1. How public schools benefit local economies
Graduation Rates
• Everyone benefits from increased graduation rates. The graduates themselves,
on average, will earn higher wages and enjoy more comfortable and secure
lifestyles. At the same time, the nation benefits from their increased purchasing
power, collects higher tax receipts, and sees higher levels of worker productivity
(The High Cost of High School Dropouts).
• The nation’s economy and competitive standing also suffers when there are high
dropout rates (The High Cost of High School Dropouts).
• Nationally, more than 7,000 students become dropouts every school day, adding
up to over 1 million students annually who will not graduate from high school with
their peers as scheduled (Editorial Projects in Education, ―Diplomas Count
2010: Graduation by the Numbers: Putting Data to Work for Student Success, ‖
special issue, Education Week 29, no. 34 (2010).
• Addressing the high school dropout crisis is a key strategy for economic growth.
Years of research repeatedly highlights the link between education and the
economy. Not only does improving education improve the economic outcomes of
individuals who earn degrees—the individual gains also compound to benefit the
economy at the local, state, and national levels (Tucci).
Income
• Most high school dropouts see the result of their decision to leave school most
clearly in the slimness of their wallets. The average annual income for a high
school dropout in 2005 was $17,299, compared to $26,933 for a high school
graduate, a difference of $9,634 (U.S. Bureau of the Census, 2006). U.S. Bureau
of the Census. (2006). Income in 2005 by educational attainment of the
population 18 years and over. Table 8. Washington, DC: U.S. Government
Printing Office. Retrieved from
http://www.census.gov/population/www/socdemo/education/cps2006.html)
• Research by Cecilia Rouse, professor of economics and public affairs at
Princeton University, shows that each dropout, over his or her lifetime, costs the
nation approximately $260,000 (Rouse, C. E. (2005). “Labor market
consequences of an inadequate education.” Paper prepared for the symposium

2. on the Social Costs of Inadequate Education, Teachers College Columbia
University, October 2005).
• Unless high schools are able to graduate their students at higher rates, more
than 12 million students will drop out during the course of the next decade. The
result will be a loss to the nation of $3 trillion ("The High Cost of High School
Dropouts.”).
• Increasing a person’s education will on average increase his wage rate; for
example, college-educated workers tend to be paid about 60 percent more than
workers with only a high school degree (author’s calculations using the Current
Population Survey, previously presented at Michigan Consensus Revenue
Estimating Conference, May 18, 2004).
• Research suggests that a one-point increase in the percent of a local economy’s
population that is college educated will increase real wages of non-college-
educated local residents by 1.4 percent, and real wages of local college
graduates (Moretti, Enrico, 2003. “Human Capital Externalities in Cities,” National
Bureau of Economic Research working paper 9641).
• In Illinois in 2011, on average, a high school graduate in Illinois earns $8,220
more each year than a high school dropout does (Illinois High Schools).
Community
• As for the general public, in a recent public opinion survey the assertion that
public schools “Improve the local economy and attract business” was identified
as the second most important benefit which schools bring to
communities(Education Week & Public Education Network. 2002 Accountability
for All: What Voters Want from EducationCandidates: National Survey of Public
Opinion.).
• The only benefit of public schools ranked above local economic improvement
was the “benefit [to] families.”(Weiss).
• Public schools are an important economic tool, and can be integrated with other
aspects of economic development, such as developing other social capital and
improving quality of life (Weiss).
• More recently, Thomas Lyson’s study in the Journal of Research in Rural
Education, “What Does a School Mean to a Community?” (2002) concludes that
rural towns with local public schools are often more economically advanced, with
more people employed in professional, managerial, and executive occupations

3. (Lyson, T. A.(2002, Winter. What Does a School Mean to a Community? Journal
of Research in Rural Education,17(3), 131-37).
• Research evidence suggests that higher education increases local economic
development principally by increasing the quality of the local workforce, and
secondarily by increasing local innovative ideas (Bartik).
• More surprising is the research finding that increasing the proportion of college
graduates in a local economy will increase the wage rates of local residents other
than those receiving more education (Bartik).
• If half of Illinois’s 45,600 dropouts from the Class of 2010 had stayed in school
and earned a high school diploma there would have been 1,600 new jobs
(all4edfiles).
Facts
• State and local economies suffer further when they have less-educated
populaces, as they find it more difficult to attract new business investment.
Simultaneously, these entities must spend more on social programs when their
populations have lower educational levels (The High Cost of High School
Dropouts).
• The economic vitality of a city is linked to the performance of its schools (Weiss).
• In addition to raising national productivity as seen in the last section, research
indicates that quality public schools can help make states and localities more
economically competitive (Weiss).
• Higher education’s most fundamental contribution to economic development lies
in its traditional role: creating an educated population. The new economy is
making the traditional academic mission ever more important (Shaffer & Wright).
• The twenty-first century paradigm, in contrast, is shifting toward putting
knowledge first. For states, increasingly, that means connecting their higher
education systems more closely to their economic development strategies
(Tucci).
• A new Economic Policy Institute report shows adequate and targeted investment
in education is the best way to achieve faster growth, more jobs, greater
productivity, and more widely shared prosperity (Schweke).

