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THE ECONOMIC IMPACT OF THE ACHIEVEMENT GAP IN AMERICA’S SCHOOLS: Report Finds that Achievement Gaps Impose the Economic Equivalent of a “Permanent National Recession”

“Many teachers and schools across the country are proving that race and poverty are not destiny; many more are demonstrating that middle-class children can be educated to world-class levels of performance.”

The achievement gaps that currently exist in the United States between certain groups of students and others impose the economic equivalent of a “permanent national recession” on the nation. So says The Economic Impact of the Achievement Gap in America’s Schools, a new report from McKinsey & Company that examines the dimensions and economic impact of the four distinct educational achievement gaps in the United States. Specifically, the report focuses on gaps in the following areas: between the United States and other nations; between black and Latino students and white students; between students of different income levels; and between similar students schooled in different systems or regions.

Internationally, the report finds that the United States already lags significantly behind other advanced nations in educational performance and is falling further behind in other areas. Even worse, the gap in performance between American students and their international counterparts widens the longer children are in school.

Even the top students in America are falling behind. According to the report, the United States has the smallest proportion of fifteen-year-olds performing at the highest levels of proficiency in math while Korea, Switzerland, Belgium, France, and the Czech Republic have at least five times the proportion of top performers as the United States. According to the report, the recurring economic cost of the international achievement gap alone is “substantially larger than the deep recession the United States is currently experiencing.” On the other hand, were the United States to close the gap between its educational achievement levels and those of better-performing countries such as Finland and Korea, Gross Domestic Product (GDP) in the United States could have been $1.3 trillion to $2.3 trillion higher in 2008.

The international achievement gaps only scratch the surface of how the underutilization of human potential in the United States affects the nation’s economy. According to the report, black and Latino students in the United States are roughly two to three years of learning behind white students of the same age no matter how they are measured. Indeed, the report finds large achievement gaps in both achievement (test scores) and attainment (graduation rates). Additionally, minority students are overrepresented among low-performing students and underrepresented among the highest-performing students.

The racial achievement gap is even more worrisome because black and Latino students will make up a greater proportion of the student population in coming years. “If unaddressed, [the racial achievement gap] will almost certainly act as a drag on overall U.S. educational and economic performance in the years ahead,” the report reads.

Like minority students, low-income students are also, on average, two years of learning behind higher-income students of the same age. Lacking many of the advantages of their more advantaged peers, low-income students begin school behind and struggle to catch up. According to the report, only 9 percent of freshmen in the nation’s 120 “Tier 1” colleges are from the bottom half of the income distribution.

“By underutilizing such a large proportion of the country’s human potential, the U.S. economy is less rich in skills than it could be,” it reads. “The result is that American workers are, on average, less able to develop, master, and adapt to new productivity-enhancing technologies and methods than they could otherwise have been. Also these achievement gaps have a clustering effect akin to economic dead zones, where communities of low-achieving local school produce clusters of Americans largely unable to participate in the greater American economy due to a concentration of low skills, high unemployment, or high incarceration rates.”

In analyzing the achievement gaps between school systems serving similar students, the report finds hope. Although it finds huge performance gaps between states, districts within states, schools within districts, and even classrooms within the same school, the report says these differences “prove there are substantial opportunities to improve productivity and performance via the adoption of best practices.”

“Many teachers and schools across the country are proving that race and poverty are not destiny; many more are demonstrating that middle-class children can be educated to world-class levels of performance,” the report reads. “America’s history of bringing disadvantaged groups into the economic mainstream over time, and the progress of other nations in education, suggest that large steps forward are possible.”

While the report does not devote much space to explaining why these achievement gaps exist, it does note that the United States “systemically assigns less experienced, less qualified, probably less effective teachers to poorer students of color.” Additionally, it finds that the “unique nature of school finance systems in the United States mean that poor neighborhoods tend to have far less funding per pupil than schools in wealthier districts,” adding that this degree of inequality is not seen in other advanced nations.

The complete report is available at

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