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New Research Shows U.S. Economy Will Grow by Billions of Dollars if High School Dropout Rate is Reduced

Press Release:

New Research Shows U.S. Economy Will Grow by Billions of Dollars if High School Dropout Rate is Reduced

If just half of the dropouts in an average year graduated, additional tax revenues and increased wages would substantially buoy the local economies of the nation’s fifty largest cities
 

Washington, D.C. – New game-changing research conducted by the Alliance for Excellent Education (The Alliance) released today shows that the U.S. economy would grow significantly if the number of high school dropouts was cut in half.

Nearly 600,000 students dropped out of the high school 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, on average, they would have earned more than $4.1 billion in additional income every year. In addition, in these areas, state and local tax revenues in an average year would jump by a total of nearly $536 million.

“In these lean economic times, local businesses and governments are looking for any way they can to improve their financial situation,” said former West Virginia Governor and Alliance for Excellent Education President Bob Wise. “These numbers demonstrate clearly that every consumer, business, and taxpayer benefits 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 AEE study also found that 65 percent of the additional high school graduates would continue their education with many earning a PhD or other professional degree.

“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 CEO 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.”

While it is impossible to forecast precise values of economic benefits, the Alliance is confident that these figures fall within the range of benefits that each region could expect to see. 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.

The model is based on graduation rates calculated by Editorial Projects in Education and projects the economic benefits for U.S. Census-defined metropolitan statistical areas (MSA), which consist of a central urban area and the surrounding geographic area if it has strong social and economic ties to that city. The 45 MSAs include the 50 largest cities in the country. Five of these cities share a region with another.

The 4,900 high schools located within these MSAs have an average graduation rate of 69.8 percent. Over 900 of these are considered “dropout factories,” that is, schools where fewer than 60 percent of freshman progress to their senior year on time.

The cities in the research 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., Wichita.

For more information and specific numbers for each of the cities listed above, please visit the Alliance’s website athttps://all4ed.org/publication_material/EconMSA.

NOTE: In January, the Alliance will release additional economic and financial benefits of reducing dropout rates in these 50 cities, including additional spending and investment, job and economic growth, and home and auto sales.

About the Alliance for Excellent Education
The Alliance for Excellent Education is a Washington, D.C.-based policy, research, and advocacy organization that works to make every child a high school graduate who is prepared for postsecondary education and success in life. For more information about the Alliance for Excellent Education, please visit www.all4ed.org.

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