Education Crisis or Economic Catastrophe?

Transcription

1 Education Crisis or Economic Catastrophe? The Crippling Burden of America s Dropouts and the True Meaning of a Diploma in the Workforce Advancing Lives, Powering the Nation.

2 Executive Summary An increased focus on helping students reach graduation across the United States has raised the graduation rate to an all-time high. But for tens of millions of working-age Americans, the window for earning a diploma has closed generally older than twenty-two, they are no longer eligible to take advantage of a free high school education. Having left their studies prematurely, they lack the skills and awareness necessary to persist in our 21st century economy. While the issue is social, the impact is economic: a cost totaling trillions in the coming decades. America s ability to reverse this cost impact hinges on decreased alliances with antiquated, monolithic education bureaucracies and increased adoption at scale of proven alternatives. Graduation Alliance, the nation s leading provider of Alternative Education and Exploration & Planning solutions, has prepared this report in response to the unaddressed challenges and untapped opportunities inherent in facilitating diploma attainment amongst working-age Americans. Since 2007, we have effectively paired the vision and expertise required to re-engage tens of thousands of dropouts in their education, empower participation in today s economy through the cultivation of in-demand skills, and support attainment of a viable high school credential. In the following pages, we have detailed the economic impact of perpetuating today s status quo approach to high school dropouts. The stories of three working-age Americans serve as points of light emphasizing the unlimited potential of proven solutions. 3

3 JEREMY S STORY From Day Laborer to Manufacturing Specialist Jeremy left school to help support his family when both of his parents became suddenly unemployed. When they returned to work several months later, Jeremy found himself with limited viable options for either returning to school or advancing his career opportunities. In 2012, he earned less than $250 a week as a day laborer in northwest Washington. That s $1,070 a month less than $13,000 a year. After paying rent, utilities, car insurance and gas, Jeremy usually didn t have enough money for groceries and so he became reliant on food assistance. He had no health insurance. He was constantly in fear of getting sick, knowing that if he was ever unable to work when called he would risk future earnings. Jeremy wanted more out of life. But he didn t know how to make it happen. In 2013, Jeremy was approached by a representative from his prior school district and offered an opportunity to re-engage in his studies to pursue completion of his high school diploma. The program included online curriculum specifically designed for students who have been away from school and once-a-week meetings with a mentor in Bothell, Washington. Jeremy progressed through the program with the support of experts who helped him chart a course toward graduation and beyond. His support team helped him conquer challenging assignments, explore career options, and ultimately identify more prosperous opportunities for employment in Washington s dynamic workforce. It took Jeremy just seven months to reach his graduation goal. During that time, he completed classes in algebra, history, and Spanish, and was connected with a training and transitions mentor who helped him align his skills and interests with career opportunities near his home. Almost immediately upon graduation, Jeremy was able to secure a manufacturing job making $650 per week and receive health, as well as additional training, benefits. The difference in salary alone amounts to more than $20,000 a year. The cost to the state of Washington for Jeremy s program was $4,000. Return on investment in economic participation and tax payments was achieved within the first year following Jeremy s graduation.

4 5

5 What if......just one percent of Americans without a high school diploma had the ability to access opportunities like Jeremy? It would: TURN INTO $17 $57 BILLION BILLION in current social service costs in economic returns = a net economic swing of $74 BILLION If 10% of those without a diploma were able to capitalize on such an opportunity, the economic stimulus would be enough to pay four years worth of in-state college tuition at the national average for more than 20 million Americans. 6

