PRESIDENT OBAMA SAYS: We must improve the quality of American education to compete in the global economy.

“In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity—it is a prerequisite. But our children will compete for jobs in a global economy that too many of our schools do not prepare them for.  We have one of the highest high school dropout rates of any industrialized nation. And half of the students who begin college never finish. This is a prescription for economic decline. That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education - from the day they are born to the day they begin a career.”

DMI SAYS: “President Obama is right to connect investments in education to economic recovery, growth, and competitiveness. The tremendous returns on these investments are incontestable: more educated citizens will ensure higher rates of productivity and aggregate growth for the country as a whole. Strengthening the cognitive capacity of our young people will yield positive economic consequences for both their individual earning power and for our national GDP. Combating the dropout epidemic must become the top priority within the Obama administration’s education agenda—left unaddressed, it could create a lost generation unprepared to compete in an economy where advanced skill sets are prerequisites for attaining the mobility, security, and prosperity still associated with a middle-class livelihood. With an astonishing 12 million students expected to drop out of high school in the next decade, this epidemic demands far more attention and funding than it currently receives—it is where our educational crisis and economic crisis meet. Millions of young people, from economically disadvantaged communities, consigned to extreme poverty, cut off from nearly all job opportunities, without much chance for a better life, is a prospect much too grave to endure.”

• The latest research shows that nearly every segment of the workforce requires employees to do more than simple procedures—they must be able to make connections between different kinds of information and to use knowledge as a versatile tool. Synthesizing a growing literature on the subject, Elena Silva at Education Sector has demonstrated the falsity of claiming that rudimentary facts and formulas should be taught ahead of critical thinking and problem solving. Basic skills and advanced skills must be learned together; critical thinking enables basic skills to be enlarged and applied in various situations.

• In a similar vein, Harvard economic historians Claudia Goldin and Lawrence Katz have shown that basic skills, when undeveloped and untrained, are far less valuable than the advanced skills of a high school or college graduate: this additional education provides at least some form of unemployment protection by enabling a worker to adapt to changes in the economy. This flexibility means transferability across occupations, industries, business cycles, and geographic locations, with each new adaptation bringing with it a further return on the original investment, as if a cognitive multiplier effect were at work.

• Dead-end jobs have always required basic skills to be used on the same tasks, whereas gateway jobs that lead to the middle class require general, portable skills to be used on multiple tasks. This is true for blue-collar jobs and white-collar jobs. In the twentieth century, Goldin and Katz argue, employers of manual workers actually demanded the same high-level skills that other workers learned in secondary schools. (Skilled manufacturing was not just about better tricks of the trade—it was about better learning.)

• According to Katz and Goldin’s analysis, inequality is fundamentally a race between the supply of skill and the demand for skill. They have found that inequality is affected most not by waning demand for our educated labor—the highly analytical individual is any employer’s dream—but by our current short supply, our increasing cognitive scarcity.

• This trend is most apparent at the bottom of the economic ladder, particularly for African-American and Latino men—the population most likely to drop out. Indeed, a number of other studies with similar findings analyzed by the Government Accountability Office confirm that lower socioeconomic status bears the strongest relationship to dropping out.

• The academic records of these students are often identical: years of low test scores, bad behavior, and poor attendance—proven indicators of disengagement, a cumulative process in which the loss of motivation eventually coincides with the decision to leave school. Student disengagement and withdrawal from school is a long-term process that can be influenced by students’ early school experiences. Several studies have found that early achievement and engagement in elementary and middle school predict eventual withdrawal from high school. Early risk factors are compounded: the more risk factors students experience over their schooling careers, the greater their likelihood of dropping out.  Robert Balfanz, a dropout prevention expert at the Center for Social Organization of Schools at Johns Hopkins University, has been able to predict as early as sixth grade when entire groups of these troubled students will fall perilously off track and ultimately drop out. There is only a very small window of time in which these students can be reached. By high school, entrenched patterns are difficult, if not impossible, to change.

• A number of studies from the National High School Center and other organizations have consistently shown that students must be challenged and encouraged throughout their academic career, with high expectations, intellectual rigor, and constant direction on how to excel in becoming part of their everyday school environment and their learning experience. Unfortunately, as Jason Amos at the Alliance for Excellent Education has argued, there has been little federal investment in middle and high schools to ensure that students get the necessary support throughout their educational careers.

• President Obama spoke about the need for reform and not just more resources, but the reality is that middle schools and high schools do need more resources because they are underfunded: they receive an estimated $5 billion a year, compared to the $18 billion and $16 billion that primary and postsecondary schools, respectively, receive each year. So the Obama administration needs to close these funding gaps immediately if it wants to see results.

