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ALLIANCE FOR EXCELLENT EDUCATION UNVEILS NEW MODEL LINKING HIGH SCHOOL GRADUATES TO ECONOMIC RECOVERY

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"Given the state of high schools in the United States, it is imperative that the nation focus attention on students most at risk of dropping out if it is to achieve long-term economic stability. In an Information Age economy, education is the main currency."

If twelve of the nation’s largest cities were to reduce the number of dropouts for a single high school class by just 50 percent, they would see a total of more than $1.5 billion per year in additional wages and 61,800 new homeowners, according to a new economic analysis by the Alliance for Excellent Education.

“As these findings show, the best economic stimulus is a high school diploma,” said Alliance for Excellent Education President Bob Wise. “Given the state of high schools in the United States, it is imperative that the nation focus attention on students most at risk of dropping out if it is to achieve long-term economic stability. In an Information Age economy, education is the main currency.”

In its past economic analyses, the Alliance has calculated the financial impact that high school dropouts have on the national economy and individual state economies. However, in an effort to better understand the various economic benefits that a particular urban area could expect were it to reduce its number of high school dropouts, the Alliance for Excellent Education, with the generous support of State Farm®, has developed a sophisticated economic model in partnership with Economic Modeling Specialists Inc.

The model allows various economic projections to be made for U.S. Census-defined metropolitan statistical areas (MSA), which consist of both a central urban area and the surrounding geographic area that has strong social and economic ties to that city. Projections for economic benefits are estimated using graduation rates calculated by Editorial Projects in Education for all public school districts located within a metropolitan area.

“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®. “These economic indicators demonstrate that graduating from high school has significant consequences. We must continue to collaborate and assure that all of our students graduate from high school with the skills necessary to compete in a global economy and a world of life long learning.”

In its initial analysis, the Alliance determined the economic benefits that twelve cities would see were they to reduce by 50 percent the number of students who fail to graduate with their class. The results are displayed in the table below.

Metropolitan Area

Combined Additional Wages in Average Year1

Percent of New Graduates Continuing Education Beyond High School2

Number of New Graduates Who Would Purchase Homes in the Metro Area3

Atlanta, GA

 $145 million

 44 percent

 8,000

Chicago, IL

$200 million

 50 percent

 10,000

Detroit, MI

 $130 million

45 percent

8,000

Houston, TX

$150 million

45 percent

 7,500

Indianapolis, IN

 $40 million

47 percent

 2,000

Jackson, MS

 $16 million

49 percent

 1,000

Louisville, KY

 $25 million

34 percent

 1,500

Nashville, TN

$28 million

 35 percent

1,800

New Orleans, LA

 $41 million

43 percent

 2,500

New York, NY

 $500 million

 53 percent

14,000

Oakland, CA

  $108 million

 71 percent

 2,500

Washington, DC

  $143 million

  57 percent

 3,000

In the coming months, the Alliance will be releasing additional findings for the forty-five largest U.S. Census-defined MSAs. Detailed reports for each metro area listed above are available at https://all4ed.org/publication_material/EconMSA.

1 By earning diplomas-and in many cases, continuing their education-these new high school graduates would earn additional wages each year compared to their likely earnings had they dropped out.
2 After earning their diplomas, many new graduates would continue their education after high school, some continuing far enough to earn a PhD or professional degree.
3 With their additional degrees and increased wages, these new high school graduates would be better positioned to buy homes rather than rent.

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