6 The $7 Trillion Opportunity The world's 50 most valuable sports franchises Market value of Apple computers Gross annual expenditures for U.S. government Projected costs of wars in Iraq and Afghanistan Economic costs-to-opportunity gap for Americans without a diploma $0 $1 $2 $3 $4 $5 $6 $7 $8 (in trillions) Today in the United States there are 24.8 million working-age adults without a high school diploma. 1 Research has repeatedly demonstrated these individuals are far more likely to be jobless, homeless, incarcerated, or otherwise dependent on the nation s already strained social services safety net. 2 Conservative estimates place the average lifetime cost, per high school dropout, of services-used over taxes-paid at $70,000. By contrast, American adults having earned a high school diploma typically contribute $230,000 more in taxes over a lifetime than they cost in services. The resulting difference (in taxes paid over public costs) in helping just one adult earn a high school diploma is $300, Assuming this as a baseline figure and counting only working-age adult Americans, 4 the nation s high school diploma gap represents a $7.4 trillion problem one that is a trillion dollars higher than the actual and anticipated costs of both U.S. wars in Iraq and Afghanistan, including the costs of lifetime healthcare and benefits for every veteran and their families. Or perhaps there is a $7.4 trillion opportunity as a nation, the United States has made great strides in the effort to increase on-time diploma attainment, raising the cohort graduation rate from 71 percent in 1999 to an all-time high of 81 percent in Experts indicate there is good reason to believe the country may even reach a 90 percent graduation threshold as early as Once considered impossible, this would still mean one in ten high school students do not graduate on-time with their cohort. And of the 10 percent who do not graduate with their cohort, most will still not receive their diploma in the five- or even 10-year period thereafter. The result? While commendable, achievement of a 90 percent graduation rate will still contribute hundreds of thousands of individuals to the existing pool of Americans without a high school diploma each year. But even in a theoretical world where every high school student receives the individualized support, resources, and interventions needed to achieve an on-time graduation, the legacy costs of social and educational policies which permitted tens of millions of individuals to leave school before graduation would continue for more than half a century to come. Why? Because outside of a small number of states 7

7 that have extended or eliminated the 22-year-old age cap on secondary education funding, there are very few opportunities for working-age Americans to earn a high school diploma. Even in states like Kansas and Texas, where the age limit has been extended, there are few programmatic offerings to support individuals who wish to pursue a high school diploma as adults. These factors render this group left behind for the rest of their lives. So-called equivalency programs have proven to be inaccessible to most individuals without a diploma and, perhaps more disconcerting, appear economically unviable as a means of raising one s standard of living. Research conducted by the Nobel Prize-winning economist James Heckman and published by the National Bureau of Economic Research has demonstrated that the most common high school equivalency degree, the GED, confers little economic benefit to its recipient when compared side-by-side with the lifetime earnings of an individual possessing no credential at all. 6 A key example: The U.S. Armed Forces currently admit only a small number of GED holders each year about 5 percent of the total recruiting class per service branch forcing GED-holding recruits to demonstrate through additional years of training and studies that they are prepared for the rigors of military life. 7 Leveling the field for all Americans 30M 25M 20M 15M 10M 5M 0 Incarcerated Americans Homeless Americans Americans with Alzheimer s Disease Working-aged Americans without a high school diploma The inequity of this crisis cannot be overlooked and would be hard to overstate. On average, underserved racial, cultural, and socio-economic populations are significantly more likely to reach their mean working years without completing a high school education; 8 and while research proves most working-age dropouts would pursue an opportunity to earn a diploma if the opportunity allowed them to remain employed, public funding for such programs completely ends in most states at the age of 22. To best consider this disparity, it is helpful to compare it with the conditions facing individuals who reach their mean working years without a college degree. There is not a state in the nation in 8

8 which public funding for the opportunity to return to postsecondary studies is ever capped by age. In-state tuition, scholarships, grants, and federally subsidized loans are available to returning students at any age. In contrast to the majority demographic of individuals without a high school diploma, college-attending individuals (including so-called non-traditional students who return at later ages) are more likely to come from traditionally advantaged racial, cultural, and socio-economic groups. But programs offering working-aged Americans an opportunity to return to school and earn a fully credentialed high school diploma are exceedingly rare even though the overall benefits conferred by a diploma are touted nationwide. From an economic point of view, diploma holders will pay greater taxes over a lifetime, are far more likely to purchase cars and homes, start a business, and to spend money locally. 9 Furthermore: The lifetime earnings for an individual who completes high school is nearly two times as much as someone who doesn t. Going on to earn an associate s degree results in nearly three times the lifetime earnings. 10 Nearly 33 percent of individuals without a high school diploma receive food assistance, compared to 17 percent of all high school graduates and 8.6 percent of all associate s degree holders. 11 Single mothers having completed a high school education are 50 percent less likely to be reliant on food assistance than those who dropped out. 12 Individuals without a high school diploma are more than six times more likely to be incarcerated than diploma holders. 13 9

