The economic cost of the US education gap

Byron G. Auguste, Bryan Hancock, and Martha Laboissière:

A persistent gap in academic achievement between children in the United States and their counterparts in other countries deprived the US economy of as much as $2.3 trillion in economic output in 2008, McKinsey research finds.1 Moreover, each of the long-standing achievement gaps among US students of differing ethnic origins, income levels, and school systems represents hundreds of billions of dollars in unrealized economic gains. Together, these disturbing gaps underscore the staggering economic and social cost of underutilized human potential. Yet they also create room for hope by suggesting that the widespread application of best practices could secure a better, more equitable education for the country's children--along with substantial economic gains.

How has educational achievement changed in the United States since 1983, when the publication of the seminal US government report A Nation at Risk2 sounded the alarm about the "rising tide of mediocrity" in American schools? To learn the answer, we interviewed leading educational researchers around the world, assessed the landscape of academic research and educational-achievement data, and built an economic model that allowed us to examine the relationships among educational achievement (represented by standardized test scores), the earnings potential of workers, and GDP.

We made three noteworthy assumptions: test scores are the best available measure of educational achievement; educational achievement and attainment (including milestones such as graduation rates) are key drivers in hiring and are positively correlated with earnings; and labor markets will hire available workers with higher skills and education. While these assumptions admittedly simplify the socioeconomic complexities and uncertainties, they allowed us to draw meaningful conclusions about the economic impact of educational gaps in the United States.

Posted by Jim Zellmer at June 24, 2009 5:54 AM
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