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Economic Impacts of the High School Dropout Rate to the State of Oklahoma

Economic Impacts of the High School Dropout Rate to the State of Oklahoma. Outline. Methodology Assumptions, Data and Limits Economic Impacts Asset or wealth creation for the state Social Impacts Liabilities or costs for the state Conclusions. Methodology.

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Economic Impacts of the High School Dropout Rate to the State of Oklahoma

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  1. Economic Impacts of the High School Dropout Rate to the State of Oklahoma

  2. Outline • Methodology • Assumptions, Data and Limits • Economic Impacts • Asset or wealth creation for the state • Social Impacts • Liabilities or costs for the state • Conclusions

  3. Methodology • Assumes that a HS degree or equivalent correlates to a current market demand for workers’ skills and abilities. • US Census measures age 25 and older with a HS degree or equivalent, regardless of when the degree was attained. • Direct impacts are measures of productivity; indirect impacts are measures of relationship or correlation.

  4. Economic Impacts • Economic Impacts • Measured in Income, GDP, and Productivity • Causal relationship with knowledge, skills and abilities • Individual’s wealth • Wages and Personal Income • State revenues • Taxes (Income and Consumer) • Business productivity

  5. Economic Impacts • 84.3% of Oklahomans age 25 or older have a HS degree or equivalent • The national average is 84.1% • Range 90.7 to 77.9 Source: US Census Bureau

  6. Economic Impacts *Current Situation Source: US Census Bureau, 2006 American Community Survey ^Scenarios represent estimates based on 2006 ACS.

  7. Economic Impacts *Current Situation Source: BEA ^Scenarios represent estimates based on calculations.

  8. Economic Impacts Rate of Marriage Source: US Census Bureau (Population greater than 15 years) Tax Structure Source: Oklahoma Tax Commission

  9. Economic Impacts Note: These data include state consumption taxes only. County and City consumption taxes are not included.

  10. Productivity Growth in the Manufacturing Sector US Productivity $120,000 $100,000 OK Productivity $90,000 $100,000 $80,000 $70,000 $80,000 $60,000 Oklahoma Productivity/Worker National Productivity/Worker $60,000 $50,000 $40,000 $40,000 $30,000 $20,000 $20,000 $10,000 $0 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Economic Impacts

  11. Economic Impacts Reducing the high-school dropout rate and/or increasing the number of people who complete a high school equivalency should: • Increase the incomes earned by the state’s population • Improve productivity • Increase the level of economic production in the state, and • Increase state and local tax collections

  12. Social Impacts • Social Impacts • Measured in Social and Government Services • Correlated relationship to Employability and Wealth Creation • Individual’s health, safety and welfare • State costs • Business Liability

  13. Social Impacts • Healthcare • Average Life Expectancy in 2000 • US = 77.8 years • Oklahomans = 75.3 years • Oklahomans without a HS Degree = 66.2 • The lifetime medical expenses of a HS dropout are approximately $83,000 more. • A 65 year-old person with a HS diploma typically enjoys better health status than a 45 year-old who dropped out in 10th grade. Levin, Henry M. The Social Costs of Inadequate Education. http://www.tc.columbia.edu/i/a/3082_socialcostsofinadequateEducation.pdf

  14. Social Impacts • Criminal Activity • HS dropouts are 3.5 times more likely to be incarcerated than HS graduates. • Increasing the average rate of education by 1 year has been estimated to reduce murder and assault by almost 30%, motor vehicle theft by 20%, arson by 13% and burglary and larceny by 6%. • 75 percent of America’s state prison inmates, almost 59 percent of federal inmates, and 69 percent of jail inmates did not complete high school. • OK would save $63 million annually in crime-related costs, plus have an estimated $33 million in increased annual earnings IF the male graduation rate were increased by just 5%. Source: http://www.all4ed.org/files/archive/publications/SavingFutures.pdf

  15. Social Impacts • Teen Pregnancy • 50% of all Teen mothers dropped out of high school before becoming pregnant. • In 2004, Teen childbearing in OK cost taxpayers (federal, state, and local) at least $149 million. • OK lost $51 million in tax revenues because of lost workforce due to teen pregnancy, ranking OK 19th in the nation. • OK spent $26 million in adult incarceration costs for sons born to teen parents, ranking OK 26th. Source: National Campaign to Prevent Teen and Unplanned Pregnancy.

  16. Conclusions Increasing the % of Oklahomans with at least a High School degree or equivalent could: • Increase annual earned income by $830 million. • Increase the state’s GDP by nearly $2 billion. • Increase the state’s annual revenues by almost $76 million. • Save over $12 billion in lifetime health-related costs. • Save the state annually over $63 million in crime-related costs.

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