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ECONOMIC IMPERATIVE: Alliance Study Finds that Fewer Dropouts Means Higher Spending on Homes, Cars, and Investments

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“If the U.S. is to improve its competitiveness in the global economy, it must have an education system that meets the fast-growing demand for high-level skills.”

Lowering the high school dropout rate will greatly increase the economic vitality for some of the nation’s largest metropolitan areas, according to a dramatic new study that the Alliance for Excellent Education released on June 9. The results are the latest in the Alliance’s continuing work linking improved educational outcomes to economic returns. Combined with the study the Alliance released in January on the nation’s forty-five largest metro areas, the June 9 release brings the number of cities for which the Alliance has data to over eighty-five.

The city-by-city findings include the growth in jobs, home ownership, levels of spending and investment, and car sales, among other findings, that would likely result from cutting the high school dropout rate in half. For example, in the Tampa metropolitan area, an estimated 14,100 students dropped out from the Class of 2008 at great costs not only to themselves but to their communities as well. If Tampa’s high school dropout rate were cut in half, graduates in the Tampa metropolitan area would likely have:

  • seen $77 million in increased earnings in the average year;
  • spent an additional $57 million and invested an additional $20 million each year;
  • created an additional 700 jobs from the increased spending in their local areas and increased the gross regional product by as much as $107 million;
  • boosted home sales with an additional $183 million in mortgage capacity over what they would spend without a diploma;
  • spent an additional $6.8 million each year purchasing vehicles; and
  • boosted tax revenue by $6 million.

And, after earning a high school diploma, 56 percent of these new Tampa graduates would likely continue on to pursue some type of postsecondary education—an especially important finding considering that over two thirds of new jobs and nearly 90 percent of new high-growth and high-wage jobs will likely go to workers with at least some education after high school.

In the Cincinnati metropolitan area, if half of the estimated 7,600 students who dropped out from the Class of 2008 had earned their diplomas instead, these new graduates would likely have:

  • seen $42 million in increased earnings in the average year;
  • spent an additional $29 million and invested an additional $10 million each year;
  • created an additional 350 jobs from the increased spending in their local areas and increased the gross regional product by as much as $53 million;
  • boosted home sales with an additional $95 million in mortgage capacity over what they would spend without a diploma;
  • spent an additional $3.5 million each year purchasing vehicles; and
  • boosted tax revenue by $5.7 million.

According to Bob Wise, Alliance president and former governor of West Virginia, these findings clearly prove that everyone benefits from improved education. “As these results demonstrate, the best economic stimulus package is a high school diploma,” he said. “If the U.S. is to improve its competitiveness in the global economy, it must have an education system that meets the fast-growing demand for high-level skills,” concluded Wise.

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.

“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.”

The June 9 release contained data for the following metro areas: Akron, OH; Anchorage, AK; Baton Rouge, LA; Billings, MT; Birmingham, MT; Bismarck, ND; Boise, ID; Bridgeport, CT; Burlington, VT; Casper, WY; Cedar Rapids, IA; Charleston, WV; Cheyenne, WY; Cincinnati, OH; Columbia, SC; Des Moines, IA; Dover, DE; Fargo, ND; Huntington, WV; Iowa City, IA; Jackson, MS; Little Rock, AR; Manchester, NH; Morristown, TN; Pittsburgh, PA; Portland, ME; Providence, RI; Raleigh, NC; Richmond, VA; Rochester, NY; Salt Lake City, UT; Scranton, PA; Sioux Falls, SD, Spokane, WA; St. Louis, MO; Stockton, CA; Tampa, FL; Toledo, OH; Trenton, NJ; Wheeling, WV; and Yakima, WA.

 

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