Education Voters Pennsylvania

Issues

Poor Education Draining Our Tax Dollars: The correlation between Education and the Economy

A good education produces national economic gains; conversely the effects of poor education drain the nation’s economy. This direct relationship has grown increasingly relevant as our nation recovers from a severe economic downturn. The growing demand for highly skilled workers further illuminates the importance of a good education. Education’s effect on the economy can be seen in regards to national revenue, government spending and worker productivity. The following facts and figures exemplify the relationship between education and the status of the economy.

  • Had the students who dropped out of the Class of 2008 stayed in school and graduated, the nation’s economy would have benefited from an additional $319 billion in income over their lifetimes.i
  • Over a lifetime, an 18 year old who does not complete high school earns approximately $260,000 less than an individual with a high school diploma and contributes about $60,000 less in lifetime federal and state income taxes. ii
  • Dropouts cost taxpayers more than $8 billion annually in public assistance programs like food stampsiii
  • Investments in quality prekindergarten programming conservatively yield a return of $7 for every taxpayer dollar invested.iv
  • National savings in public health costs would exceed $40 billion if every high school dropout in just a single year would graduate. Average annual public health costs are $2,700 per dropout, $1,000 per high school graduate and $ 170 for college graduates.v
  • Increases in educational attainment were responsible for an estimated 11 to 20 percent growth in worker productivity in the United States in recent decades.vi
  • If the United States had closed the international achievement gap between 1983 and 1998 and raised its performance to the level of such nations as Finland and Korea, US GDP in 2008 would have been between $1.3 trillion and $2.3 trillion higher, representing 9 to 16 percent of GDP.vii

These facts and figures support one of many reasons why public education is a necessary investment. The link between educational attainment and the economy’s status is undeniable and the effects of this relationship are substantial. Achieving an excellent education system is imperative in ensuring sustainable economic recovery.

Sources
i Amos, Jason. Dropouts, Diplomas, and Dollars U.S. High Schools and the Nation’s Economy August 2008. Rep. Washington D.C.: Alliance for an Excellent Education, August 2008. p.2
ii Rouse, Celia E. The Labor Market Consequences of an Inadequate Education. Working paper.
Equity Symposium on “The Social Costs of Inadequate Education” at Teachers’ College, Columbia University., 2005. Print (http://devweb.tc.columbia.edu/manager/symposium/Files/77_Rouse_paper.pdf, p. 2)
iii Whitaker, Bill. "High School Dropouts Costly for American Economy - CBS Evening News - CBS News." Breaking News Headlines: Business, Entertainment & World News - CBS News. CBS News, 28 May 2009. Web. 02 June 2010. <http://www.cbsnews.com/stories/2010/05/28/eveningnews/main6528227.shtml>.
iv Baker, David, and Eric Cummings. Pennsylvania’s Best Investment: The Social and Economic Benefits of Public Education David. Rep. Philadelphia: Education Law Center, 2008. Print. p. 9
v Baker, David, and Eric Cummings. Pennsylvania’s Best Investment: The Social and Economic Benefits of Public Education David. Rep. Philadelphia: Education Law Center, 2008. Print. p. 1
vi Decker, Paul T., Jennifer K. Rice, Mary T. Moore, and Mary R. Rollefson. Education and the Economy: An Indicators Report. Rep. no. NCES 97- 269. National Center for Education Statistics, 1997. Print. (http://nces.ed.gov/pubs97/97269.pdf, p. ix)
vii McKinsey.com/The Economic Impact of the Achievement Gap in America’s Schools. Rep. Social Sector Office, Apr. 2009. Web. 2 June 2010. <http://www.mckinsey.com/app_media/images/page_images/offices/socialsector/pdf/achievement_gap_report.pdf>. p. 17