The Economic Impact of the Achievement Gap in America's Schools

Ben Hoffman

McKinsey & Company
April 2009

Consulting giant McKinsey's new report on the achievement gap might
not turn many heads in ed policy circles. But the company's reputation,
combined with the report's economic findings, might just help thrust
education more fully into the national consciousness. (In fact, the
report received play from The New York Times' Tom Friedman prior
to its release yesterday.) The study consists of three sections. The
first details four worrisome achievement gaps: the international gap
between the U.S. and other advanced nations; the racial gap between
white students and students of color; the income gap between students
from high- and low-income families; and the systems-based gap between
neighboring classrooms, schools, districts, and states. The second
portion examines the consequences of these gaps. The implications for
individuals--lower career earnings, a higher probability of
incarceration, a less healthy lifestyle, and lower civic engagement--are
already widely known, but the impact on our nation's economy has been
less explored. Using models that assume varying levels of progress
between 1983's A Nation At Risk
and 1998 (presumably, this 10 year gap between 1998 and 2008 was to let
graduates filter into the working world, and thus effect GDP), McKinsey
estimates that the racial, class, and systems gaps have each cost the
U.S. somewhere in the neighborhood of $300 billion to $700 billion (2 to
5 percent of our GDP). But the international achievement gap delivers
the real economic whammy: if the U.S. raised student achievement levels
to those of high-performing nations like Finland and Korea, the "U.S.
GDP in 2008 would have been between $1.3 trillion and $2.3 trillion
higher, representing 9 to 16 percent of the GDP." In comparison, the
U.S. lost 6.3 percent of its GDP in the fourth quarter of 2008. The good
news, according to the report's final section, is that schools matter
"profoundly." If we can correct things like inequities in teacher
quality and school funding and commit to investing in and utilizing
better data, conclude the authors, we can make progress in closing gaps
whose effect has been a "permanent national recession." You can find the
report here.

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