Click HERE for a PDF of our paper Education and the Economy.
Having a strong education system produces economic gains for Pennsylvania and the nation as a whole; conversely the effects of having an inadequate, inequitable system drain our economy. This correlation has grown increasingly relevant as our nation recovers from the economic downturn. The growing demand for highly skilled workers further illuminates the importance of providing an opportunity to learn to all students. Education’s effect on the economy can be clearly seen when examining issues like jobs, consumer spending and revenue. The following highlights the inseparable relationship between education and the economy.
- If only half of Pennsylvania’s high school dropouts were to stay in school and receive a diploma, the state would see 1,050 new jobs created, $13 million in increased state revenue, $129 million in increased earnings and $100 million in increased spending. If 60% of those new high school grads went on to earn a college degree, the improvement would be even more drastic: 1,750 new jobs, $22 million in increased state revenue, $217 million in increased earnings and $157 million in increased spending.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
- Investments in quality prekindergarten programming conservatively yield a return of $7 for every taxpayer dollar invested.iii
- Improving education outcomes could results in national savings between $7.9 and $10.8 billion annually in public assistance, food stamps and housing assistance.iv
- Increases in educational attainment were responsible for an estimated 11 to 20 percent growth in worker productivity in the United States in recent decades.v
- 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.vi
These facts and figures support one of many reasons why public education is a necessary investment. The link between educational attainment and the health of the economy is undeniable and the effects of this relationship are substantial. Creating an excellent education system is vital in the effort to create a robust economy that is competitive both nationally and globally.
i Education and the Economy: The Economic Benefits of Helping High School Dropouts Earn Both High School Diplomas and College Degrees (PA Report). Rep. Washington D.C.: Alliance for an Excellent Education, December 2011. p.1&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 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
iv Mitra, Dana. Pennsylvania’s Best Investment: The Social and Economic Benefits of Public Education David. Rep. Philadelphia: Education Law Center, 2012. Print. p.12
v 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)
vi 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