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Education and Rhode Island’s Economic Future
Bryan C. Hassel, Ph.D. and Jacob RoschDecember 1, 2009
$400 ‐ $670 Billion, with a “b”
Payoff in national GDP of closing the income achievement gap
3 – 5% of the nation’s economic output
‐McKinsey & Company
12/1/2009 2
Source: McKinsey & Company, “Economic Impact of the Achievement Gap in America’s Schools,” 2009
$425 ‐ $700 Billion
Payoff in national GDP for improving education in low‐performing states
3 – 5% of the nation’s economic output
‐McKinsey & Company
12/1/2009 3
Source: McKinsey & Company, “Economic Impact of the Achievement Gap in America’s Schools,” 2009
Overview
Why are these numbers so large?
How would better education payoff for Rhode Island?
How can RI get there from here?
12/1/2009 4
Overview
Why are these numbers so large?
How would better education payoff for Rhode Island?
How can RI get there from here?
12/1/2009 5
More Education Pays
12/1/2009 6
Source: College Board, “Education Pays” (2007)
$100,000
$79,400
$61,300$50,900
$40,600$37,100$31,500$23,400
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Professional Degree
Doctoral Degree
Masters Degree
Bachelor's Degree
Associates Degree
Some College
High School Graduate
Not a High School
Graduate
Median Earnings and Tax Payments of Full‐Time Year‐Round Workers, by Education Level, 2005
After‐Tax Income Taxes Paid
More Education Pays
0%
10%
20%
30%
40%
Medicaid School Lunch Food Stamps
Percen
tage Participa
ting
Individuals 25 and Older In Households in Public Assistance Programs, by Education Level, 2005
Not a High School Graduate High School GraduateSome College Associates DegreeBA or Higher
12/1/2009 7
Source: College Board, “Education Pays” (2007)
More Education Pays
1.9%
1.2%
0.3%0.1%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Not a High School Graduate
High School Graduate
Some College BA or Higher
Percen
tage Rep
orting
Incarceration, by Educational Attainment, 1997
12/1/2009 8
Source: College Board, “Education Pays” (2007)
Quality Matters
It’s not simply more education that matters
– Test scores predict attainment
– Test scores predict earnings
12/1/2009 9
Early scores predict future scores
12/1/2009 10
Source: McKinsey & Company, “Economic Impact of the Achievement Gap in America’s Schools,” 2009
How Low-Performing 4th Graders Fare in 8th Grade
62%
30%
11%2%
0%
20%
40%
60%
80%
Bottom Quartile
26th‐50th 50th‐75th Top Quartile
Eighth‐grade achievement
Math scores in high school predict future, especially for poor kids.
12/1/2009 11
Source: College Board, “Education Pays” (2007)
30%
3%
11%
29%
Highest Level of Education Attained, by High School Math Scores
Low Math Scores High Math Scores
No High School Degree BA or Higher
10x Greater
8th grade performance predicts education attainment
12/1/2009 12
10%20%
36%
56%
Bottom Quartile
25‐50th Percentile
51‐75th Percentile
Top Quartile
Percent of Students Graduating College by 8th
Grade Achievement Quartile
Source: McKinsey & Company, “Economic Impact of the Achievement Gap in America’s Schools,” 2009
5x Greater
Quality Matters
The median income of students with the highest 8th grade achievement is 40% greater than students with the lowest achievement.
12/1/2009 13
$20,000
$24,000 $25,000
$28,000
Bottom Quartile
26‐50th Percentile
51‐75th Percentile
Top Quartile
40% Greater
Source: McKinsey & Company, “Economic Impact of the Achievement Gap in America’s Schools,” 2009
Payoffs for States: Tax Revenues
$54,000
$91,000
$211,000
High School Graduate Some College BA or Higher
Present Value of Lifetime Increases in Tax Revenue from Increased Education, White Male
12/1/2009 14
More education leads to greater lifetime tax revenues.
Source: RAND, “The Benefits to Taxpayers from Increases in Student’s Educational Attainment” 2009
Payoffs for States: Tax Revenues
12/1/2009 15
A greater concentration of college graduates improves overall average income
$20,400
$27,000
Not a high school graduate
23% College Grads
28% College Grads
33% College Grads
38% College Grads
Source: College Board, “Education Pays” (2007)
Payoffs for States: Other Benefits
12/1/2009 16
High quality education, and greater attainment have been shown to improve:– Attractiveness to businesses choosing locations
– Housing prices
– Level of political participation
– Level of volunteerism
Payoffs for States: Economic Growth
12/1/2009 17
Improving the quality of education for low performing students would have a huge payoff
$310 $400 $425
$525 $670 $700
Racial Gap Income Gap Low Performing States
Increase in
GDP Over 10
Years
National Impact of Eliminating Gaps, in Billions
Lower Estimate Upper Estimate Source: McKinsey & Company, “Economic Impact of the Achievement Gap in America’s Schools,” 2009
Overview
Why are these numbers so large?
How would better education payoff for Rhode Island?
How can we get there from here?
12/1/2009 18
Education Payoff for Rhode Island
Rhode Island has one of the nation’s largest racial achievement gaps.
Achievement in Rhode Island lags the national average.
What if the state could close these gaps?
12/1/2009 19
Education Payoff for Rhode Island
Closing racial achievement gaps could increase statewide earnings by between $315 – $430 million– Improving black performance to that of white students: $95 – $130 million
– Improving Hispanic performance to that of white students: $220 – $300 million
12/1/2009 20
Education Payoff for Rhode Island
Reaching the national average could increase statewide earnings by between $380 – $515 million
– Improving the state’s performance to that of Connecticut: $800 million – $1 billion
– Improving the state’s performance to that of Massachusetts: $1.5 – $2.1 billion
12/1/2009 21
Overview
Why are these numbers so large?
How would better education payoff for Rhode Island?
How can we get there from here?
12/1/2009 22
Getting There from Here
World‐class standards will aligned assessments
Robust data‐sharing, transparency
Intense focus on teacher and leader quality
Vigorous new school creation
Truly dramatic changes for failing schools
Dynamic funding system
12/1/2009 23
Dynamic Funding System
Transparency
Money following children
Funding based on needs
Change over time as enrollment changes
Incentives to get results, especially for poor
children
12/1/2009 24
PUBLIC IMPACT is a national education policy and managementconsulting firm based in Chapel Hill, N.C. We are a small, growingteam of researchers, thought leaders, tool‐builders, and on‐the‐ground consultants who help education leaders and policymakersimprove student learning in K‐12 education. We believe that if wefocus on a core set of promising strategies for change, we can makedramatic improvements for all students.
For details about sources of data and calculations in this presentation please contact Dr. Hassel.
