Written by Ray Beebe
Is the American Dream dead? Many Americans think so and a case can certainly be made that they are correct. But first, what does the “American Dream” mean? One definition I like is: “Life should be better and richer and fuller for everyone with opportunity for each according to ability and achievement regardless of social class or circumstances of birth.” People of my generation are familiar with the name Horatio Alger. Alger was a prolific 19th century American author best known for his many juvenile novels about impoverished boys and their rise from humble backgrounds to lives of middle-class security and comfort through hard work, determination, courage and honesty. And, by and large, the American Dream seemed to be working as Americans grew richer with each passing generation. Parents wanted their children “to do better than we did.” But data suggests an apparent stagnation of the American middle class—not just since the financial crisis hit in 2008 but for much of the decade that preceded the crash. The economic recovery has not translated into higher incomes for most American families. After adjusting for inflation, U.S. median household income is still 8% lower than it was before the recession and 9% lower than at its peak in 1999, and essentially unchanged since the end of the Reagan administration. If you look at the growth of the American economy and the growth of productivity of the American workforce, from 1945 until the mid-1970’s the productivity roughly doubled and middle Americans shared in those gains. The average pay rose just about the same as productivity.
But if you look at the period from 1973 until now, productivity has gone up 80% but the average pay of a typical American has gone up only 10%. Some call this “wedge economics” where the people at the top are gaining enormously and the people in the middle are basically flat for about three decades. The hourly compensation of a typical median male worker in 2011 was the same as in 1978 but at the same time the incomes of the people in the top one percent rose six fold.
So, against this backdrop, where does a college education fit in? Is it still a good investment? It clearly is. There is substantial evidence that education raises earnings. The median weekly earnings of a full-time bachelor’s degree holder in 2011 were 64% higher than those of a high school graduate ($1,053 to $638). Workers with a bachelor’s degree earn about 75% more than high school grads, and over a lifetime, that payoff is huge. Compared to high school grads, workers with bachelor’s degrees earn about $1.5 million more. The earnings differential grew steadily throughout the 1980’s and 1990’s. Recent evidence suggests that the earnings differential observed today is higher than it has ever been since 1915, which is also the earliest year for which there are estimates of the college wage gap. The earnings differential is almost certain to continue to broaden. As opposed to generations of the past, high school graduates today are unable to obtain the number of high-paying jobs that were once available. The U.S. has been transformed from a manufacturer-based economy to an economy based on knowledge, and the importance of a college education today can be compared to that of a high school education forty years ago. It serves as the gateway to better options. Moreover, the earnings differential underestimates the economic benefits of higher education since college- educated workers are less likely to be unemployed and more likely to have jobs that provide additional non- wage compensation (e.g.., paid vacation, employer-provided health insurance).
Higher education is also important for intergenerational mobility. Without a college degree, children born in the bottom income quintile have a 45% chance of remaining there as adults. With a degree they have less than a 20% chance of staying in the bottom quintile of the income distribution and a roughly equal chance of ending up in any of the higher income quintiles.
Some people like to talk in terms of investment yield or return. A college education is an extraordinarily profitable investment. Every dollar spent on a young person’s college education produces $34.85 in increased lifetime income. College degrees may be expensive, but the only thing more expensive is not getting one. There are also many quality of life issues where the college graduate stands above the high school graduate. I am fond of sharing a quote attributed to Confucius with our high school students: “Choose a job you love and you will never work a day in your life.” I can confirm this to be true because I had a job like that. Just think of the difference in quality of life between the person who can’t wait to get to work each day and the person who dreads every minute of it and waits impatiently for the buzzer to go off signaling the end of the work day. People with only a high school diploma are much more likely to end up in the latter category. Yet another point about the value of a college education is that a college education is a legacy for our children. Research shows that children of college-educated parents are healthier, perform better academically, and more are more likely to attend college themselves than the children of those with lower educational attainment.
While a college degree is perhaps more valuable than ever, the cost of that college education has skyrocketed. Since 2000, the cost of college (tuition and fees) has increased more than 5% annually about the rate of inflation. College costs rose 500% from 1985 to 2012 while the overall consumer price index rose by only 115%. Students graduate with a median debt level of $57,600. This debt burden combined with the difficulty in qualifying for a loan has resulted in homeownership levels dropping for the under 35 group from 42% to 2007 to 36.8% currently and this trend is likely to continue. Another complicating factor is that state support for higher education has decreased substantially with no change of direction likely. I hear people say that they worked their way through college so our young people should be able to do that as well. Yes, in my era, it was very possible to work your way through with a part-time job during the school year coupled with a good summer job. But we know the information provided herein will convince you that this is no longer even remotely possible.