4. • At a time when our knowledge-based economy demands increasingly higher
skills to stay competitive, support for well-resourced schooling and training is key.
This strategy is also an important tool for advancing economic quality (Schweke).
• The best economic stimulus package is a diploma (all4edfile).
• Estimated Additional Lifetime Income If High School Dropouts Graduated
With Their Class in 2006-2007 in Illinois.
o States 9th Graders (2003-2004) 174,343
o Estimated Graduation Rate(2006-2007) 75.7%
o Estimated Number of Dropouts for the class of 2007 42,365
o Total Lifetime Additional Income if Dropouts Graduated $11,014,990,
740
o Projections are available for each state and more than 200 MSAs on the
Alliance’s website, http://www.all4ed.org/publication_material/Econ.
Costs
• Class of 2010 alone would have resulted in significant economic benefits to the
nation, including more than $7.6 billion in increased annual earnings and the
creation of 54,000 new jobs (Tucci).
• Finally, and perhaps most critically, research suggests that improving education
could have the power to grow the economy by boosting the gross domestic
product (GDP) and creating jobs. In 2009, McKinsey & Company released an
often-cited report that likened low levels of academic achievement and
attainment to a ―permanent national recession (McKinsey & Company, Social
Sector Office, ―The Economic Impact of the Achievement Gap in
America’sSchools.http://www.mckinsey.com/App_Media/Images/Page_Images/O
ffices/SocialSector/PDF/achievement_gap_report.pdf (accessed November 16,
2010).
• In the report, the authors assert that if the United States had improved its
educational achievement levels to those of the world’s leaders in education—
Finland and South Korea—the nation’s GDP could have grown by as much as
$2.3 trillion, or 16 percent(McKinsey & Company, Social Sector Office, ―The
Economic Impact of the Achievement Gap in America’s
Schools.http://www.mckinsey.com/App_Media/Images/Page_Images/Offices/Soc
ialSector/PDF/achievement_gap_report.pdf (accessed November 16, 2010).
Real Estate

5. • If half of Illinois’s 45,600 dropouts from the Class of 2010 had stayed in school
and earned a high school diploma there would have been a $458 million in
increased home sales (all4edfile).
• Increased home and vehicle sales. By the midpoint of their careers, these new
graduates, combined, would likely have spent as much as $19 billion more on
home purchases than they will likely spend without a diploma. In addition, they
would likely have spent up to an additional $741 million on vehicle purchases
during an average year (Tucci).
• If just half of Illinois’s dropouts had graduated in 2011, they would likely have
provided the following economic benefits: $717 million in increased home sales
(Illinois High Schools).
Auto Sales
• If half of Illinois’s 45,600 dropouts from the Class of 2010 had stayed in school
and earned a high school diploma there would have been a $21 million in
increased auto sales (all4edfile).
• If just half of Illinois’s dropouts had graduated in 2011, they would likely have
provided the following economic benefits of $26 million in increased annual
Auto sales (Illinois High Schools).
• Increased home and vehicle sales. By the midpoint of their careers, these new
graduates, combined, would likely have spent as much as $19 billion more on
home purchases than they will likely spend without a diploma. In addition, they
would likely have spent up to an additional $741 million on vehicle purchases
during an average year (Tucci).
Tax Revenue
• Improving high school graduation rates can result in a wave of economic
benefits, including increases in individual earnings; home and auto sales; job and
economic growth; spending and investment; and state tax revenues (Tucci).
• Increased tax revenue. As a result of these new graduates’ increased wages and
higher levels of spending, state tax revenues would likely have grown by as
much as $713 million during an average year (Tucci).
• If half of Illinois’s 45,600 dropouts from the Class of 2010 had stayed in school
and earned a high school diploma there would have been a $20 million in
increased state tax revenue (all4edfile).

6. • When education levels increase, public expenditures decrease and tax revenues
increase (Tucci).
Sources:
http://www.all4ed.org/files/archive/publications/HighCost.pdf
"The High Cost of High School Dropouts." All4ed.org. Oct. 2007. Web.
<http://www.all4ed.org/files/archive/publications/HighCost.pdf>.
http://www.mea.org/tef/pdf/public_schools_development.pdf
Weiss, Jonathan D. "Public Schools and Economic Development." Mea.org. 2004. Web.
<http://www.mea.org/tef/pdf/public_schools_development.pdf>.
http://www.rockinst.org/pdf/education/2010-03-18-A_New_Paradigm.pdf
Shaffer, David F., and David J. Wright. "A New Paradigm for Economic Development."
Rockinst.org. Mar. 2010. Web. <http://www.rockinst.org/pdf/education/2010-03-18-
A_New_Paradigm.pdf>.
http://www.all4ed.org/files/EdEconomy_seb_leb.pdf
Tucci, Tara N. "Education and the Economy." All4ed.org. June 2011. Web.
<http://www.all4ed.org/files/EdEconomy_seb_leb.pdf>.
http://www.nsea.org/CORE/media/040708-schweke-pr1.pdf
Schweke, William. "Investment in Education Best Route to Stronger, Fairer Economy."
NSEA.org. July 2004. Web. <http://www.nsea.org/CORE/media/040708-schweke-
pr1.pdf>.
http://www.upjohninst.org/publications/wp/04-106.pdf

7. Bartik, Timothy J. "Increasing the Economic Development Benefits of Higher Education in
Michigan." Upjohnist.org. Sept. 2004. Web.
<http://www.upjohninst.org/publications/wp/04-106.pdf>.
http://www.all4ed.org/files/Illinois_sebps.pdf
"The Economic Benefits of Helping High School Dropouts Earn Both High School
Diplomas and College Degrees." All4ed.org. Dec. 2011. Web.
<http://www.all4ed.org/files/Illinois_sebps.pdf>.
http://www.all4ed.org/files/Illinois_hs.pdf
"Illinois High Schools." All4ed.org. Jan. 2012. Web. <http://www.all4ed.org/files/Illinois_hs.pdf>.