The Economics of Failure: How Low Graduation Rates Affect All of Us

One of the clearest measures of Connecticut’s education achievement gap is the significant difference in high school graduation rates between underrepresented segments of our student population and others.

State Department of Education data for the high school class of 2009 show that the graduation rate for white students was nearly 21% higher than for black students and almost 29% higher than for Hispanics. And students from low-income families graduated at a rate nearly 26% lower than the rate for their more affluent peers.

“Failing to address these disparities is not only a tragic disservice to our young people,” says CBIA President and CEO John Rathgeber, “it affects every citizen in Connecticut through the negative impact low graduation rates have on our economy.”

A statewide study by the Center for Labor Market Studies at Northeastern University shows that Connecticut’s economy loses more than a half-million dollars over the lifetime of each high school dropout, taking into account social services, incarceration costs, medical care, and lost tax revenue.

Other research shows that Connecticut would save more than $155 million in health care costs alone over the lifetimes of each class of high school dropouts had they earned their diplomas. And if the male high school graduation rate increased by just 5%, the state’s economy would see a combination of crime-related savings and additional revenue of about $63 million each year.

A National Perspective

Nationwide, the statistics are also eye-opening. A study released last January by the Washington, D.C.-based Alliance for Excellent Education found that in the country’s 50 largest cities and the 45 metro areas that surround them, approximately 600,000 students dropped out from the class of 2008 “at great cost not only to themselves but also to their communities.”

How high was that cost? If high school dropout rates were reduced by half, graduates in the United States would likely have

Bought homes worth $10.5 billion more than what they would likely spend without a diploma

Supported 30,000 additional jobs and increased the gross regional product in these metro areas by a total of up to $5.3 billion by the time the graduates reached the midpoint of their careers

Seen $4.1 billion in combined additional earnings in the average year

Spent an additional $2.8 billion and invested an additional $1.1 billion each year

Boosted tax revenue by $536 million each year

Spent an additional $340 million each year purchasing vehicles

These findings make it clear, says Edward B. Rust Jr., chairman and CEO of State Farm (which provided funding for the study), that “assuring that all of our students graduate from high school with the skills necessary to compete in a global economy is something all businesses”_should see as a priority.”