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Cost of each class of Arizona dropouts? $7.6 billion in lost economic activity


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  • Seth Scott/ Office of Phoenix Mayor Greg Stanton

ArizonaMayorsReportOnDropoutsImpact

The more than 18,000 Arizona students who dropped out of high school this year will produce $7.6 billion less economic activity over their lifetimes than if those same students had graduated, according to a new report by the Arizona Mayors Education Roundtable.

Cutting the dropout rate in half would generate $3.8 billion more in economic benefits to the state for each graduating class.

Mayor Greg Stanton and several Valley mayors released the research report today, which measured the economic impact of high school dropouts in Arizona.

Cost of each class of Arizona dropouts?  $7.6 billion in lost economic activity ArizonaMayorsReportOnDropoutsImpactKey takeaways from the study include:

·     Each Arizona high school dropout results in a $421,280 loss in economic activity over his or her lifetime.  This figure includes lost earnings, increased health care and crime-related costs, lost economic productivity and lost tax revenue.

·     In the City of Phoenix, the number is higher: each dropout results in a $463,500 economic loss – creating a $1.42 billion economic loss per graduating class.

·     In Arizona, each dropout will earn $271,040 less over the course of their lifetime than counterparts who graduate.  Dropouts face higher risks of unemployment and economic insecurity.

·     Each dropout will cost taxpayers an additional $98,520 more in crime-related expenses over the course of their lifetime.

·     Of the $7.6 billion in Arizona economic loss, $1.5 billion represents lost revenue and increased expenses for state and local governments.

·     In 2012, Arizona’s disconnected youth population – that is, young people who are neither in school nor working – was 183,200, or 22 percent of population aged 16 to 24.  This disconnected population results in an aggregate economic loss of more than $127 billion.

The full report is available at: http://azmayors.org/resources/college-and-career-readiness/.

“This report should be a wake up call to everyone in our state about why it is so important that we work together to get every student to graduate high school,” said Mayor Greg Stanton.  “It’s important for us to have city-level data so every elected official understands that if we sit idly by and leave this problem for others to solve, we do so at our own peril.  In Phoenix, we’re working to tackle the dropout rate by making sure our kids read by the third grade, and opening an online high school that helps those who have dropped out get back into class and earn their diploma.”

“We’ve all known that dropouts have a cost to our society, but this report displays it in a startling way,” remarked Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce.  “We at the Greater Phoenix Chamber commend the Arizona Mayors Education Roundtable for illuminating the stark reality of the economic burden of dropouts in our cities and state, and we look forward to working collaboratively with the mayors and the community to seek educational reforms and provide programs that will ease the economic burden of dropouts and improve our future economy.”

“We appreciate the leadership of the Mayors Roundtable in shedding more light on a critical issue like the impact of the dropout rate on our state’s future economic viability,” said Paul J. Luna, president and CEO of Helios Education Foundation. “Having the Mayors hold these statewide discussions will help enable our communities to identify and respond to the contributing factors and set goals that will re-engage students and put them back on the path toward college and career readiness.”

“Beyond the profound consequences to individuals and their families, we are now able to quantify the impact of school dropouts on Arizona’s economy,” said Paul H. Koehler, director of WestEd’s Policy Center and coordinator of the Mayors Roundtable. “This report should serve as a clarion call to action for state educators, policy makers, and all Arizonans.”

Russell W. Rumberger, a professor of education at the University of California, Santa Barbara and director of the California Dropout Research Project served as lead author.  Data was compiled from the Arizona Department of Education, U.S. Census American Community Survey and the 2014 study, “The Economic Losses from High School Dropouts and Disconnected Youth: Evidence from Across Arizona,” written by Clive R. Belfield, a professor at Queens College, City University of New York.

“The losses from failure to graduate from high school are sizeable, robust and pervasive,” Belfield said. “The social loss amounts to more than a high school dropout will earn in their lifetime; and the fiscal loss is almost equivalent to total spending per student over their entire K-12 years in the Arizona school system.”

Additional Background

·     The state Department of Education reports a five-year high school graduation rate of 80 percent, which means that – at current rates – 20 percent of Arizona ninth graders will not finish high school.  In 2012, there were an estimated 18,100 dropouts in Arizona.

·     Arizona’s Latino youth are particularly at risk.  In a ground-breaking report released just two years ago, the Morrison Institute for Public Policy warned: “It seems inevitable that, unless something is done to improve Latino educational achievement, Arizona’s population of under-educated workers will continue to grow.” [Source: Bill Hart and C.J. Eisenbarth Hager, “Dropped? Latino Education and Arizona’s Economic Future,” Morrison Institute for Public Policy, 2012]

·     Arizona’s K-12 enrollment increased steadily between 2001 and 2011.  The fastest-growing segment is Latino youth, which has grown by more than half during that same time. “Latinos now comprise nearly one-third of the state’s population and about 47 percent of its children under 19.” [Source: Bill Hart and C.J. Eisenbarth Hager, “Dropped? Latino Education and Arizona’s Economic Future,” Morrison Institute for Public Policy, 2012]

·     Investing in high school students pays dividends.  “When the costs of investment to produce a new graduate are taken into account, there is a return of $1.45 to $3.55 for every dollar of investment, depending on the intervention strategy.  Under this estimate, each new graduate confers a net benefit to taxpayers of about $127,000 over the graduate’s lifetime.” [Source: Henry M. Levin and Cecilia E. Rouse, “The True Cost of High School Dropouts,” New York Times, January 25, 2012]

·     “A recent national study predicted that by 2018, 61 percent of all jobs in Arizona will require some training beyond high school.” [Source: Anthony P. Carnevale, et.al., “Help Wanted: Projections of Jobs and Education Requirements Through 2018,” Georgetown University Center on Education and the Workforce (2010), http://cew.georgetown.edu/jobs2018/]

·     “The average annual income for a high school dropout [in the U.S.] in 2009 was $19,540, compared to $27,380 for a high school graduate – a difference of $7,840.” [Source: T. D. Snyder and S.A. Dillow, Digest of Education Statistics 2010 (2011-015), U.S. Department of Education, National Center for Education Statistics, Institute of Education Sciences, 2011]

Stanton created the Arizona Mayors Education Roundtable in 2012 as a partnership of WestEd and the Helios Foundation.  The research is the result of the Education Roundtable’s goal to expand the knowledge base and learning network of mayors.