Annual Cost of Inadequate Education is Hundreds of Billions of Dollars

Symposium at Teachers College, Columbia University, Kicks Off Campaign for Educational Equity

When young people fail to graduate from high school, the nation loses hundreds of billions of dollars each year. To document and respond to this fact, the Campaign for Educational Equity at Teachers College hosted its first annual symposium, “The Social Costs of Inadequate Education,” on October 24-25, 2005. America could face a bleak economic and political future if it fails to educate its growing and increasingly poor English language learner population. Leading scholars presented papers addressing both the moral imperative to provide equal educational opportunities to all children, and the dollars and cents impact of inadequate education on tax revenue, healthcare, welfare, civic participation, income and the labor force, and the criminal justice system. The researchers found that:

Annual losses exceed $50 billion in federal and state income taxes for all 23,000,000 U.S. high school dropouts ages 18-67.
America loses $192 billion -- 1.6% of GDP -- in combined income and tax revenue losses with each cohort of 18-year-olds who never complete high school. Health-related losses for the estimated 600,000 high school dropouts in 2004 totaled at least $58 billion, or nearly $100,000 per student.
High school dropouts have a life expectancy that is 9.2 years shorter than high school graduates.
America could save between $7.9 billion and $10.8 billion annually by improving educational attainment among all recipients of TANF (Temporary Assistance for Needy Families), Food Stamps and housing assistance.
Increasing the high school completion rate by just 1 percent for all men ages 20-60 would save the U.S. up to $1.4 billion per year in reduced costs from crime.
The economic benefits of participation in model preschool programs range as high as $7 for each dollar invested.
College graduates are three times more likely to vote than Americans without a high school degree, while those who earn more are far more likely to be affiliated with a political organization.

Together, the studies called for a comprehensive approach to the problem of inequities in educational opportunity – America 's education is not based on ‘no child left behind,' but on ‘no school, no community, and no neighborhood left behind.' Effective programs of reform must be studied, so that they can be added to interventions like preschool, class size reduction, and increased teacher salaries, in which benefits far outweigh the costs. A summary of the wide spectrum of issues discussed is provided below; all papers presented are available at the symposium's website.

Congressman Charles Rangel opened the conference with an appeal to invest in our youth. To make this a priority in the political and private sectors, he advised advocates to draw on financial statistics and national self-interest, as well as the moral imperative. He pointed to his own story as an example of someone who, because of the power of dreams, rose from an underprivileged childhood in Harlem to a position of influence. Rangel concluded with a call to give children the tools to hope, have opportunity, and believe that every dream is attainable.

Henry M. Levin, William Heard Kilpatrick Professor of Economics and Education at Teachers College and chair of the symposium, underscored the history of studies showing that poor education is expensive and educational investments cost significantly less than later losses. Levin also presented the twin issues in educational equity: the moral issue of justice and fairness, and the major dollar and cents costs to society of neglecting large inequalities in educational outcomes. “The issue of educational equity is a moral issue, an issue of justice, fairness,” Levin declared, “but beyond the moral imperative, there are also major costs to society of neglecting large inequalities in educational outcomes.” Richard Rothstein, Sachs Lecturer in International and Transcultural Studies at Teachers College, showed that these large inequalities can be observed between blacks and whites in many areas. In addition to educational attainment, academic achievement, and school readiness, percentile rankings of whites surpassed blacks in health, the quality of non-school experiences, civic participation, and economic security. The striking consistency in inequality across many factors should spur us to more effective action, narrowing gaps by focusing policy on all domains simultaneously, Rothstein argued.

Marta Tienda, Maurice P. During Professor in Demographic Studies and Professor of Sociology and Public Affairs at Princeton University, examined America 's growing population of school-age children from different racial and ethnic backgrounds in an aging, white population and further emphasized the need to invest in education. Now is the time, she urged, to take advantage of the demographic dividend and educate the large number of students to be part of the future work force. Challenges remain, however: the population growth is primarily within minority, low-income, and urban student populations, often the most challenging to educate; and there is potential for a struggle over resources with aging members of society. The research of Irwin Garfinkel, Jane Waldfogel, and Brendan Kelly reaffirmed the substantial financial rewards of providing at least a high school education for students on welfare and public assistance. Their report examined the effects of inadequate education of single mothers on 3 safety nets: income assistance (the TANF program), food stamps, and housing assistance; they found an impressive possible savings of $8 billion to $10 billion if all single mothers who had dropped out obtained a high school degree and one third of them went on to more than high school.

