An Assessment of the Labor Market, Income, Health, Social, Civic and Fiscal Consequences of Dropping Out of High School

Transcription

1 An Assessment f the Labr Market, Incme, Health, Scial, Civic and Fiscal Cnsequences f Drpping Out f High Schl The Fiscal Ecnmic Cnsequences f Drpping Out f High Schl State and Lcal Fiscal Cnsequences f High Schl Drput Prblems in Massachusetts A three-part study f the drput crisis and the cnsequences fr the Cmmnwealth by Nrtheastern University s Center fr Labr Market Studies Key Findings 11,14 students drp ut f Massachusetts high schls each year. This has prfund cnsequences fr the individuals wh drp ut and fr the cmmunities in which they live. This paper examines the cnsequences in seven areas: emplyment and earnings health and health care cverage public assistance dependency family frmatin civic participatin incarceratin fiscal csts The explanatins and calculatins shw that there is an pprtunity t have a prfundly psitive impact n the Cmmnwealth s budget by significantly reducing the drput rate. I. Emplyment and Earnings Drputs are less likely t wrk as yung adults and ver the curse f their lives. Only 2% f year ld drputs in Bstn wrked in 24-2, cmpared with 6% f high schl graduates nt attending schl and 83% f Bachelr degree hlders. % f Massachusetts drputs ages16-64 were wrking in 2, cmpared with 73% f high schl graduates Annually, drputs earn far less n average than ther educatinal subgrups. This is due t three factrs: They are less likely t btain emplyment Thse wh are emplyed wrk fewer hurs annually Thse wh are emplyed earn lwer hurly wages

2 As shwn in the chart belw, Massachusetts drputs earn almst $1, less per year than high schl graduates and $34, less than bachelr s degree hlders. Cmparisns f the Mean Annual Earnings f Year Old Adults by Educatinal Attainment in the U.S. and Massachusetts, 2 (in $1,) 8 7 $7.3 $ $48.2 $.8 in $1, $14.6 $16.8 $22.3 $26. $28.4 $3.9 1 <12 r 12, n diplma H.S. Graduate 13-1 Years BA Degree Master's r Higher Degree Educatinal Attainment U.S. Massachusetts The lng-term effect is that the average drput earns cnsiderably less ver a life-time and spends lnger perids f time in pverty. In 2, the average Massachusetts drput earned $46, less in a lifetime than the average high schl graduate and $1. millin less than the average bachelr s degree hlder. As charted belw, based n 2 data, drputs spent an average f 21 years in lw incmes status (r lwer), while high schl graduates and bachelr s degree hlders spent averages f 11 and years, respectively. Mean Expected Years in a Lw Incme Status Amng Massachusetts Adults frm Ages by Educatinal Attainment Mean Years <12 r 12, n diplma H.S. Graduate 13-1 Years Assciate Degree BA Degree Master's r Higher Degree Educatinal Attainment 2

3 Male drputs will earn less ver their lifetime than they ever did, as the labr market has changed substantially ver the last 3 years. In real dllars, the mean lifetime earnings f male Massachusetts high schl drputs declined by 3% between 1979 and 2, as charted belw. Trends in Mean Lifetime Earnings Year Old Male Drputs Massachusetts, 1979 t 2 (In Thusands) $1,6 $1,4 $1,383 $1,276 $1,2 $1,14 $981 $1, $8 $6 $4 $2 $ II. Health and Health Care Cverage Drputs are less likely t experience gd health than thse with mre educatin. As charted belw, 18% f Massachusetts drputs reprted pr r fair health, cmpared with 13% f high schl graduates and % f bachelr s degree hlders. Per Cent f Year Old Adults in Massachusetts and the U.S. Reprting Their Health Status as Fair r Pr, March Per Cent <12 r 12, n diplma H.S. Diplma/GED 13-1 Years B.A. r Higher Degree Educatinal Attainment M.A. r Higher Degree 3 U.S. Massachusetts

