It's a constant refrain in education circles that spending on schools is an investment in the future. Better educated people earn more and live healthier, more productive lives. We know this through extensive social science research, and in fact, even know income numbers in terms of averages for people who score in different quartiles on standardized tests.
But we don't talk about the converse very often: By that logic, bad schools are extremely expensive in terms of producing far lower returns than one should expect. This is the equivalent of keeping your money in a 0% interest savings account at one bank, rather than going next door to one offering 2% or so for the same level of risk.
This week, McKinsey's Social Sector Office released a report quantifying exactly how bad our returns are in terms of lower expected earnings and the like. You can read the report here. Among the findings:
* If the USA closed the achievement gap on international tests between better scoring countries such as Finland and South Korea, our GDP could be $1.3-$2.3 trillion higher. This is the equivalent of 9-16% of GDP.
* If the USA closed the achievement gap between black and Hispanic students and white students, our GDP could be 2-4% higher ($310-$525 billion).
* If the USA closed the achievement gap between low income students and other students, our GDP could be 3-5% higher ($400-$670 billion).
* If low performing US states did as well as high performing US states, our GDP could be $425-700 billion higher.
* And lest anyone think it's all about money, the USA spent more per earned point on international tests than other countries (though McKinsey still notes that in general poor districts in the US spend less than richer districts and also do less well -- not universally, a la Washington DC -- but in general).
These are interesting numbers because as of late March, the current recession was expected to knock about 3.4% off GDP, and only the most bearish economists are putting it into double digits. So if our lousy schools are giving us annual returns of 9-16% less than we could expect, this is like being in a "permanent national recession," as McKinsey says.