The Key to Increasing Wages and Productivity

Chuck Sheketoff

The best way for Oregon to strengthen its economy is by investing more to create a better educated workforce, according to a national report by the Economic Analysis and Research Network (EARN).

The EARN report, A Well-Educated Workforce is Key to State Prosperity, (PDF) found “clear and strong” evidence that states’ workforces with higher levels of educational attainment tend to be more productive and enjoy a higher median wage. The median wage represents what the typical worker earns.

If Oregon lawmakers want a stronger economy — one where typical Oregonians earn more — they need to raise our workforce's educational attainment. That means lawmakers need to invest more in education, from early childhood through higher education.

The EARN report also documents that cutting taxes in the hopes of attracting businesses would not increase wages. The authors found “no clear relationship” between state tax levels and median wages.

Tax cuts for corporations and the wealthy not only won’t strengthen our economy, they will waste valuable resources needed to better educate our workforce.

The report found that median wages hover around $15 an hour in the 22 states with the least-educated workforces, defined as states with 30 percent or less of the workforce with at least a bachelor’s degree.

By contrast, in the three states where more than 40 percent of the population has at least a bachelor’s degree, median wages are $19 to $20 an hour. That is nearly a third higher than in states with the least-educated workforces.

So what should Oregon and other states do? Increase access to postsecondary education by curbing tuition growth and increasing financial aid, reduce high school dropout rates, move people without high school degrees through GED and associate degree programs, increase the quality of K-12 education to improve success of high school graduates in postsecondary education, and offer universal preschool programs

We know what's preventing higher educational attainment and what’s needed to improve it. We just need to make those policies a priority and stop the wasteful tax subsidies that plainly don't work and rob the state of valuable resources.

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Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

By Chuck Sheketoff Aug. 22, 2013 Posted in open discussion.