How Dropouts and the Achievement Gap Hurt the Economy

2 separate studies explore the magnitude of education problems and their impact on the economy.

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A new study released this week shows that graduation rates are on the rise in a majority of the nation's 50 largest cities. But staggering numbers of students still are not finishing high school. Fifty-three percent of high school students in the largest city districts don't earn a diploma, compared with 71 percent of students in the suburbs who do, according to the study by Collin Powell's America's Promise Alliance, a children's advocacy organization.

Among the cities that have seen the biggest improvement are Philadelphia, Tucson, Ariz., and Kansas City, Mo. These three cities saw their graduation rates jump by 20 percentage points or more. In contrast, Las Vegas, Wichita, Kan., and Omaha, Neb., experienced the steepest drops in graduates. The graduation rate in Las Vegas, for example, plunged 23 percentage points, to 44.5 percent.

"The fact that barely half of students educated in America's largest cities are finishing high school should truly raise an alarm among those who care about the future of public education and the nation as a whole," Chris Swanson, director of the Editorial Projects in Education Research Center, says in the report. Swanson, the report's author, cites research showing that, on average, dropouts earn significantly less than high school graduates and suggests that dropouts are likely to bear the brunt of the economic crisis.

A separate study released this week shows that inaction in education can be costly. The study, funded by McKinsey & Company, estimates that had America closed achievement gaps between 1983 and 1998—15 years after the landmark report on education "A Nation at Risk"—the U.S. economy in 2008 would have been significantly better off. Not closing the test score gap with other countries, for example, cost the U.S. economy in 2008 between $1.3 trillion and $2.3 trillion in terms of gross domestic product. The study's researchers describe the existing gaps as the economic equivalent of "a permanent national recession."

The study on graduation rates, funded by the Bill and Melinda Gates Foundation and America's Promise, is based on an analysis of federal Education Department data from 1995 to 2005. During that decade, the graduation rate declined in 19 of the nation's largest city districts. The study doesn't explore the successful strategies that helped urban school districts boost their graduation rates.

In all, 13 cities posted double-digit graduation rate increases. Philadelphia's graduation rate rose from 38.9 percent to 62.1 percent, which is still below 70 percent, the national average. The city's school district has addressed the dropout problem by, among other things, targeting at-risk middle school students, creating freshman academies, and opening centers where dropouts can re-enroll.

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