So what does all of this mean? Let me suggest that we have all the necessary ingredients for the “perfect storm.” The cost of a college education has increased dramatically. A college education has never been more valuable/necessary than it is right now. While young people need more and more financial support from their parents to pay for a college education, parents’ ability to help has significantly eroded (in a recent survey 52% of adults admitted that they did not have any college savings for their children). State support for higher education is almost certain to continue escalating. Young people are graduating with ever increasing student debt which is often not extinguished until they are in the middle age category. I think this easily leads to the conclusion that more private support primarily in the form of scholarships is needed now more than ever before so we can help more of our young people attain that American Dream. They should not have to face the consequences of this “perfect storm” when they bear absolutely none of the responsibility for creating it. I will go so far to say that very issue is extremely important for the future of our country.
Prior to 2008 there were two organizations providing support for Forest City graduates, Forest City Community School Foundation and Forest City Dollars for Scholars. Realizing they were working toward a common goal they merged in 2008 under the name Forest City Education Foundation. The major benefactor throughout the history of all these organizations has been the John K. and Luise V. Hanson Foundation. The Hansons founded Winnebago Industries, Inc. in 1958 and throughout their lifetimes they provided countless support to Forest City organizations and endeavors. Assisting educational institutions and students was always a top priority for them and continues to be so for their children who now act as Trustees of the foundation.
As you likely have surmised by now, the mission of the Forest City Education Foundation is to provide scholarships and related support to the graduates of the Forest City High School. From humble beginnings ($68,500 in scholarships was awarded at Senior Awards Night in 2009) we have grown significantly with over $294,000 in scholarships awarded at Senior Awards Night in 2015. That evening we also announced scholarships the seniors were receiving from college, universities and other outside sources and when those are included we estimate that over $1,250,000 in scholarships “walked across the stage” that evening. The top 20% of the class received an average of $10,000 in scholarships. However, while difficult to quantify (but we know it is substantial), these figures do not include what we refer to as the “One Free Year Program” available to all Forest City students whereby they can take classes at Waldorf College and/or North Iowa Area Community College (NIACC) during their junior and seniors years (at no cost to the student) and receive enough college credits to equate to up to one year of college. This translates into a value of anywhere from $15,000 to $40,000 depending on where the students goes to college following graduation. We feel there is also an intangible benefit to the student as they will have already been exposed to a college environment while still in high school which will ease the transition to their post-high school college experience. The figures also do not take into consideration the increased scholarship aid received by the students because they improve ACT scores we believe in large part because of the John Baylor Test Prep program which is funded by our foundation and made available to the students free of charge. By taking this course we have seen students improve their ACT score by up to five points. Even a one or two point increase can translate into thousands of dollars of increased scholarship aid for the students.
Our foundation is governed by a twenty member volunteer Board. We are all driven by a passion for our young people and a desire to help any of them, who have the desire and the ability, obtain a college degree. I have long referred to our young people as “our most valuable asset.” And indeed they are—in fact, they ARE our future. As the longtime President of the foundation, it has been my privilege and pleasure to become acquainted with a significant number of the Forest City High School students. It is not unusual to spot me at a local restaurant or coffee shop immersed in conversation with one of them. I have acted in a mentor role to a number of them encouraging and assisting them along the way in the selection of a career, picking the “right” college and maximizing the scholarships they receive. We have some truly amazing young people in Forest City and I don’t mean just academically but high character, strong values and a strong desire to help others and make the world a better place. They receive a very strong education here and I always tell them they will not have trouble competing with high school graduates from anywhere. I “keep an eye” on our graduates and can tell you that many of them end up on Dean’s Lists at many colleges and universities.
We are pleased with the role our Foundation has played in creating a more academic environment at the Forest City High School. We have had the full cooperation of Superintendent Darwin Lehmann. Prior to Darwin’s arrival in Forest City eight years ago, it was not really talked about but the Forest City High School’s composite ACT score was slightly below the state average. Now, we are pleased to report that it is comfortably above the state average. Certainly the John Baylor Test Prep program has been a significant factor. This past spring the Forest City Education Foundation sponsored the Sixth Annual Academic Banquet whereby students from all four high school grades receive academic letters for outstanding achievement. The evening is devoted to praising and encouraging these students and includes a keynote inspirational speech usually delivered by a Forest City alum. Attendance at this event has grown to over 200 consisting primarily of parents and grandparents. We know many students are motivated to meet the required criteria to attend this event. We have received countless favorable comments from family members and the broader community for sponsoring this event and honoring students who perform well academically or I sometimes day for doing what he or she is supposed to do—become the very best student he/she can be!
Beginning in 2012 our foundation has provided the funding for Forest City students who have just completed their sophomore year to attend the Iowa Hugh O’Brien Leadership Conference (HOBY) which is held each summer. (There are about 100 seminar locations each year located throughout the United States and several other countries). HOBY was founded in 1958 by actor Hugh O’Brien with a goal of developing leadership potential in American youth. We identify students with leadership potential to attend the seminar and with assistance from two individual donors we have been sending four Forest City students each year. They come back energized and empowered and students say it was a “life-changing event”.