9 JASMINE S STORY Launching a legacy Jasmine, a single mother of two young children, was working at a fast food restaurant in Baton Rouge, Louisiana, and had been away from school for more than four years when she first learned about a program that would allow her to complete her graduation requirements online. To participate in the program at no cost she simply needed to demonstrate monthly completion milestones and commit to working one-on-one with program specialists. At the time, Jasmine was making just $11,000 annually while working 30 to 35 hours per week. She earned no vacation, no sick leave, and no benefits. She knew she needed to make a change. Jasmine faced multiple challenges during the pursuit of her diploma, but she never entertained the thought of quitting. She knew how fortunate she was to have been given a second chance years after walking away from her education. After 12 months of hard work supported each step of the way by academic coaches, 24-7 tutors, and a dedicated training and transitions mentor Jasmine completed her studies and immediately entered the region s most in-demand career field: health care. Working regularly with her training and transitions mentor, Jasmine had identified an interest in nursing. As soon as she graduated, she was able to get a job at a nursing home, resulting in significantly higher earnings than what she had been making at the restaurant including a benefits package covering her children s health care. She was also able to enroll in nursing school, something she had never before believed to be possible. When Jasmine completes her nursing degree, according to federal wage data, she can expect to earn at least $22 an hour. The anticipated minimum difference in her earnings, from fast food employee to health care associate, will be nearly $35,000 a year, an increase of 320 percent.

10

11 When Louisiana......invested in Jasmine s future, that investment will be returned within the first two years of her contribution to the economy as an individual no longer reliant on social services. BEFORE PROGRAM $11,000 Fast Food Worker $7K cost to Louisiana taxpayers to invest in Jasmine WHEN COMPLETED $35,000 Health Care Aide 320% increase in wages According to federal wage data, Jasmine can expect to earn at least $22 an hour. The difference in her earnings, from fast food employee to health care associate, will be nearly $35,000 a year, an increase of 320%! Research shows having earned a high school diploma significantly increases the likelihood of breaking generational poverty a legacy outcome that will amplify Louisiana s initial return on investment across generations to come. 12

12 The average annual health care costs for individuals without a high school diploma are more than two times those of high school graduates. These health care costs are increasingly a burden of the American taxpayer as those who do not complete their high school education are less likely to have health insurance. 14 Despite an estimated return on investment of 70- to-1 before compounded economic benefits, limited opportunities exist for working-age Americans to earn a diploma once they have withdrawn from the traditional secondary education system. Improving workforce outcomes for working-age Americans % 75% 50% 53% 51% 56% Asian/PI White Black Hispanic Native American /Alaskan Disability Among the relatively few who have been presented with and pursued alternatives there are points of light. Jeremy, Jasmine, and Jessica demonstrate the power of flexible alternative education solutions. Across the nation, opportunities for individuals to re-engage in their high school education are generally available only in large urban centers and as brick-and-mortar programs, requiring significant location-based participation; moreover, these opportunities are almost exclusively offered by secondary school districts who serve only eligible individuals. But the nearly 25 million Americans needing skills development and diploma completion programs are no more concentrated in these areas than the general population, are nearly always limited in their ability to commit hours to attending brick-and-mortar locations, and are predominantly no longer eligible for public funding. Furthermore, many dropouts still in the eligible age range for public funding cannot avail themselves of programming simply because they are significantly under-credited, meaning that even at an accelerated academic pace they will not reach graduation before secondary funding expires. In most states, a 20-year-old who has only completed one year s worth of credits is in an untenable position, unable to complete their education before funding is cutoff. 13

