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Education Lab Blog

Education Lab is a project to spark meaningful conversations about education solutions in the Pacific Northwest.

January 3, 2014 at 5:00 AM

How much do dropouts cost us? The real numbers behind ‘pay now or pay later’

Plenty of educators opine vaguely about the costs to society when a student drops out of school. But in 2011, an economist and professor of public policy at Columbia University dug into the numbers to tally the actual dollar figures, and they are stunning.

Of 40 million Americans between 16 and 24, about 6.7 million are neither in school nor employed. About half are high school droupouts; the others may have a GED. All are underemployed, if they work at all.

To taxpayers, each of these so-called “opportunity youths” imposes a lifetime cost of about $235,680 in welfare payments, food stamp, criminal justice and medical care. Multiply that across the full 6.7 million cohort and the hit is nearly incomprehensible: $1.6 trillion.

“The economic consequences of opportunity youth are enormous,” write authors Clive Belfield, Henry Levin and Rachel Rosen in “The Economic Value of Opportunity Youth,” which was published in 2011.

Because they are far more likely to be in jail, use welfare or live on food stamps, each youth costs us about $13,890 each year. That’s a lot more than the $5,000 Washington state spends per student in the public schools.

But policy-makers in Olympia have come up with a promising answer, a way to get our 30,000 youngest dropouts back on track and save state taxpayers billions of dollars.

Stay tuned for more on that in the next full-length Education Lab story, coming later this month. In the meantime, consider the implications of failing to act.

Young people who drop out of school make only $4,000 a year – if they can find work at all – contributing about $750 to public coffers. Others in their age group, while hardly commanding princely sums, earn an average $13,900 annually and pay $2,400 in taxes. Resulting taxes that opportunity youth could be contributing: $11.3 billion each year.

“These numbers show how much is being squandered,” the authors write.

The crush only mounts from there: more criminal activity, more use of welfare and food stamps. More Medicaid.

Consider that 63 percent of all youth crime nationally is committed by kids who have dropped out of school or failed to find a way into higher education. Their incarceration and court costs saddle us with a $76.7 billion annual bill – not including the financial hit to their victims in medical care, lost work time or insurance adjustments.

For welfare and food stamps, the pattern is predictable: Opportunity youth receive $9,660 more in lifetime welfare payments than those who graduate from high school, for an aggregate annual burden of $65.1 billion.

You get the picture.

Of course, kids who drop out of school do, technically, represent a certain savings on education spending, though you can almost hear the researchers wincing as they note this.

“Emphatically, the future burden of opportunity youth is far greater than the immediate burden,” they note. “That is, the real economic loss from opportunity youth is that these youth will not progress through adulthood being economically independent. The immediate burden is approximately one-quarter of the full burden.”

Comments | More in News | Topics: dropouts, graduation rates


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