High School Dropouts Cost the U.S. Billions in Lost Wages and Taxes, According to Alliance for Excellent Education

Press Release:

High School Dropouts Cost the U.S. Billions in Lost Wages and Taxes, According to Alliance for Excellent Education

Almost 1.3 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. (A chart showing the losses over a lifetime to each state and the District of Columbia can be found below this press release).

“This is a very conservative estimate,” said Alliance president and former governor of West Virginia 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.”

Students who don’t graduate earn less than their classmates who get at least a high school diploma, and considerably less than those with a college degree. Said Wise: “These losses in earnings are bad for the individual, obviously, but they also have a tremendously negative impact on the nation’s economy.”

Although states regularly report higher graduation rates, reliable research has shown that nationally, only about two-thirds of the students who enter 9th grade will graduate with a regular diploma four or five years later.

The Alliance’s analysis is based on a recent report by Princeton University researcher Cecilia Rouse, which noted that “those who do not complete high school are less likely to be employed and have significantly lower annual earnings than those with at least a high school degree, (and) they also contribute significantly less to tax revenues.” Rouse estimates that the lifetime difference in income between a high school graduate and a dropout is about $260,000. 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.

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. It is funded by the Leeds Family, the Bill & Melinda Gates Foundation, Carnegie Corporation of New York, the Daniels Fund, and the New York Community Trust, as well as by concerned individuals.

Lost Earnings for Dropouts

Source: Projections of 2003-04 High School Graduates: Supplemental Analyses based on findings from Who Graduates? Who Doesn’t? A Statistical Portrait of Public High School Graduation (Table 1) Washington, D.C.: The Urban Institute, 2004. Available at http://www.urban.org/url.cfm?ID=411019.

*Earnings estimation based on calculations in “Labor Market Consequences of an Inadequate Education” by Rouse, Cecilia E. (2005) Paper prepared for the symposium on The Social Costs of Inadequate Education, Teachers College Columbia University, Oct. 2005.