The Dollars and Cents of Dropping Out

It’s no mystery that America’s failing high schools have a direct impact on the economy. A recent study released by the Alliance for Excellent Education attempts to place a price tag on the “dropout crisis” and the results are stunning.

According to the report’s findings, the potential wealth the country could gain if every head of household was a high school graduate is over $74 billion. Even a 5 percent increase in the graduation rate of males alone would result in a $7.7 billion benefit to the national economy. And if every member of the graduating class of 2008 had graduated from high school, they would have produced an extra $319 billion in earnings, taxes and productivity over their lifetimes.

Not shockingly, the drop out crisis disproportionately affects poor students. Students from wealthy areas are nearly seven times as likely to graduate from high school as students from poor areas. As a result, the failure of our high schools reinforces the cyclical nature of poverty, particularly in today’s economy. According to the report, virtually all high school dropouts have fallen out of the middle class due to their inability to secure well-paying jobs resulting in an annual wage gap of $9,000 between high school dropouts and graduates.

The repercussions of our high schools’ failure to graduate poor and minority students are undeniable. It is no longer an issue that just concerns equity and fairness. It has become a dramatic economic problem to the tune of trillions of dollars. More than 12 million students are expected to drop out of high school in the next decade, taking three trillion potential dollars out of the economy. That amount could almost cover the cost of running the federal government in 2009.

Failing high schools have been labeled “dropout factories” by academics and become the subject of much media scrutiny and foundation attention. The Bill & Melinda Gates Foundation, alone, has invested over $1 billion in high schools. But, these efforts have remained isolated at best and sweeping attempts to improve high school success, particularly in low income areas, are nearly non-existent.

Quantifying the impact of dropping out on the nation’s economy is an important step in drawing attention to the current state of secondary education. And it will ultimately better guide federal policy and the use of federal funds concerning high school age students.

A forthcoming report by the Federal Education Budget Project’s Sara Mead examines current federal investments in high schools, the majority of which target students who have already dropped out of school. While these may be worthy investments, the severity of the dropout problem demands interventions that keep students from falling out of the system to begin with. Until cities, states, and the federal government are willing to make more consistent and long term investments in America’s failing high schools, it’s difficult to imagine a time when dropping out will no longer be a crisis, but a thing of the past.