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ECONOMIC BOOST: New Alliance Report Examines Economic Impact of Reducing the High School Dropout Rate Among Students of Color

“If the nation’s education system does not start serving students of color better today, all Americans will feel the difference in their wallets.”

Cutting the high school dropout rate in half among students of color will greatly increase the nation’s economic vitality, according to the latest report in the Alliance for Excellent Education’s continuing work linking improved educational outcomes to economic returns.

“If the nation’s education system does not start serving students of color better today, all Americans will feel the difference in their wallets,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia. “That means that for all of us, the best economic stimulus package is a high school diploma.”

According to the report, The Economic Benefits of Reducing the Dropout Rate Among Students of Color in the Nation’s Forty-Five Largest Metropolitan Areas, students of color made up a sizable 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 likely contributions that the 300,000 “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. And these findings represent the economic gains for just one class of dropouts.

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, which is more than 20 percentage points lower than that of their white peers.

Poor educational outcomes for students of color are especially troubling given Census projections indicating that, by the middle of the century, America will become a minority-majority country in which no single demographic group commands a majority. In 2007, the U.S. Census Bureau estimated that there were slightly more than 299 million people in the United States. Of that total, 66 percent were white, 15.1 percent were Hispanic, 12.3 were African American, 4.3 were Asian, and 0.8 percent were Native American. But by 2050, minorities are projected to make up 54 percent of the U.S. population. Minorities already accounted for nearly half (49 percent) of U.S. births in the year ending July 1, 2009, a record high, according to data released last month.

“Reducing dropout rates among students of color and native students could be 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 economic model used to generate The Economic Benefits of Reducing the Dropout Rate Among Students of Color in the Nation’s Forty-Five Largest Metropolitan Areas was developed by the Alliance for Excellent Education with the generous support of State Farm® and in partnership with Economic Modeling Specialists Inc.

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.

Economic boost

The Alliance released the findings from the report during a webinar on July 7 and featured Alliance President Bob Wise, Michael Wotorson, Richard Wells, vice president for partner-driven programs at the America’s Promise Alliance, and Mike Fernandez, vice president of corporate communications and external relations at State Farm®. (Click on the image to the right to watch video or download audio from the webinar).

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 included in the study, please here

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