Graduation counts: connection between education and the economy.

AuthorHerling, Daphne
PositionReport - Statistical data

[ILLUSTRATION OMITTED]

Graduating from high school is a rite of passage for many American youth, an accomplishment that is hailed by families and communities alike, an achievement that warrants proms, parties, and presents. Newspaper stories hold up intellectually brilliant teenagers, challenged teenagers who have graduated despite all odds, and extraordinarily talented teenagers.

The transition from high school student to young adult is a critical one. Young people will enter into young adulthood as they head to college, to the workforce, or into whatever life has to offer--with or without the life skills and educational skills they need. Thus there is much riding on high school graduation, and there are serious consequences for those who fail to obtain a high school diploma.

According to the U.S. Department of Education, the 2011 national high school graduation rate was 75 percent. The remaining 25 percent, or approximately 1.2 million high school seniors across the country, did not attain a high school diploma. This heterogeneous group of high school dropouts constitutes a loss to the national economy in terms of work participation, tax revenue, and wealth accumulation.

According to the Alliance for Excellent Education, improving our nation's high school graduation rate is smart economic policy. The Alliance states in its June 2011 brief that if half of the 2010 high school dropouts were to have graduated, they would have earned approximately $7.6 billion more each year than they will without the diploma. In another report, "The Impact of High School Graduation on Household Wealth," the Alliance states that the U.S. could increase the nation's collective wealth by increasing the high school graduation rates. Though the report was written in 2007, before the deep recession and resulting high unemployment rates, its message is still relevant: There is a direct connection between education and asset accumulation. Those without high school diplomas frequently end up at the lowest end of the economic spectrum and, as such, have the hardest time saving and accumulating wealth. The ability to accumulate wealth not only helps break the cycle of poverty, but it ensures a vibrant, successful working class. The report estimates the potential for "an additional $74 billion in collective wealth in the United States if every household were headed by an individual with at least a high school diploma."

The state report from the Alliance for Excellent Education shows that Montana is a big loser when youth do not graduate from high school. On average, a high school graduate in Montana will earn $6,684 more each year than a high school dropout will, and the lost lifetime earnings for those who did not graduate from high school in 2011 is estimated to be $312 million.

The report also states that if only half of Montana's 2011 dropouts had graduated, they would likely have provided several economic benefits to the state, including $21 million in increased home sales; $1.8 million in increased annual auto sales; 100 new jobs; a $15 million...

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