Economic Impacts of Dropouts

Economy

Each year's class of dropouts will cost the country over $200 billion during their lifetimes in lost earnings and unrealized tax revenue (Catterall, 1985).

The estimated tax revenue loss from every male between the ages of 25 and 34 years of age who did not complete high school would be approximately $944 billion, with cost increases to public welfare and crime at $24 billion (Thorstensen, 2004).

Students from low-income families have a dropout rate of 10%; students from middle income families have a dropout rate of 5.2%, and 1.6% of students from high-income families dropout. (NCES, 2002).

A cost of $10,038 for after-school programs produces benefits of $89,000 to $129,000 per participant (Alliance for Excellent Education, 2003d).

Increasing minority students' participation in college to the same percentage as that of white students would create an additional $231 billion in GDP and at least $80 billion in new tax revenues (Alliance for Excellent Education, 2003e).

Personal Income and Employment

High school graduates, on the average, earn $9,245 more per year than high school dropouts. (Employment Policy Foundation, 2002).

Between October 2001 and October 2002, about 400,000 persons dropped out of high school. The unemployment rate for this group was 29.8 %--almost 13 percentage points higher than the unemployment rate for recent high school graduates who were not enrolled in college (United States Department of Labor, 2003).

A woman with a high school diploma earns a salary just above the poverty line for a family of three (Alliance for Excellent Education, 2003c).

In 2000, the median earnings for black females with a high school diploma and no college was $20,000 less than the median earnings for black females with a bachelor's degree or higher (Alliance for Excellent Education, 2003c).

In 2002, the unemployment rate of blacks ages 20-24 with no high school diploma was 32%, compared to 6% for those with a bachelor's degree or higher (Alliance for Excellent Education, 2003c).

In today's workplace, only 40% of adults who dropped out of high school are employed, compared to 60% of adults who completed high school and 80% for those with a bachelor's degree (Alliance for Excellent Education, 2003c).

Employment projections indicate that jobs requiring only a high school diploma will grow by just 9% by the year 2008, while those requiring a bachelor's degree will grow by 25% (Alliance for Excellent Education, 2003e).

Crime

75% of America's state prison inmates are high school dropouts (Harlow, 2003).

59% of America's federal prison inmates did not complete high school (Harlow, 2003).

High school dropouts are 3.5 times more likely than high school graduates to be arrested in their lifetime (Alliance for Excellent Education, 2003a).

A 1% increase in high school graduation rates would save approximately $1.4 billion in incarceration costs, or about $2,100 per each male high school graduate (Alliance for Excellent Education, 2003a).

A one-year increase in average education levels would reduce arrest rates by 11% (Alliance for Excellent Education, 2003a).

Literacy

The cost to taxpayers of adult illiteracy is $224 billion per year (National Reading Panel, 1999).

U.S. companies lose nearly $40 billion annually because of illiteracy (National Reading Panel, 1999).

If literacy levels in the United States were the same as those in Sweden, the U.S. GDP would rise by approximately $463 billion and tax revenues would increase by approximately $162 billion (Alliance for Excellent Education, 2003e).

For juveniles involved in quality reading instruction programs while in prison, recidivism was reduced by 20% or more (Alliance for Excellent Education, 2003a).

Health

Teen girls in the bottom 20% of basic reading and math skills are five times more likely to become mothers over a two-year high school period than teen girls in the top 20% (Alliance for Excellent Education, 2003b).

Male and female students with low academic achievement are twice as likely to become parents by their senior year of high school, compared to students with high academic achievement (Alliance for Excellent Education, 2003b).

The U.S. death rate for those with fewer than 12 years of education is 2.5 times higher than the rate of those with 13 or more years of education (alliance for Excellent Education, 2003b).

References

Alliance for Excellent Education. (2003a, November). FactSheet: The impact of education on: Crime. Washington, DC: Author.

Alliance for Excellent Education. (2003b, November). FactSheet: The impact of education on: Health & well-being. Washington, DC: Author.

Alliance for Excellent Education. (2003c, November). FactSheet: The impact of education on: Personal income & employment. Washington, DC: Author.

Alliance for Excellent Education. (2003d, November). FactSheet: The impact of education on: Poverty & Homelessness. Washington, DC: Author.

Alliance for Excellent Education. (2003e, November). FactSheet: The impact of education on: The economy. Washington, DC: Author.

Catterall, J. S. (1985). On the social costs of dropping out of schools. (Report No. 86-SEPT-3). Stanford, CA: Stanford University, Center for Educational Research.

Doland, E. (2001). Give yourself the gift of a degree. Employment Policy Foundation. Retrieved May 28, 2002, from http://www.epf.org/media/newsreleases/2001/nr20011219.htm (No longer available).

Harlow, C. W. (2003, January). Education and correctional populations. Bureau of Justice Statistics Special Report. Washington, DC: U.S. Department of Justice.

National Center for Educational Statistics. (2002). Dropout rates in the United States: 2000. Washington, DC: Author. Retrieved November 28, 2001. Available: http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2002114

National Reading Panel (NRP). (1999). 1999 NRP Progress Report. Retrieved January 8, 2004. Available: http://www.nationalreadingpanel.org/Publications/Interim_Report/toc.htm.

Thorstensen, B. I. If you build it, they will come: Investing in public education (PowerPoint Presentation). Retrieved January 12, 2004. Available: http://abec.unm.edu/resources/gallery/present/invest_in_ed.pdf

United States Department of Labor. (2003, June). Work activity of 2002 high school graduates. Washington, DC: Author. Available: http://www.bls.gov/news.release/hsgec.toc.htm