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SAVING FUTURES, SAVING DOLLARS: Five Percent Increase in Male Graduation Rate Could Lead to Savings of $8 Billion Annually

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“Research has shown that 75 percent of America’s state prison inmates, almost 59 percent of federal inmates, and 69 percent of jail inmates did not complete high school,” said Bob Wise

Effectively reforming the nation’s high schools would increase the number of graduates and, as a result, significantly reduce the nation’s crime-related costs and add billions of dollars to the economy, according to conservative calculations by the Alliance for Excellent Education. In its new issue brief, Saving Futures, Saving Dollars: The Impact of Education on Crime Reduction and Earnings, the Alliance has estimated that increasing the graduation rate and college matriculation of male students by only 5 percent could lead to combined savings and revenue of almost $8 billion each year. This issue brief was made possible with the generous support of MetLife Foundation.

“Research has shown that 75 percent of America’s state prison inmates, almost 59 percent of federal inmates, and 69 percent of jail inmates did not complete high school,” said Bob Wise, former governor of West Virginia and Alliance for Excellent Education president. “For each student we can keep in school until Graduation Day, we’ll win twice: not only will we spend less on crime-related costs, but we’ll also enjoy additional tax revenue from the higher salary that a high school graduate would command over a dropout.”

According to the issue brief, lower educational attainment levels increase the likelihood that individuals, particularly males, will be arrested and/or incarcerated. As evidence, it points to a study that looked at state prisoners’ education levels in 1997 and showed that male inmates were about twice as likely as their counterparts in the general population to not have completed high school or its equivalent.

The brief lists several theories as to why people with more education commit less crime. For one, people who have high school diplomas earn higher wages through legitimate work, thus reducing their perceived need to commit a crime. In addition, the stigma of a criminal conviction may be greater for professional workers, who tend to have higher levels of education, than for those in lower-paying, lower-skilled jobs. Whatever the reason, education has a strong impact on crime prevention and the personal safety of Americans.

“The financial cost of crime to communities, states, and the nation cannot be overstated,” the brief reads. “It includes expenses related to medical care for victims, loss of victims’ income, reduced tax revenue as a result of lost wages, and rising police payrolls and court operating budgets. Most expensive of all is the cost of incarcerating convicted criminals.”

The United States spent almost $50 billion in incarceration costs in 2004 alone, with an average annual cost per inmate of $22,600. Compare that number to the $9,644 average that the nation spends to educate a student for one year.

Using methods outlined by economists Lance Lochner of the University of Western Ontario and Enrico Moretti of the University of California, Berkeley, the Alliance conservatively estimates that if the male graduation rate were increased by just 5 percent, annual crime-related savingsto the nation would be approximately $5 billion dollars. The benefits would vary from state to state: for example, South Dakota (at the low end) would save $1.6 million; Oklahoma (near the middle) would save $63 million; and California (at the high end) would save almost $753 million.

Beyond the savings related directly to crime reduction, almost $2.8 billion in additional annual earnings would enter the economy if more students graduated from high school. Using 2004 U.S. Census Current Population Survey data, the brief reports that if an additional 5 percent of male students not only graduated but also went on to college in the same percentages as current male high school graduates, their average earnings would increase significantly. The benefits, again, would vary from state to state: Wyoming (at the low end) would see an increase of $5 million, Massachusetts (near the middle) would add $55 million to its economy, and California’s economy (at the high end) would accrue an additional $352 million.

The complete issue brief, which includes a breakdown of state-by-state costs, is available at https://all4ed.org/files/SavingFutures.pdf.

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Every Child a Graduate. Every Child Prepared for Life.