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ECONOMIC ANALYSIS: How kids do in high school matters to economy

April 14, 2008

Far too often, our worry about the shortterm state of the economy prevents us from focusing on the long term. That's too bad because it is the long term, not the short run, that we have the most ability to influence. The most important issue looming for Indiana and the nation is education.

Here is the fate of a representative group of 10 18-year-olds.

Four years ago, our 10 Hoosier students entered high school. One could not read. As of this spring, he and one or two others are no longer in school, having dropped out due to pregnancy, illiteracy or behavior problems. Two more are going

to college out of state, or have joined the

military. Three or four more are going to one of our fine four-year universities in Indiana. The remaining two or three kids soon will enter the labor force without college experience, though they are likely to further their education either through employersponsored training or at Ivy Tech Community College.

The prognosis for the economic health of these 10 students is very different.

The dropouts are essentially finished. For every high school dropout who will become economically self-sufficient, there are dozens who always will need public assistance. As far as labor markets

are concerned, these folks are worth far

less than a third-world worker, but cost far more. In Indiana, this problem is both rural and urban, and for many communities it is a looming disaster. The best outcome we can hope for is that they won't have children and that they stay out of jail (both costly endeavors for taxpayers). This is a harsh diagnosis to be sure, but the truth nonetheless.

Of the five or six who go to college or the military, only three eventually will finish a four-year degree, though the remainder will have picked up job skills along the way. These are the "above-average" folks who will have family incomes above the median. They are the future taxpayers. We have done a lot for these kids. We've spent perhaps $120,000 of taxpayer dollars on their education, and are subsidizing college. And for the students who fall by the wayside, we did even more. The five "below-average" folks are going to receive more government services than they pay for. But the top half of students will have made the most of assistance they received.

The two or three who don't go to college are a huge untapped resource, and the ones where public involvement makes the most difference. Here, the investment in technical and community colleges could have a highly salutary effect.



Hicks is director of the Bureau of Business Research at Ball State University. His column appears weekly. He can be reached at bbr@bsu.edu.
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