Tuesday, November 11, 2008

Recession and the demand for education

Today's New York Times reports on surging demand for classes at CUNY's community colleges. Ironically, but not atypically, this comes just as state and city officials are cutting CUNY's budget and requesting further cuts. An article yesterday reported the governor's thoughts about balancing the state budget: cut education and health (Medicaid).

Unemployed or "underemployed" workers have clear incentives to obtain additional training; it may add skills that enhance employment prospects. Enrolling or reenrolling in college is also a nice bridge element for a resume that would otherwise have holes. Viewed another way, the opportunity cost of spending the time obtaining skills --- the value of what you could be doing otherwise --- has surely fallen during a recession.

As today's article states, tuition at CUNY is extremely low, at $2,800 and $4,000 per year for community and the senior colleges respectively, and it hasn't risen in 5 years. That isn't to say that an increase in tuition may not dissuade students at the margin from attending, but it suggests that a tuition hike would be in line with the general rise in prices of services over time. Apparently the CUNY Chancellor will recommend precisely such actions to the city and state rather than budget cuts.

There is much talk of the need for fiscal stimulus, with Alan Blinder and Martin Feldstein both calling for federal government spending to ameliorate the effects of rapidly declining consumption spending. On the one hand, perhaps college education is not an area that really needs stimulus, given the countercyclical growth in demand. But it is clear that states saddled by balanced budget amendments are likely to reduce spending rather than raise taxes and fees to cover their deficits. Either one is likely to worsen the economic outlook. Direct federal aid could certainly help.

As a CUNY professor myself, I can assure you that long-overdue infrastructure spending in CUNY --- new, larger, modern classrooms with AV capabilities --- would be an excellent fiscal stimulus with real long-term benefits. At Queens, it is a struggle to lug a projector into my classroom every week!