Lowering High School Dropout Rate Among Students of Color Significantly Increases Nation’s Economic Growth
Fewer Dropouts Means Higher Spending on Homes, Cars, and Investments
WASHINGTON, DC – Lowering the high school dropout rate among students of color will greatly increase the nation’s economic vitality, according to a dramatic new study, The Economic Benefits of Reducing the Dropout Rate Among Students of Color in the Nation’s Forty-Five Largest Metropolitan Areas, that the Alliance for Excellent Education released today.
“Census projections indicate that America will become a minority-majority country by the middle of the century,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia, “but a recent report found that minorities accounted for nearly 49 percent of U.S. births in the year ending July 1, 2009. According to our report, if the nation’s education system does not start serving students of color better today, all Americans will feel the difference in their wallets. That means that for all of us, the best economic stimulus package is a high school diploma.”
Years of data have consistently demonstrated the persistent graduation gap between America’s students of color and their peers. The most recent estimate shows that high school graduation rates for African American, Latino, and American Indian students hover only slightly higher than 50 percent; more than 20 percentage points lower than that of their white peers.
“In addition to the moral imperative to provide every student with an equal opportunity to pursue the American dream, there are also strong economic arguments for helping many more students of color graduate from high school,” Wise said. “Lowering the dropout rate brings a range of benefits—both to the individual student and to a community—many of which most people do not realize.”
Summary of Key Findings
Nationally, students of color made up a sizeable portion of the estimated 600,000 students who dropped out from the Class of 2008 in the nation’s forty-five largest metropolitan areas. Of these students, approximately 113,600 were African American, 200,000 were Latino, 30,800 were Asian American and 3,750 were American Indian. Cutting the number of these dropouts in half would likely produce vast economic benefits by boosting the spending power of these communities of color and spurring job and economic growth in these regions.
The economic model used to generate this report was developed by the Alliance for Excellent Education with the generous support of State Farm® and in partnership with Economic Modeling Specialists Inc. The findings represent the economic gains for just one class of dropouts. The likely contributions that the “new graduates” would add to the nation’s economy are:
- increased earnings of $2.3 billion in an average year;
- increased home sales of an additional $5.9 billion in mortgage capacity over what they would spend without a diploma;
- an additional 17,450 jobs from the increased spending in their local areas;
- an increase in the gross regional product by as much as $3.1 billion;
- an additional $1.6 billion spent and an additional $636.6 million invested each year;
- an additional $158.6 million spent on vehicle purchases; and
- increased tax revenues of $249.7 million.
The metro regions would also see increased human capital, with 48 percent of these new graduates likely continuing on to pursue some type of postsecondary education after earning a high school diploma.
“These data show that reducing dropout rates among students of color and native students could be the one of the keys to righting our economy,” said Michael Wotorson, executive director of the Campaign for High School Equity. “Increasing the earning, investing, and purchasing power of these potential graduates would dramatically improve the economy at every level. Large metropolitan areas cannot recover and sustain economic health without seeing every high school student, regardless of zip code or race, through to graduation.”
The results are the latest in the Alliance for Excellent Education’s continuing work linking improved educational outcomes to economic returns. Earlier this year the Alliance released a larger study that measured on a city-by-city basis the growth in home ownership, levels of spending and investment, and car sales that would likely result from cutting the high school dropout rate in half for all students in the nation’s largest cities and the metropolitan areas that surround them.
“As a business leader, I’m committed to a quality education for all children and to strengthening the vitality of our communities,” said Edward B. Rust Jr., chairman and chief executive officer of State Farm®. “The new findings from the Alliance for Excellent Education conclusively demonstrate that graduating from high school has significant positive economic and financial consequences for the business community and not just for the individual getting the education. Assuring that all of our students graduate from high school with the skills necessary to compete in a global economy is something all businesses—small and large—should see as a priority.”
“Times have changed. We no longer can afford to educationally bankrupt our students and our communities by shortchanging them on high school diplomas. This report provides compelling economic data to help make the case for every student to get a quality education,” said Richard Wells, vice president for partner-driven programs at the America’s Promise Alliance. “More importantly, this report does a fantastic job of demonstrating to all Americans the real-life economic benefit to their communities when they reduce the dropout rate.”
The report includes detailed findings for each of the forty-five largest metropolitan areas in the United States: Albuquerque, Atlanta, Austin, Baltimore, Boston, Charlotte, Chicago, Cleveland, Colorado Springs, Columbus, Dallas-Fort Worth-Arlington, Denver, Detroit, El Paso, Fresno, Honolulu, Houston, Indianapolis, Jacksonville, Kansas City (MO), Las Vegas, Los Angeles-Long Beach, Louisville, Memphis, Miami, Milwaukee, Minneapolis, Nashville, New York City, Oklahoma City, Omaha, Philadelphia, Phoenix-Mesa, Portland (OR), Sacramento, San Antonio, San Diego, San Francisco-Oakland, San Jose, Seattle, Tucson, Tulsa, Virginia Beach, Washington, DC, and Wichita.
For more information and specific statistics on how lowering the high school dropout rate among students of color can increase economic growth in each of the metropolitan areas listed above, please visit the Alliance’s website here.