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Internal link - educational inequality key to economy

Educational inequality makes it impossible to meet future high-skilled job demand—fixing the gap is key to economic competitiveness

Parmley and Smith, Smith is a Senior Fellow with the Carnegie Foundation for the Advancement of Teaching, 2016

[Kelli and Marshall, “Memo: Improving and equalizing high school and college graduation rates for all students,” Brookings Institute, December 15, https://www.brookings.edu/blog/brown-center-chalkboard/2016/12/15/memo-improving-and-equalizing-high-school-and-college-graduation-rates-for-all-students/, GDI - TM]

Economists estimate that by 2020 more than two-thirds of jobs in the United States will require some form of postsecondary education or training. However, at the current rate of higher education completion, the nation will fall nearly 20 million degrees short of meeting that need. According to The Pell Institute, in 2014 only 35 percent of 25-34 year olds had a bachelor’s degree or higher, placing the United States around the middle of 43 developed nations. Achieving economic competitiveness demands a national response to increase the number of people earning four-year degrees or credentials. Moreover, the degree attainment rate masks pernicious inequities. According to the Pell Institute, more than half of all 24-year-olds with bachelor’s degrees are from families in the top 25 percent of the income bracket, while individuals from the bottom quarter accounted for only 10 percent of four-year degrees. Moreover, according to the Digest of Educational Statistics, Asians (57 percent) and whites (40 percent) are roughly twice as likely to hold a bachelor’s degree as African Americans (27 percent) and Hispanics (20 percent). Despite recent improvements in college-going rates, the overall degree completion rates, combined with disparities in educational attainment for low-income and underrepresented populations, will impede our nation’s efforts to develop a flourishing, inclusive economy. The “leaky student pipeline” metaphor, which characterizes the transition points in our educational system where students are lost, provides a powerful framing for identifying how to increase graduation rates. At each transition, some students fall by the wayside, especially black and Hispanic students and those from low-income families. While every transition point is important from a policy and practice perspective, improving student success at three critical junctures would have the greatest impact: (1) high school graduation, (2) pre-college remediation, and (3) college graduation. The U.S. has made progress over the last 15 years in improving on-time high school completion. A recent GradNation report describes how high school graduation rates began to rise in 2002, after flat-lining for 30 years, and have climbed sharply since 2006. The national graduation rate reached 82.3 percent in 2014—a gain of more than 10 percentage points since 2002. Gains by black and Hispanic students have been the key drivers with both of these student subgroups exceeding the national rate of improvement between 2013 and 2014 (0.9 points), and with yearly gains averaging more than 1.3 percentage points since 2011. Even with these gains, however, there is much to do to reach GradNation’s goal of having 90 percent of students graduate on time by 2020. The opportunity gap remains one ongoing challenge. The overall increase in high school graduation rates notwithstanding, substantial racial and economic variation persist. For example, while 88 percent of white students graduate, only 73 percent of African American and 75 percent of Hispanic Americans leave school with a diploma. That means one-quarter of African and Hispanic American students have little chance of obtaining a reasonably well paying job and are effectively shut out of college.[1]

Closing the achievement gap boosts income and overall economic output—outweighs the costs of fixing education inequality

The New York Times, 2015

[Patricia Cohen, “Closing Education Gap Will Lift Economy, a Study Finds,” February 2, https://www.nytimes.com/2015/02/03/business/economy/closing-education-gap-will-lift-economy-study-finds.html, GDI - TM]

Study after study has shown a yawning educational achievement gap between the poorest and wealthiest children in America. But what does this gap costs in terms of lost economic growth and tax revenue? That’s what researchers at the Washington Center for Equitable Growth set out to discover in a new study that concluded the United States could ultimately enrich everybody by improving educational performance for the typical student. When it comes to math and science scores, the United States lags most of the other 33 advanced industrialized countries that make up the Organization for Economic Cooperation and Development, ranking 24th, far behind Korea, Poland and Slovenia. Moving up just a few notches to 19th — so that the average American score matched the O.E.C.D. average — would add 1.7 percent to the nation’s gross domestic product over the next 35 years, according to estimates by the Washington Center, a nonpartisan, liberal-leaning research group focused on narrowing inequality. That could lead to roughly $900 billion in higher government revenue, more than making up for the cost of such an effort. If Americans were able to match the scores reached in Canada, which ranks seventh on the O.E.C.D. scale, the United States’ gross domestic product would rise by an additional 6.7 percent, a cumulative increase of $10 trillion (after taking inflation into account) by the year 2050, the report estimated. Robert G. Lynch, an economist who wrote the Washington Center report, explained why he took the trouble to make these what-if calculations. “One of the main goals was to see how we could promote more widely shared and faster economic growth,” said Mr. Lynch, who teaches economics at Washington College in Chestertown, Md. In the three decades that followed the end of World War II, almost all Americans, no matter where they fell on the earnings scale, enjoyed at least a doubling of their real incomes. But that balanced growth has evaporated. While those at the top have continued to experience robust income increases, everyone else’s income has either stalled or dropped. The average income of the bottom 20 percent of households sank by more than 8 percent from 1973 to 2013, while the inflation-adjusted incomes of the top 20 percent grew by about 60 percent, according to the report. The top 5 percent enjoyed an 80 percent jump. One point of this exercise, Mr. Lynch explained, is to show that the added cost of improving educational achievement at the bottom would be more than made up for by the rise in economic output and tax revenue. The study used math and science scores from the 2012 Program for International Student Assessment, a test widely used around the world for measuring and comparing educational achievement. The average combined score for the United States is 978, while the O.E.C.D. average is 995. The Canadian average is 1,044. Eliminating the achievement gap in America would require raising the country’s average to 1,080, so that it would rank third behind South Korea (with an average score of 1,092) and Japan (with a 1,083 average). That stunning improvement, according to the center, would raise the total output in the United States by another 10 percent. Lifetime earnings of the poorest quarter would jump by 22 percent in this event. The income gap is an outgrowth, at least in part, of the education gap. An analysis by the O.E.C.D. released last fall showed that the United States greatly lagged nearly every advanced industrial nation on measures of educational equality. Only one in 20 Americans age 25 to 34 surpassed the educational level of their parents, for example. For the 20 richest member nations, that average was one in four.