Improving High School Graduation Rates Helps the Economy, Too

by Grant Bradley, Intern Summer 2013

In a twenty-first-century economic landscape dependent upon consumer spending yet still feeling the effects of the Great Recession, people, businesses and the government have been drumming up ways to get the nation back on track. While Congress debates deficit spending, the costs of immigration reform, more taxes and tax cuts, one way to encourage consumer spending and thereby spur the economy is simply to create more consumers. By focusing attention on the plight of slipping high school graduation rates, Americans can not only better the lives of their younger fellow citizens but also create a bigger consumer pool and boost the economy.

A November 2012 study from the Alliance for Excellent Education (AEE), “Inseparable Imperatives: Equity in Education and the Future of the American Economy,” holds that increasing the number of high school graduates is key to the economic future of the United States.

Right now, Americans face a very real connection between their level of education and their income potential. At the peak of their careers, those with bachelor’s degrees and beyond earned a median salary of $52,000; high school graduates earned a median salary of $28,000; and high school dropouts earned a median salary of $19,000. This translates to a median hourly wage of $25 for college graduates and beyond, $13 for high school graduates and $9 for high school dropouts.

Income is not the only factor that disadvantages those without a high school diploma. The chances of being employed in the first place are slimmer than those who continue their education—high school dropouts are 1.5 times more likely to be unemployed than high school graduates, and 3 times more likely than college graduates.

If more people graduate high school, the AEE suggests, more people will have bigger paychecks, which they will spend on consumer goods. These purchases, in turn, will contribute to the economy. As the AEE succinctly observes, “any successful economic strategy must eliminate the gaps in education attainment and achievement and enable the fastest-growing populations to reach their full potential as wage earners, consumers, and citizens.”

In the meantime, high school graduation rates and their effect on the American job market are only getting worse. A June 2013 report conducted by the Council on Foreign Relations, “Remedial Education: Federal Education Policy,” points to a unique phenomenon among developed countries: young people entering the US workforce today are, on the whole, less educated than their more senior colleagues and bosses. American Baby Boomers aged 55 to 64 stand out as one of the most academically educated demographics in the world, ranked first in the number of high school graduates and third in the number of college graduates. In contrast, Millennials aged 25 to 34 rank only tenth in the number of high school graduates and thirteenth in the number of college graduates.

If 90 percent of the high school class of 2011 graduated, the AEE study found, the United States would have over 750,000 more graduates—750,000 potential consumers just waiting to score a better job with better pay that would allow them to buy more goods and services. Investing in education, then, means not just a more skilled and educated nation—it means a more vibrant, healthier economy.

Further Reading:

Bob Wise, “Providing All Students With a Quality Education is a Moral—and Economic—Necessity,” The Huffington Post, April 29, 2013, http://www.huffingtonpost.com/bob-wise/providing-all-students-wi_b_3147321.html.

Lauren Alix Brown, “Generation Dropout: Millenials Joining the Workforce Are Less Educated Than Retiring Boomers,” The Atlantic, June 18, 2013, http://www.theatlantic.com/business/archive/2013/06/generation-dropout-millennials-joining-the-workforce-are-less-educated-than-retiring-boomers/276974/.