Education as Economic Stimulus

An interesting report from an unlikely source, business consultants McKinsey & Company, identify underperforming education as the equivalent of a permanent recession.  Are you listening Ohio legislature? The report finds that the achievement gap is the economic equivalent of a permanent national recession—one substantially larger than the deep recession the country is currently experiencing.  Read McKinsey's report here, The Economic Impact of the Achievement Gap in America's Schools.

The US faces several achievement gaps, both compared to other countries in math and science education, as well as internal achievement gaps based on income and race.  Those gaps translate into lost earnings for individuals and our nation as a whole.  By allowing the gaps to persist, we are missing chances for economic growth.  For the economy as a whole, the report shows that:

  • International Gap: If, over the past years, the US had closed the current gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, GDP in 2008 could have been $1.3 trillion to $2.3 trillion higher (9-16% of GDP).
  • Racial Gap: If the gap between black and Latino student performance and white student performance had been narrowed, GDP in 2008 would have been between $310 billion and $525 billion higher (2-4% of GDP).
  • Low-Income Gap: If the gap between low-income students and the rest had been similarly narrowed, GDP in 2008 would have been $400 billion to $670 billion higher (3-5% of GDP).
  • Poor Performance Gap: If the gap between America's low-performing states and the rest had been narrowed, GDP in 2008 would have been $425 billion to $700 billion higher (3- 5% of GDP).

The lost income for individuals and our nation is only part of the problem, as we have substituted costs associated with the lower earnings or lower education, including poor health and higher prison rates.  That’s not a productive trade.