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NOT EXACTLY A DROP IN THE BUCKET: Alliance Analysis Finds that High School Dropouts Cost the Country $325 Billion in Lost Wages and Taxes

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"This is a very conservative estimate," said Alliance for Excellent Education President Bob Wise

More than 1.2 million students didn’t graduate from U.S. high schools in 2004, costing the nation more than $325 billion in lost wages, taxes, and productivity over their lifetimes, reports the Alliance for Excellent Education. The $325 billion figure represents a number larger than the gross domestic product (GDP) of countries such as Turkey ($301 billion), Austria ($290 billion), and Saudi Arabia ($250 billion), according to 2004 figures from the World Bank.

“This is a very conservative estimate,” said Alliance for Excellent Education President Bob Wise. “There’s so much that it doesn’t include like the much higher earnings that would be realized if some of the kids not only got their high school diploma but also went on to college. Nor does it take into account the losses related to dropouts from previous or future years. These losses in earnings are bad for the individual, obviously, but they also have a tremendously negative impact on the nation’s economy.”

The Alliance’s analysis is based on a recent report by Princeton University researcher Cecilia Rouse, which noted that high school dropouts are less likely to be employed and have significantly lower annual earnings than those with at least a high school degree. She estimates that the lifetime difference in income between a high school graduate and a dropout is about $260,000. The lifetime difference in income between a high school dropout and a college graduate is approximately $1 million.

To calculate the figures for each state, the Alliance multiplied the number of students reported by the Urban Institute as not having graduated on time in 2004 (the last year for which figures are available) by $260,000. Costs for selected states are in the chart below.

State
9th Grade (2000-01)
All Students (#)
Graduation Rate (%)
Nongraduates in 2004
Lost Lifetime Earnings
($260,000 per dropout)
CA
476,142
68.9
148,080
$38,500,800,000
FL
238,161
53.0
111,936
$29,103,360,000
MA
59,213
71.0
17,172
$4,464,720,000
MI
142,663
74.0
37,092
$9,643,920,000
NY
245,311
61.4
94,690
$24,619,400,000
NC
111,745
63.5
40,787
$10,604,620,000
OH
159,724
70.7
46,799
$12,167,740,000
PA
153,523
75.5
37,613
$9,779,380,000
TX
355,019
65.0
124,257
$32,306,820,000
WY
7,711
72.4
2,128
$553,280,000
Nation
3,913,738
68.0
1,252,396
$325,622,960,000

 

chart showing the losses over a lifetime to each state and the District of Columbia can be found athttps://all4ed.org/press_room/press_releases/03012006#Chart.

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