Assets of U.S. Households Would Increase by $74 Billion if All High School Students Graduated on Time
If high school dropouts who currently head households in the U.S. had instead earned diplomas, the U.S. economy would benefit from an additional $74 billion in wealth accumulated by families, according to conservative calculations by the Alliance for Excellent Education in its new brief, Hidden Benefits: The Impact of High School Graduation on Household Wealth, funded by MetLife Foundation.
There is a wealth gap between high school dropouts and high school graduates that is even more severe than the better known income gap. Graduating all students, therefore, would increase family wealth (defined as investments that appreciate over time, commonly known as “assets”). This would have provided the approximately 16.5 million families currently headed by high school dropouts with a safety net for times of financial stress and with the increased capacity to invest in higher education, homes, and business enterprises. The nation also would have benefited through greater neighborhood stability, increased civic involvement and voting participation, and reduced need for public assistance.
“Wealth inequality between the ‘haves’ and ‘have nots’ and between African Americans and Hispanics and their white counterparts is increasing,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia. “Policymakers are concerned with reducing poverty and want to help poor Americans and members of racial minorities build the assets they need for true financial security. Congress and the administration need to recognize that targeted and effective investments in secondary school reform that will graduate more students each year is a key strategy for addressing these concerns.”
“Education unlocks the door to personal and professional opportunities, as well as paves the road to financial freedom,” said Sibyl Jacobson, president of MetLife Foundation. “A high school diploma offers lifelong benefits, and we need quality schools to help make certain more young people earn them.”
Hidden Benefits: The Impact of High School Graduation on Household Wealth is available at here
2005 United States Census data for households by educational attainment was used to derive the number of households in each state by education level and was then multiplied by the median financial wealth by education level (Gouskova and Stafford, 2005) to derive the total financial wealth of education level by state. Additional household financial wealth gained by high school graduation was derived by multiplying the number of households headed by an individual with less than a high school degree by the median financial wealth of those households headed by an individual with a high school diploma. The current estimate of the financial wealth of households with less than a high school diploma was subtracted by this number to derive the additional household financial wealth that would be gained by each state and the nation if every household were headed by someone with at least a high school diploma.
It should be noted that this is a conservative estimate, as the calculation does not include the value of housing. Although homeownership may offer the greatest asset-accumulation opportunity for most Americans, the decision was made to exclude the value of homes, because mortgage holders may also have considerable debt associated with the home and since the value of homes may fluctuate in unpredictable ways; developing a firm estimate of the value of this particular asset is complex and outside of the scope of the Alliance’s analysis. That said, since a home is the most valuable asset most families have—and graduates are more likely to be able to afford that investment—the $74 billion figure is likely to significantly understate the potential loss to non-graduates.
MetLife Foundation was founded in 1976 and supports programs that increase opportunities for young people to succeed, give students and teachers a voice in improving education, create connections between schools and communities, and strengthen relationships among parents, teachers, and students.
For more information about MetLife Foundation, please visit: www.metlife.org .
The Alliance for Excellent Education is a Washington-based policy, research, and advocacy organization that works to make every child a graduate, prepared for postsecondary education and success in life.
For more information about the Alliance for Excellent Education, please visit: www.all4ed.com .