It's time for those who make public policy in Arkansas to follow the example of billionaire John Tyson and go big. Along with the eclipse, the top story in Arkansas this month has been the hiring of John Calipari as head basketball coach at the University of Arkansas. The story received major media attention across the country and shook the sports world. Arkansas was in the spotlight because Tyson chose to go big.
A once-proud basketball program was without a coach, its players had left, and two other coaches had turned down UA offers. At that point, Tyson, a former member of the UA Board of Trustees, took things into his own hands and provided the funds necessary to bring one of the most famous coaches in the history of the sport to Arkansas.
I look at Tyson's example and dream about the exciting things that could happen on the academic side of higher education if our governor and legislators also went big. Instead, we starve higher education at a time when those with college degrees are needed more than ever in our state.
The Legislature entered its fiscal session earlier this month with Gov. Sarah Sanders proposing cuts for most of the state's four-year public colleges and universities. The saddest thing about such a lack of vision is that it's occurring when the Arkansas economy is doing well. The state budget is performing above forecast. Think about what we could do if we invested surplus funds into the lives of young Arkansans.
The Legislature has become a refuge for those who can make more money there than in the private sector. An increasing number of legislators don't have college degrees. That doesn't necessarily mean they're not smart. What it does mean is that they don't know what a college degree could have meant. They simply can't relate to the value of higher education.
Many of them play to the social media mob. As one of my friends likes to say, social media has given every idiot a megaphone while also providing a vehicle for shysters to separate fools from their money. In playing to the mob, legislators scream about the need for more plumbers and welders rather than more people with college degrees.
The problem with that kind of thinking is that this isn't an either/or situation. It's "all of the above." In a state with a growing economy, we need more plumbers and welders along with more people with bachelor's degrees, master's degree's and even doctorates.
Contrary to what politicians would have you believe, the wage gap between recent college and high school graduates continues to widen. A thriving Arkansas economy--the continued boom in northwest Arkansas, a new fighter mission that's bringing huge growth to the Fort Smith economy, the steel boom in northeast Arkansas, the defense industry and lithium booms in south Arkansas, the growth of logistics and distribution in central Arkansas--requires a better educated workforce.
In 2023, recent college graduates ages 22-27 who were working full time earned $24,000 more per year on average than those in the same age group with only high school degrees. In 1990, the gap was $15,000. By their early 20s, those with only high school degrees will have years more work experience than new college graduates, but they still earn less.
Economist David Deming published research last year that showed the wage premium will double over a worker's lifetime. Deming followed a group of college-educated workers through their working lives. At age 25, they had a 27 percent premium over those with only high school degrees. By age 55, the premium was 60 percent.
"It's malpractice to tell a young person that a college degree isn't necessary anymore," Deming says.
Even those who don't graduate from college have higher earnings than those who never attend.
According to a story from Axios: "Jobs that high school graduates typically get don't see much wage growth. Truck drivers, with years and years of experience, don't go on to make considerably more money than newbies. Someone in marketing or human relations or even journalism might see a salary double or more over a lifetime. More educated workers are also more likely to have other benefits -- the ability to work remotely, access to paid sick and family leave, health insurance."
"We're in an economy that puts a premium on high skill, knowledge, idea generation," says Jaison Able, who heads urban and regional studies for the New York Federal Reserve. "There are fewer and fewer opportunities, especially good-paying opportunities, for those who have just a high school diploma."
Deming, a professor at Harvard's Kennedy School and the Harvard Graduate School of Education, wrote a story for The Atlantic that was headlined "The College Backlash Is Going Too Far."
He wrote: "Americans are losing their faith in higher education. In a Wall Street Journal poll, more than half of respondents said that a bachelor's degree isn't worth the cost. Young people were the most skeptical. As a New York Times Magazine cover story put it: 'For most people, the new economics of higher education make going to college a risky bet.'
"The article drew heavily on research from the Federal Reserve Bank of St. Louis, which found that rising student-loan burdens have lowered the value proposition of a four-year degree. American higher education certainly has its problems. But the bad vibes around college threaten to obscure an important economic reality: Most young people are still far better off with a four-year college degree than without one."
My hope is that the governor and a majority of legislators will take their cue from Tyson prior to the regular legislative session next January. Not only could they put more state revenue into higher education, they could set up a trust fund that uses tax revenue from the aforementioned lithium boom. We need to look no farther than Texas for inspiration.
The south Arkansas lithium boom won't be anything like that region's oil boom of the 1920s, which transformed towns such as El Dorado and Smackover almost overnight. We should think of it more like a long freight train. It's going to slowly gain speed. That won't happen all at once. But when it reaches full speed, it will be a sight to behold. We're talking about something that will happen over three decades, not the next three years.
The time is now, though, to set up something like the Texas Permanent University Fund. Almost 99 percent of the state's oil and natural gas royalties are deposited into the Permanent University Fund and Permanent School Fund. Both receive about $1 billion annually.
In 1876, the Texas Constitution set aside land in west Texas to support the University of Texas and Texas A&M. Today, that 2.1 million acres is leased to oil and gas companies whose wells generate revenue that flows into the Permanent University Fund. UT gets two-thirds of the benefits, and Texas A&M gets the other third.
"The annual cash payout from the oil fund has exploded," Neena Satija and Matthew Watkins wrote for The Texas Tribune. "That has helped the UT System become one of the richest educational institutions in the world, part of a rarefied club that includes Harvard, Yale and Stanford."
The Texas endowment almost doubled during the fracking boom. Arkansas doesn't have millions of acres of state-owned land to devote to such an endowment, but legislators can make the decision now to put future state tax revenues from lithium into a fund that benefits public four-year and two-year institutions of higher education.
If the lithium boom plays out like I think it will, this endowment will be transformative for our state. If the Legislature won't do it, the voters should with a constitutional amendment.
John Tyson set the example. Arkansas can compete with anyone. Let's go big.
Rex Nelson is a senior editor at the Arkansas Democrat-Gazette.
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