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URBAN RENEWAL: New Alliance Research Shows U.S. Urban Economy Will Grow By Billions of Dollars If High School Dropout Rate is Reduced in America’s Fifty Largest Cities

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"In these lean economic times, local businesses and governments are looking for any way they can to improve their financial situation."

On November 18, the Alliance for Excellent Education released new research showing that the U.S. urban economy would grow significantly if the number of high school dropouts were cut in half in the nation’s fifty largest cities.

Almost 600,000 high school students dropped out of the Class of 2008 in the nation’s fifty largest cities and the surrounding areas. The Alliance’s research shows that, if just half of those students had graduated, they would have earned a total of more than $4.1 billion in additional annual income. Los Angeles, at $575 million a year, would see the largest increase while Wichita, at $11.5 million would see the lowest.

In addition to the income gains, yearly state and local tax revenues in these cities would jump by a total of nearly $536 million. New York City would see the biggest increase with $92 million while Wichita, at $1.5 million, would see the lowest.

“In these lean economic times, local businesses and governments are looking for any way they can to improve their financial situation,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia. “These numbers demonstrate clearly that every consumer, business, and taxpayer benefit dramatically when we do what it takes to increase the number of students who graduate from high school with the skills they need to succeed in life. Indeed, the best economic stimulus is a high school diploma.”

The study also found that an average of 65 percent of the additional high school graduates would continue their education after high school. This number ranged from a high of 84 percent in Honolulu to a low of 47 percent in Memphis.

The economic model used to estimate these economic benefits was developed by the Alliance for Excellent Education with the generous support of State Farm® and in partnership with Economic Modeling Specialists, Inc. It is based on graduation rates calculated by Editorial Projects in Education and forecasts the economic benefits for U.S. Census-defined metropolitan statistical areas (MSA), each of which consists of a central urban area and the surrounding geographic area if it has strong social and economic ties to that city. The forty-five MSAs include the fifty largest cities in the country.1 Five of these cities share a region with another.

“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 Alliance for Excellent Education model conclusively demonstrates 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 model can project how reducing the number of dropouts in a city for a single high school class will result in tremendous economic benefits for the business community in that city and their state and local governments. The table below outlines the benefits that would result from reducing the dropout rate by 50 percent in the selected cities listed.

Metro Area

2008 Graduation Rate

Number of Dropouts from Class of 2008

Combined Yearly Additional Earnings for New Graduates

Percentage of New Graduates Going on to Postsecondary

Additional Yearly State and Local Tax Revenue

Atlanta

63.0%

27,900

$160 million

57%

$19 million

Boston

78.3%

10,400

$78 million

69%

$9 million

Chicago

75.6%

32,100

$211 million

64%

$25 million

Dallas/Ft. Worth/Arlington

68.2%

29,000

$197 million

65%

$19 million

Houston

69.9%

26,900

$165 million

59%

$16 million

Los Angeles/Long Beach

63.8%

70,900

$575 million

74%

$79 million

Miami

57.2%

33,600

$212 million

59%

$16 million

New York City

71.4%

66,900

$537 million

66%

$92 million

Philadelphia

77.2%

16,400

$125 million

65%

$18 million

Washington, DC

74.9%

18,200

$157 million

70%

 $22 million

 

Specific numbers for each city in the study and more information on the economic model, including technical notes and frequently asked questions, are available at here.

 
1 The forty-five MSAs in the study include: Albuquerque; Atlanta; Austin; Baltimore; Boston; Charlotte; Chicago; Cleveland; Colorado Springs; Columbus; Dallas/Ft. Worth/Arlington; Denver; Detroit; El Paso; Fresno; Honolulu; Houston; Indianapolis; Jacksonville; Kansas City; Las Vegas; Los Angeles/Long Beach; Louisville; Memphis; Miami; Milwaukee; Minneapolis; Nashville; New York City; Oklahoma City; Omaha; Philadelphia; Phoenix/Mesa; Portland; Sacramento; San Antonio; San Diego; San Francisco/Oakland; San Jose; Seattle; Tucson; Tulsa; Virginia Beach; Washington, D.C.; and Wichita.

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