DROPOUT COSTS PRICED FOR 50 MAJOR U.S. CITIES: "The Economic Benefits of Reducing High School Dropout Rates in America’s Fifty Largest Cities" + L.A./Long Beach data

By Catherine Gewertz | Ed Week Vol. 29, Issue 13

November 25 – If  half the students who dropped out of the class of 2008 had graduated, they would have generated $4.1 billion more in wages and $536 million in state and local taxes nationally in one average year of their working lives, according to a new analysis.

The study, issued this month by the Washington-based Alliance for Excellent Education, calculates what the dropout problem costs the country and each of the 50 largest metropolitan areas.

Underwritten by State Farm Insurance of Bloomington, Ill., the study uses a model developed by an Idaho company that specializes in tools for socioeconomic analysis. The model blends education and jobs data, and an examination of each metropolitan region’s economy, to estimate the increased wages, education, and tax revenue that would be generated if the dropout rate were cut in half.

The numbers vary depending on each region’s peculiarities. In a conference call with reporters, Bob Wise, the president of the alliance, noted that 84 percent of high school graduates in Honolulu go on to some kind of postsecondary education, compared with 47 percent in Memphis. For the area that includes Los Angeles and Long Beach, Calif., for instance, the study finds that if half of the 70,929 students who dropped out of the class of 2008 had earned diplomas, they would have contributed $575 million more in wages and $79 million in property, sales, and income taxes during an average year, which the alliance defines as when a graduate is about 39 years old.

The national dropout count—599,755 students in the class of 2008—was calculated using a method devised by the Editorial Projects in Education Research Center, which is an arm of the same organization that publishes Education Week.

Mr. Wise said that he hopes the data in the report make clear to local business people the stake they have in improving the graduation rates in their communities, even if they don’t have children attending the public schools.

“Nearly 600,000 students dropped out of the class of 2008, at a great cost to themselves,” he said, “but as this study demonstrates, also to their communities.”

from the study:

The Economic Benefits of Reducing Los Angeles-Long Beach’s Dropout Rate

November 2009

Halving the Number of Dropouts in Los Angeles-Long Beach and Surrounding Areas

In the Los Angeles-Long Beach metropolitan area, (Not just LAUSD and LBUSD) - 70,929 students dropped out from the Class of 2008. These high school dropouts did so at a great cost not only to themselves but also to their communities. Reducing the number of dropouts by 50 percent for just this single high school class would result in tremendous economic benefits to the Los Angeles-Long Beach region. The following are three examples of the economic impact that these 35,465 new graduates would have on Los Angeles-Long Beach and its surrounding area:

1. Increased Wages. By earning their diplomas—and in many cases, continuing their education—these new high school graduates would together earn over $575 million in additional wages over the course of an average year compared to their likely earnings without a diploma.
2. Increased Human Capital. After earning their high school diplomas, many new graduates would not stop there. An estimated 74 percent of these students are projected to continue their education after high school, some earning as high as a PhD or other professional degree.
3. Additional Tax Revenue. As these new graduates’ incomes grow, local tax revenues will also increase. Annual state and local property, income, and sales tax revenue would grow by over $79 million during the average year as the result of increased spending and higher salaries.