13 JESSICA S STORY: Future vet-tech, filling jobs that are in demand Jessica was working as a waitress to support herself after leaving her parents home at the age of 17. As a food services worker in a truck-stop diner, she was mostly dependent on tips. Her guaranteed hourly wage was just $2.17. Most days her earnings would average $8 an hour, but when the diner was slow she would often return home from a shift with less than $20 in her pocket, resulting in an average hourly income of less than $5 for the day. Jessica had left her Michigan high school just four credits shy of graduation. She recognized it would be a challenge to complete her education while working fulltime, but she still jumped at the chance after learning she qualified for a unique program combining online classes with training and transitions mentoring. Within five months, Jessica had closed the gap between her outstanding credits and a high school diploma. She also realized that her love of animals and strong analytic abilities made her uniquely positioned to pursue opportunities in the life sciences. With the ongoing support of her training and transitions mentor, she identified programs nearby where she could continue her studies and ultimately enrolled as a full-time student in Michigan State University s veterinary technology program. 14

14 When Michigan......invested in Jessica s future, the initial investment of $2,500 will increase her earning potential by 100% even before factoring the value of her benefits. Here s how: Jessica works inconsistent hours, earning $15K annually with no benefits. Jessica enrolls in program while continuing to work and receives her high school diploma. Jessica continues her education in veterinary technology. She will be prepared for a career where median starting salaries average $30K Over the course of a 30-year career, that could mean a difference (before inflation and cost of living adjustments) of $1 million or more.

15 When Michigan......invested in Jessica s future, the initial investment of $2,500 will increase her earning potential by 100% even before factoring the value of her benefits. Here s how: Jessica works inconsistent hours, earning $15K annually with no benefits. Jessica enrolls in program while continuing to work and receives her high school diploma. Jessica continues her education in veterinary technology. She will be prepared for a career where median starting salaries average $30K Over the course of a 30-year career, that could mean a difference (before inflation and cost of living adjustments) of $1 million or more.

16 Conclusion A persistent confluence of historical, cultural, and logistical challenges prevents our nation s leaders from systemically addressing one of the most pervasive social and economic issues of our time, stifling our country s economic prospects. But as exhibited in the personal stories of Jeremy, Jasmine, and Jessica, the short- and long-term benefits of innovative programming are of vast significance. It thus behooves civic, educational, and political leaders across the country to address the diploma-gap head on by embracing new opportunities and providing working-age American dropouts the opportunity to become highly engaged, diploma-holding workforce participants. Endnotes U.S. Census Bureau 2. Sum, A. et al. (2009) Joblessness and jailing for high school dropouts and the high cost for taxpayers. Center for Labor Market Studies. 3. ibid. 4. U.S. residents between the ages of 18 and 65, per the U.S. Census. 5. DePaoli, J., et al. (2015) Building a grad nation: Progress and challenge in ending the high school dropout epidemic. Civic Enterprises. 6. Heckman, J. et al. (2010) The GED. National Bureau of Economic Research. 7. GED Testing Service (2009) Military Acceptance of GED Credential StudentSupportServices/GED/documents/Military_Acceptance_of_GED_Credential_Nov2009.v2.pdf 8. National Center for Education Statistics 9. Alliance for Excellent Education (2010) The Economic Benefits from Halving the Dropout Rate. 10. Carnevale, A., Rose, S and Cheah, B. (2011) The College Payoff: Education, Occupations, Lifetime Earnings. Georgetown University Center of Education and the Workforce. 11. Sum, A., et al. (2011) High School Dropouts in Chicago and Illinois: The Growing Labor Market, Income, Civic, Social and Fiscal Costs of Dropping out of High School. Center for Labor Market Studies. 12. Waldfogel, J., Garfinkel, I. and Kelly, B. (2005) Public Assistance Programs: How Much Could Be Saved with Improved Education? Paper prepared for the symposium on The Social Costs of Inadequate Education. Teachers College, Columbia University. 13. Sum, A., et al. (2009) 14. Levin, H. (2005) The Social Costs of Inadequate Education. The Campaign for Educational Equity 17

17 About Graduation Alliance Graduation Alliance works to give students of all ages the resources, support, and flexibility they need to reach their educational goals and prepare for what is next. In partnership with educators, economic development agencies, and community leaders across the nation, Graduation Alliance provides versatile pathways to high school graduation, fosters college and career exploration by aligning individual interests and aspirations with in-demand workforce skill development, and connects job creators to capable and ready workers. In everything it does, Graduation Alliance works for one common goal: creating opportunity through the power of education.

18 Toll free: Copyright Graduation Alliance. All Rights Reserved.