• The problem, as Amos points out, is that the federal government has focused too narrowly on the bookends of the education system, neglecting the crucial years in between. This is not to deny the importance of early education and college. But it is to say that if at-risk students on the economic margins don’t receive better support across the educational continuum fewer of them will be able to enter the workforce, let alone the middle class.

• Because problematic attitudes and behaviors of students at risk of dropping out appear early, the most effective dropout prevention strategies do not wait to target high school or middle school students who have experienced years of unsolved problems, as Russell Rumberger, a dropout prevention scholar at the University of California, Santa Barbara, has argued in recent studies.

• One model program of early invention in dropout-prone schools is Project GRAD, based in Houston. It has been singled out in major studies on dropout prevention by the Government Accountability Office. The basic idea is to restructure schools to become more responsive at every level to the most at-risk students, offering a wider array of resources and services along with stronger social support, revamped curriculum, and higher standards across the educational continuum. Project GRAD has succeeded in some of the most impoverished urban schools in Houston, Newark, Los Angeles, Nashville, Columbus, Atlanta, and beyond—boosting graduation rates while lowering disciplinary problems.

• Project GRAD costs approximately 5 to 7 percent of the annual per-student spending in the public schools where implemented. More states and school districts would likely access information about Project GRAD and expand its reach if the Obama administration used its web savvy to create and market a wiki-like interactive clearinghouse of model dropout prevention policies.

• More successful dropout prevention in schools across the country is in our long-term economic interest. For example, increasing the high school graduation rate and college matriculation for male students by just 5 percent would lead to combined savings and revenue of almost $8 billion each year. High schools graduating more students prepared for college and the workforce greatly reduce healthcare costs for states. Individuals with higher education access jobs that are more likely to provide health care and other benefits.

• The Obama administration, ever mindful of its strong ties to Chicago, should recall the recent studies of the Consortium on Chicago School Research. The importance of course performance in high schools is often overlooked, Consortium analysts have shown, especially in the current era of accountability, when test results often take predominance over students’ actual classroom experiences. Test scores can be measures of student success, but they are only a very small part of the picture. Students need additional skills besides those measured by achievement tests to succeed in high school. The transition to high school places significant demands on students that can be eased through safer, supportive environments that foster the skills and strategies to deal with such obstacles.

• The Consortium has developed an on-track indicator to gauge whether sufficient progress in the first year of high-school means a student will graduate within four years. On-track students typically complete enough credits by the end of the school year to be promoted to tenth grade, and have failed no more than one semester of a core subject area. This indicator is today part of the accountability system for Chicago public high schools—and it’s something education secretary Arne Duncan should champion more widely. It is an equally good predictor of graduation for all students, regardless of their background.

• If the flexible skills currently demanded are produced too slowly, overall economic growth and productivity will become sluggish and inequality will widen—a nightmarish prospect for our future. The Obama administration should be economically smarter and politically courageous about our nation’s investments in education by jettisoning what economist Charles Schultze once called the pernicious practice of incremental budgeting, the process in which the budget allocation process consists in making decisions about how much each existing program is to be increased or decreased. Too many big issues in education and economics are at stake to be so small-minded about money.

• The returns on investments in education far exceed the initial debt incurred.

RELEVANT STATISTICS

• Percentage of college students who can demonstrate proficiency on basic literacy tests: 40

• Amount the nation loses each year in costs associated with college remediation: $3.7 billion

• Percentage of new high-growth, high-wage jobs that will require some postsecondary education: 90

• Percentage of college-educated workers that have employer-provided healthcare: 95

• Percentage of high school-educated workers that have employer-provided healthcare: 77

• Percentage of high school dropouts that have employer-provided healthcare: 67

• Number of dropouts the U.S. currently produces every year: 1.2 million

• Number of dropouts expected in the next decade: 12 million

• Amount of additional collective wealth in the nation if each household were headed by an individual with at least a high school diploma: $74 billion

• Amount of lost income the next decade of dropouts will cost the country: $3 trillion

• Amount a single high school dropout costs the nation over the course of his or her lifetime: $260,000 in lost earnings, taxes, and productivity

• Amount states could save in Medicaid and expenditures for the uninsured if current numbers of dropouts graduated: more than $17 billion

• Amount of lifetime income expected to be lost by the total number of dropouts from the class of 2008: $319 billion

• Amount of federal funding for grades preK–6: nearly $18 billion

• Amount of federal funding for grades 7-12: nearly $5 billion

• Amount of federal funding for postsecondary education, not including student loan spending: nearly $16 billion

Go to the next section: Fiscal Responsibility

DMI on the 2009 Presidential Address to Congress