Dropout rate affects economic development

Bobby L. Hickman

April 1, 2008

If you're not convinced education has a dramatic effect on economic development and growth, you haven't met Dr. Steve Dolinger. As president of the non-profit Georgia Partnership for Excellence in Education (GPEE), he travels around the state talking to chambers of commerce, civic clubs and other community leaders about the economics of education. He presents sobering statistics detailing how the high-school dropout rate has an $18 billion annual economic impact on Georgia.

What sort of reaction does he get?

"Usually it's a little bit of a wake-up call," Dolinger says. "They'll know some of the data. They know the graduation rate is getting better but it's not where we want it. They know SAT scores are improving but still not where they need to be."

But when GPEE starts tying dollar values to those statistics, it's often an eye-opening discussion. According to a Georgia Southern study, in 2005, the percentage of Georgians age 25 and older who had completed high school was 82.8 percent. The national average was 84.2 percent.

Other studies indicate if the number of 20-year-old high-school dropouts were cut in half, the federal government would reap $45 billion in extra tax revenues and reduced costs for public health, crime and justice, and welfare.

The Georgia high school graduation rate improved from 65 percent in 2004 to 72 percent in 2007. But Dolinger says that number represents 123,275 students over the past four years who entered ninth grade but did not graduate from high school.

He says high school non-completion "affects so many things. It increases criminal activity, and adds to the costs of prison and welfare. They have lower lifetime earnings, which reduces their buying power, lowers tax revenues for governments and reduces economic growth. There's also decreased health status, more criminal activity, higher rates of teen pregnancy and single motherhood – just higher costs all around."

Aside from the immediate impact, the education system also has a direct effect on future economic growth. Dolinger says that before businesses even make a physical visit to an area, they're already looking at economic impact data. "Part of that data is the education achievement of a community, along with items such as transportation and workforce development. Sometimes a county or a community won't even make the first cut because a company will see they don't have a pipeline to supply them with the workers they need."

Dennis Donovan of Wadley-Donovan-Gutshaw Consulting, a New Jersey-based corporate relocation firm, agrees education is a major factor for companies looking to move into a community. He recently told Metro Atlanta Chamber of Commerce leaders transportation is the No. 1 problem Atlanta faces in attracting and retaining companies. However, his top five issues include "education in the central city."

Asked about Donovan's comments, Dolinger agrees, saying that since Atlanta is the hub of the area's economic development, the performance of its schools is key. But Dolinger says that for an urban school system, Atlanta public schools are doing pretty well when you compare them with other cities across the country.

"Of course, they're not where we want them to be yet," Dolinger says. "[Atlanta School Superintendent] Dr. Beverly Hall is doing a great job in the elementary schools and we're starting to see some traction in middle school and in the high school completion rate. She still has the challenge of improving overall high-school performance and further increasing high-school graduation rates."

Mike Garrett, president and CEO of Georgia Power, doesn't believe Atlanta's most pressing economic development issue is transportation. He believes having an educated and trained work force is key.

"We're seeing manufacturing drop off and higher-tech jobs coming on," says Garrett, who also is GPEE's vice chairman. "About 80 percent of new jobs created over the next 10 years will be high-tech, requiring at least a two-year technical degree. Yet we have almost a 30 percent dropout rate."

 "It's not about keeping up anymore – we've got to get ahead," he adds. "You'll start to see economic development pass us by if we don't."

For an idea of how large the future impact of not addressing educational shortfalls could be, GPEE statistics about the current effects of high school dropouts give clues. The lost lifetime earnings of Georgia's 2007 dropout class totals more than $15 billion. In 2005, non-high school graduates earned $8,367 less annually than high-school graduates and $36,618 less than college graduates. Over an adult's working life, high- school graduates earn $1.4 million – $400,000 more than non-graduates. The average person with a bachelor's degree will earn $2.5 million, with a master's, $2.9 million.

Once it raises awareness of the problem, GPEE also helps communities find ways to tackle educational issues.

Dolinger says his presentations are customized for each area GPEE's visits across the state. "At the end, we compare their communities to similar districts across the state – similar sizes, levels of poverty, percentage of students with English as a second language, and so forth. If they're not performing as well as the others, part of our message is that we can help them connect with other school systems. They can see what their best practices are, which helps them to get better."

And if a community is willing to bring all the players to the table, GPEE has a program that helps it set up a strategic education plan. "Once you have leaders in business, education, government and the community involved, then you can really jump-start the education program," Dolinger says. "That, in turn, leads to better workforce development and economic development programs."

Businesses are hungry to know what they can specifically do. Dolinger says business leaders want to know, "What can we do tomorrow to make a difference? They like to measure what they're doing. We can give statistics that show return on their investment. They realize it might be long-term ROI but at long as they know they can get something back, they're willing to do it.