry-recognized credentials and certificates as part of high school CTE pathways. The top-line takeaway is that some of these credentials seem to offer a pretty hefty payoff in the workforce, even after accounting for the benefit of the CTE course-taking (and other variables) themselves. This study from Ohio is some of the best (and only) evidence to date on the economic value of some technical education that students can earn during high school.
Such credentials have been pitched as having the potential to help those who earn them have a smoother transition to the workforce, and the assumption has been that would include a pay premium. However, there isn’t much evidence on this count, despite substantial growth in the use of these credentials by states and districts that are hungry for available measures to satisfy requirements in accountability systems and meet student and parent demand for a measure of value.
These certifications have been in broad use for some time, but they are getting much more attention as policy shifts toward emphasizing career readiness and non-college pathways into the workforce. Importantly, at least one credential or certification is linked to almost every high school CTE program. And, other than basic course-taking numbers, there isn’t much in the way of data that is systematically collected or reported for CTE students in high school. As a result, for students in high school CTE programs who are not planning to go on to college, these certifications may be the only available metric beyond seat time that indicates career readiness.
So what do we learn from the Ohio analysis? Well, this study is among the first to show that credentials earned in high school can indeed lead to higher pay. Though the findings cannot be interpreted as demonstrating a cause-and-effect relationship, it does a thoughtful job of comparing students who were in similar CTE programs and schools and whose only clear difference was whether they earned the certificate or credential. Overall, Plasman finds that seven years after high school, credential earners in many areas were earning more than their otherwise similar peers who also completed coursework in the same CTE program. In particular, he finds returns of over 20 percent higher earnings for certificate holders in construction, transportation, and manufacturing, with smaller gains in IT, health, business, agriculture, engineering, and law/public safety. A handful of other certifications show that those who earn them are earning less seven years out.
Is this work really new? Yes, this work adds to a small literature that tries to estimate whether credentials earned in high school seem to pay off. This is important because there is not a lot of research evidence on this question. Earlier work using Texas data from Matt Giani showed that some credentials can offer workforce benefits in the form of higher pay in the short term. As with the Plasman report, there was a lot of variation in the potential value of these certificates across program content areas, with a few showing higher benefits and many showing zero or small negative differences in later earnings.
What’s interesting is that the Plasman and Giani studies align on showing benefits of transportation, health, construction, and IT certificates, but differ in the direction of earnings differences in areas like agriculture and business. We shouldn’t make too much of differences across the states because their economies and population trends are quite distinct. However, it is worth noting the areas where they find similar benefits of certificate earning. Two states don’t make a consensus, but in an area with limited evidence, this is worth noting.
Will earnings premiums persist as (former) students enter their late twenties and thirties? It’s too early to tell. What we really want to know is whether credential earners will continue to do better than they otherwise would have done had they not earned the credential. If the peers that these studies are comparing them against all went to college and earned a bachelor’s degree, then it may be that the short-term benefits of these certificates earned in high school won’t carry the same longer-term benefits.
What other research questions remain? One important issue to sort out is whether the certificate or unobserved skill differences are behind the wage returns? The big challenge is that we do not know if the certificate itself is valuable, or if it is just the best available indicator of skills that employers value. Plasman has done the best that is possible given the Ohio data (which are excellent, though don’t include the underlying CTE skill measures that we might like).
Deeper insights may soon be coming. Ongoing work by Daniel Kreisman and Thomas Goldring is designed to offer first-of-its-kind evidence that we need to better understand whether and how credential receipt is working. They have data on student performance on some National Occupational Competency Testing Institute (NOCTI) certifications. Most certifications are awarded based on students scoring at or above some minimum threshold. In the case of this ongoing study, they have the scores and the indication of who received the certificate. The result is that they should be able to differentiate among people who had similar skills on the assessment but who just barely differed in whether they received the certification. This design has the potential to help provide the next set of evidence we need to understand (at least for a handful of districts and certifications) if the payoff comes from the certificate or the underlying skill it is meant to signal.
What might we expect to see? The certificate is likely valuable only insofar as it gives employers an idea of actual skills they value. In areas where the credentials are more easily attained (the test is relatively easy), receiving the credential might not provide all that much information to employers. For instance, if passing a credentialing test is easy and everyone (or nearly everyone) gets the credential, then there is no ability of employers to use the signal that might otherwise come from attainment of the certificate or credential. In these instances, employers get too little information or an imperfect indicator of skill from these metrics. Conversely, credentials that are harder to earn might mean that getting the certificate is a good indicator of someone with high skills. But because earning a credential is binary—you get it or you don’t—those students who just missed earning the credential will look lower-skilled to employers. Thus, the certificates themselves could really be benefiting those who earn them. However, if employers need to hire more than just the pool of people who earned the certificate, they are at a disadvantage in knowing who is the next best person with the skills they value.
The Plasman study sheds new light on a policy relevant issue. The size and economic diversity of Ohio make it a great place from which to learn, and the analysis’s insights are valuable to policymakers and practitioners. There is more evidence needed, but thankfully, some of that work is underway.
