The Positive Economic Impact of America’s Historically Black Colleges and Universities
HBCU Impact 2017 –
HBCUs are pillars of their host communities, generating economic impacts year after year. In 2014, the nationwide economic impact of HBCUs on their regional economies includes:
- Total initial spending by the nation’s 100 HBCUs is $10.3 billion. Initial spending is the combination of three types of spending—spending by the institution for personnel services (wages, salaries, and benefits), spending by the institution for operating expenses, and spending by students.
- The total economic impact on output (sales) is $14.8 billion.Total output impacts are the most inclusive, largest measures of economic impact and are the most frequently cited measure of economic impact and are typically emphasized in press releases and other communications. Viewed as the equivalent of business revenue, sales, or gross receipts, total output is the value of production by all industries, including intermediate inputs.
- Public HBCUs account for $9.6 billion of the output impact, or 65 percent of the total amount. Private, nonprofit, HBCUs account for $5.2 billion of the output impact, or 35 percent of the total amount.
- Dividing the total output impact ($14.8 billion) by initial spending ($10.3 billion) yields a multiplier of 1.44. Every dollar in initial spending generates an additional 44 cents for the regional economy. The multiplier captures the regional economic repercussions of the flows of re-spending that take place throughout the region until initial spending has completely leaked to other regions. In short, it measures the response of the regional economy to a change in spending.
- The economic impact of an HBCU is most easily understood in terms of its effects on employment. Collectively, the employment impact of the nation’s HBCUs on their regional economies is 134,090 jobs. Approximately 43 percent (57,868 jobs) are on-campus jobs at the HBCUs and 57 percent (76,222 jobs) are off-campus jobs. For each job created on campus there are 1.3 off-campus jobs that exist because of spending related to the HBCU.
- To provide perspective, the rolled-up employment impact of the nation’s HBCUs exceeds the number of jobs at either Oracle (132,000 jobs), or Convergys (130,000 jobs), or Honeywell International (129,000 jobs), which are the nation’s 48th, 49th, and 50th largest private employers, respectively.
- The economic impact of the nation’s HBCUs expressed in terms of gross regional product, or value added, is $10.1 billion. Gross regional product, like output, is a measure of the value of production of all industries, but does not include the value of intermediate inputs. Gross regional product equals output less intermediate purchases.
- The economic impact of the nation’s HBCUs expressed in terms of labor income is $7.3 billion. Labor income includes all forms of employment income, such as wages, salaries, benefits, and proprietors’ income.
- The $3.9 billion that HBCUs spend on wages, salaries, and benefits generates $7.9 billion in output, $6.3 billion in regional product, $5.2 billion in labor income, and 88,315 jobs. The $2.7 billion that HBCUs spend on operations generates $2.6 billion in output, $1.4 billion in regional product, $813 million in labor income, and 18,209 jobs. The $3.7 billion in spending by HBCUs’ students generates $4.3 billion in output, $2.4 billion in regional product, $1.3 billion in labor income, and 27,566 jobs.
- The economic success of the graduates of HBCUs can be measured in terms of higher earnings over a working lifetime. The 50,037 HBCU graduates in the Class of 2014 can expect work-life earnings of $130 billion, of which $46 billion (36 percent) represents the incremental work-life earnings that can be attributed to their degrees. That amounts to an additional $926,666 in work-life earnings per graduate. On average, a certificate is worth $204,464, an associate’s degree is worth $463,112, a bachelor’s degree is worth $1,101,200, a master’s is worth $431,679, a PhD is worth $724,005, and a professional degree is worth $1,819,966.
These recurring annual benefits permeate both the private and public sectors of the communities that host HBCUs. These economic impacts demonstrate that continued emphasis on HBCUs as pillars of the economy translates into jobs, higher incomes, and greater production of goods and services. The analysis also shows that the economic worth of an HBCU education over the course of a graduate’s working lifetime is considerable.