The conversation then turned to possible interventions and strategies for closing the achievement gap. Ron Ferguson of Harvard's Kennedy School of Government suggested two major interventions within the context of a national movement towards educational equity: training all parents to support at-home learning, and pursuing transformative school reform through whole school district units. In looking at student achievement data broken down by socioeconomic status and race, Ferguson found that parental involvement and a ‘tough love' approach to parenting can improve educational outcomes. As for school reform, he offered the Union City, New Jersey school district, which serves a disadvantaged group of students, as an example of impressive improvement through strong district leadership, flexibility in applying programs in local schools, and ongoing support for teachers. Another promising intervention is expanding early childhood education, according to Clive Belfield, an economist at Queens College, City University of New York. His study found that pre-kindergarten pays for itself and is an efficient investment because of its high returns; he reminded the audience, though, that the real promise of pre-kindergarten rests on its effects on a range of short- and long-term behavioral outcomes.

The second day of the conference opened with Campaign for Educational Equity's Executive Director Michael Rebell, who emphasized the need for a broad discussion of educational equity that includes both the enormity of problems that inequity causes and the enormity of the solutions that will be required to solve those problems. He also underscored the usefulness of papers such as those presented at the symposium, which will help the education community tailor its focus to the most effective and productive educational interventions.

A paper on inadequate education's impact on “Health Status and Social Costs” followed Rebell's opening remarks. Peter Muennig, of the Mailman School of Public Health at Columbia University, highlighted the dramatic impact that levels of education can have on an individual's health, not the least of which is the reality that people without a High School diploma live on average 9.2 fewer years than those who have graduated. This shocking disparity reflects a difference in both knowledge and understanding of health and related risk-factors, in stress based on lower earning capacity, and in the ability to afford preventative healthcare. Muennig showed that High School dropouts' inferior health lowered their capacity for “social return” through decreased earnings, taxes paid, and hours worked, amongst others. Their inferior health also led to public costs for public insurance, emergency healthcare, and other interventions. All told, the costs to society for each student that drops out of school before completing high school could rise to $120,000.

Next, Enrico Moretti, of the University of California, Berkeley, discussed the impact inadequate education has on criminal justice and its social costs. Moretti was able to show that education and incarceration are inversely related, independent of any third variables that might impact the likelihood that an individual will drop out of high school and commit a crime. In addition to the social costs that higher incarceration rates create, Moretti noted that the serious racial disparities in incarceration rates rendered the inadequate education of African-American boys an extraordinary moral failure. Simply increasing the male graduation rate by one percent could lead to 100,000 fewer crimes each year, which would save about $1.4 billion.

Jane Junn, of Rutgers University, next presented a paper on the political costs of inadequate education. Unlike the other presenters, Junn's paper focused on civic, rather than economic, costs. She noted that the primary attributes of democratic citizenship; voting, engagement, knowledge, tolerance, attentiveness, and efficacy, were impacted by an individual's education level. Importantly, however, educational attainment does not affect all racial groups in the same way—reaching the same educational level still leaves an earnings gap between whites and minorities. Education as it is currently constituted serves a powerful “sorting” function that creates a rationalization for the unequal distribution of limited resources. This stark reality is important to keep in mind in the face of so many reforms and interventions; ultimately, Junn noted, education interventions must emphasize the ability of all students to achieve and give hope to a diverse population of school children.

A series of lunchtime discussions sought to mine the symposium attendees for expertise in a number of topic areas discussed by the symposium. The discussions were also an opportunity for participants to weigh in on the significance of the research presented at the symposium and point the Campaign for Educational Equity in a direction for further action.

The final research presentation took place on the afternoon of Day Two, and was impressive, if only for the sheer magnitude of the figures it presented. Cecilia Elena Rouse, of Princeton University, presented her findings on the relationship between education and earnings, and the potential savings that arise from increased tax revenues as a result of increased high school graduation rates. Rouse, using what she described as conservative calculations, concluded that a one percent increase in the graduation rate would increase annual tax revenue by $50 billion, as well as an additional $30 billion in social security payments. These startling figures are amongst the strongest evidence presented at the symposium of the economic costs of inadequate education.

Thomas Bailey, of Teachers College, used his studies of the population to emphasize society's need for students to graduate from college as well as high school. Bailey reported that the clearest line of demarcation in earning power exists between those who have graduated from college and those who have not, emphasizing that the economy's growth is taking place primarily within sectors that require not simply “adequate” preparation, but “expert thinking” and “complex communication.” Without making more, faster progress in getting students into higher education, their economic productivity will be compromised along with that of the entire nation.

The afternoon ended with an invitation for audience commentary and feedback. The audience response varied in tone and topic, but emphasized the need for creation of a network of activists and researchers who can respond to the issues brought forth at the conference, a coordinated effort that will appeal to the broader public. These suggestions will be used along with the diverse information and expertise presented at the symposium as the Campaign for Educational Equity works to develop further its plan of action to close the educational achievement gap and thereby create a more just society.

The symposium was sponsored by the Laurie M. Tisch Foundation.

Symposium papers are available at the symposium's website.

Prepared by Katherine Lu and Nelly Ward, October 31, 2005