The Economic Benefits from Halving Philadelphia’s Dropout Rate

Posted by on February 15, 2010

Report highlights economic value of dropout reduction

In the Philadelphia metropolitan area, an estimated 16,400 students dropped out from the Class of 2008 at great cost not only to themselves but also to their communities.

A new report from the Alliance for Excellent Education says that reducing the number of dropouts by 50 percent for this single high school class would result in tremendous economic benefits to the Philadelphia region.

The Philadelphia metropolitan area (which includes Philadelphia and 11 surrounding counties is home to 196 high schools. Forty-one of these are considered “dropout factories” – schools where fewer than 60 percent of freshmen progress to their senior year on time.  Twenty-three percent of high school students in the region do not graduate on time with a regular diploma.

The analysis, supported by a grant from State Farm Insurance Company, says that moving even just one student from dropout status to graduate status will make positive contributions to a local economy.

The report says that if high school dropout rates in the region were reduced by half, graduates in the Philadelphia metropolitan area would have bought homes worth $294 million more than what they would likely spend without a diploma; supported 900 additional jobs and increased the gross regional product by as much as $159 million by the time these new graduates reach the midpoint of their careers; seen $125 million in increased earnings in the average year; spent an additional $83 million and invested an additional $32 million each year; boosted tax revenue by $18 million; and spent an additional $10 million each year purchasing vehicles.

The report also says that if only a thousand of the young people who dropped out had graduated, they would likely earn $15 million in additional earnings each year; spend an additional $1.2 million each year purchasing vehicles and, by the time they reach the midpoint of their careers, would buy homes worth $36 million more than what they would likely have spent without a diploma; and support 110 new jobs in the region, increase the gross regional product by $19 million, and pour an additional $2.2 million annually into state and local coffers, all through their increased spending and investments.

A summary of the AEE analysis can be downloaded here.

http://www.all4ed.org/files/Philadelphia.pdf