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The High Cost of High School Dropouts: The Economic Case for Reducing the High School Dropout Rate

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Designed for an era long since passed, many of the country’s high schools no longer serve the needs of a nation powered by innovation and fueled by knowledge and skills. Instead of cultivating young minds and preparing the nation’s next generation of leaders, America’s high schools are hemorrhaging talent at the rate of more than five thousand students every school day—a steady drip that grows into a tidal wave of more than 1 million dropouts each year, a number larger than the entire population of the city of San Francisco.

Fifty years ago, the nation could afford to lose large numbers of students before graduation because high school dropouts could still land well-paying jobs and support their families. But times have changed. Today, jobs that require relatively little education are increasingly done by machines or shipped overseas, and individuals who fail to earn a high school diploma are at a great disadvantage.

Based on March 2014 data from the U.S. Bureau of Labor Statistics, high school dropouts are nearly three times more likely to be unemployed than college graduates. Even when employed, high school dropouts earn about $8,000 a year less than high school graduates and approximately $26,500 a year less than college graduates, based on calculations by the Alliance for Excellent Education.

Looking into the future, the job prospects aren’t getting any brighter for individuals with lower levels of education. According to research by the Georgetown Center on Education and the Workforce, 65 percent of all jobs in 2020 will require some form of education after high school.

Most people understand the heavy yoke that high school students place around their own necks when they drop out of school, but few understand that the drag goes far beyond the impact on the individuals. As research by the Alliance for Excellent Education has found, high school dropouts also influence a community’s economic, social, and civic health.

While data on the education attainment of inmates is sparse, a 2004 survey of inmates in state and federal correctional facilities by the U.S. Bureau of Justice Statistics finds that 67 percent of inmates in America’s state prisons, 56 percent of federal inmates, and 69 percent of inmates in local jails are high school dropouts.

According to an Alliance for Excellent Education report, the nation could save as much as $18.5 billion in annual crime costs if the high school male graduation rate increased by only 5 percentage points. In addition to the cost savings, the nation would also see a decrease in annual incidences of assault by nearly 60,000; larceny by more than 37,000; motor vehicle theft by more than 31,000; and burglaries by more than 17,000. It would also prevent nearly 1,300 murders, more than 3,800 occurrences of rape, and more than 1,500 robberies.

The disparity between annual federal spending on students and inmates is staggering: the national average for educating a student is $12,643 per year while the annual state average cost to house an inmate is more than double that amount, at $28,323. If the nation made a comparable investment in schools as it does in jails and prisons, the return would be decreased levels of criminal activity and incarceration as well as significant and life-changing impacts for individuals and the nation as a whole.

High school dropouts are also generally less healthy, require more medical care, and die earlier. In fact, cutting the number of high school dropouts in half nationally would save $7.3 billion in annual Medicaid spending, according to an Alliance report on the subject. When you add in projected savings to society through improved productivity at work, decreased health problems, and the freedom from pain and suffering caused by illness and disease, you get even higher benefits: Nearly $12 billion in heart disease-related savings, $11.9 billion in obesity-related savings, $6.4 billion in alcoholism-related savings, and $8.9 billion in smoking-related savings.

On the other hand, ensuring that more students graduate from high school with the knowledge and skills necessary to succeed in college and career would have tremendous benefits for the national economy. In fact, increasing the national high school graduation rate to 90 percent for just one high school class would create as many as 65,700 new jobs and boost the national economy by as much as $10.9 billion. The nation would also see increases in home and automobile sales of as much as $16.8 billion and $877 million, respectively, and an annual increase in federal and state tax revenues of as much as $1.3 billion and $661 million, respectively. See the economic benefit for your state or metro area by visiting http://impact.all4ed.org.

Without systemic reform, the nation’s economic future could be severely threatened; today’s dropouts and undereducated graduates will become tomorrow’s poorly educated workers, struggling to find jobs and support their families. Large numbers of high school dropouts will make it difficult for cities and states to attract new business. At the same time, additional spending on social programs and the criminal justice system will drain state and federal coffers. Increasing numbers of dropouts translate not only into lost human potential and lower tax revenues, but also a vitiated democracy and a weakened ability to compete in the global economy.

Instead of an education system that ensures that every child is a high school graduate prepared for college and success in life, the nation will be left with middle and high schools that typify the old adage, “You get what you pay for.”

The stunning potential economic benefit to the nation, as well as individual states and communities, of improving outcomes for America’s youth should be a wake-up call. The importance of reforming America’s high schools cannot be understated; the nation truly needs the economic and social contributions these young people can make. The realities of global competitiveness, the rapidly diminishing prospects of those students whose high schools fail to prepare them for college and work, and the resulting widening opportunity gap all make high school reform an imperative from an economic, national security, and civil rights perspective.

The time to act is now. In an increasingly global economy, American high school students must achieve at increasingly higher levels to allow the country to maintain its competitive advantage. Ensuring that all secondary students are prepared to succeed in college and work is a giant step in the right direction and will benefit individuals and society for decades to come.

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Every Child a Graduate. Every Child Prepared for Life.