4 Drputs, particularly Black and Latin men, have a shrter life expectancy than their better-educated peers. One natinal, lngitudinal study shwed that high schl drputs ages years ld had a mrtality rate ver twice that f high schl graduates and three times that f thse with pst-graduate schling. As charted belw, Black male high schl drputs have the highest death rates, with Latin male drputs mre likely t die yung than White male drputs. Death Rates Amng Selected Grups f Year Old Males In the U.S. by Race-Ethnic Grup and Educatinal Attainment in 24 (in %) Per Cent Black, H.S. Drput Black, H.S. Graduate Hispanic, H.S. Graduate White, 1-3 Years Cllege White, BA Black, BA + White, BA + Grup Drputs are substantially mre likely t reprt physical and mental disabilities as adults than thse in ther educatinal subgrups. 27% f adult high schl drputs reprted a disability, cmpared with 13% f high schl graduates and 6% f bachelr s degree hlders. Drputs with disabilities are far less likely t be emplyed than members f ther educatinal subgrups having disabilities, as shwn in the chart n the next page 4

5 Emplyment/Ppulatin Ratis f Year Old Wmen With Disabilities By Their Level f Educatinal Attainment, Massachusetts, 2 (in %) % Years, N Diplma High Schl Diplma, N Cllege Sme Cllege Bachelr's Degree Master's Degree Drputs with disabilities were mre likely t receive public assistance and far mre likely t live in pverty than members f ther educatinal subgrups having disabilities. 6% f drputs with disabilities received cash public assistance incme cmpared with % f high schl graduates and 33% f bachelr s degree hlders. 12% f drputs were bth disabled and pr r near-pr, cmpared with 4% f high schl graduates and.6% f bachelr s degree hlders. Massachusetts drputs were less likely t have health insurance than thse in ther educatinal subgrups, thugh mre likely t have it than their natinal peers. 12 Health Insurance Cverage Rates f Massachusetts and U.S. Adults (18-64 Years Old) by Educatinal Attainment, 24-2 Averages Per Cent < Bachelr's Master's Educatinal Attainment Massachusetts U.S

6 A majrity f drputs in ur state depend n Medicaid r Medicare fr their cverage, while a majrity f the ttal wrking age ppulatin earn their health insurance thrugh an emplyer Over half f all Massachusetts drputs have publicly funded health care thrugh Medicaid r Medicare at a cst f $8,8 fr each drput insured under ne f these prgrams. Only 18.7 % f the ttal wrking age ppulatin have publicly funded health care. Only 2% f all Massachusetts drputs had health insurance cverage thrugh an emplyer. Over half f the ttal wrking age ppulatin had health insurance thrugh an emplyer. III. Public Assistance Dependency Drputs are mre likely t depend n public assistance, bth cash and in-kind, than ther educatinal subgrups. 27% f Massachusetts drputs were dependent n cash public assistance f sme kind, cmpared with 14.9% f high schl graduatins and 6.8% f Bachelr s degree hlders, as charted belw. Percent f the 16-6 Year Old Ppulatin in Massachusetts Wh Were Dependent n Sme Frm f Cash Public Assistance Incme by Educatinal Attainment, % Years, N Diplma r GED High Schl Diplma, N Cllege Sme Cllege, including Assciate Degree Bachelr's Degree Master's Degree r Higher 6

7 Massachusetts drputs were als mre likely t rely n in-kind public assistance, such as Fd Stamps. As shwn in belw, drputs were verrepresented amng Fd Stamp recipients. The Educatinal Distributin f Fd Stamp Recipients and the Year Old Adult Ppulatin in Massachusetts During 24 (A) (B) (C) Educatinal Attainment Percent f Ppulatin Percent f Fd Stamp Benefit Recipients Relative Incidence f Fd Stamp Beneficiaries (Cl. B/ Cl. A) 1-12 Years, N Diplma r GED High Schl Diplma, N Cllege r Mre Years f Schling IV. Institutinalizatin Rates and High Schl Drputs Drputs particularly yung men and yung Black men are much mre likely t be incarcerated than thse with mre educatin. The chart belw shws that twice as many male drputs as high schl graduates were institutinalized in 2 and 18 times as likely t be institutinalized as their cunter parts with a bachelr s degree r higher. Institutinalizatin Rates f Year Old Men by Level f Educatinal Attainment in the U.S., 2 (Excluding Thse Enrlled in Schl) Y e ars, N D ip l m a H.S. D ip l m a, N C lle g e S m e C lleg e, In clu d in g A ss cia te D eg ree B ac h el r's D e g ree M a ster's D e g ree r H ig h er 7

8 Amng drputs, yung Black male drputs are mst likely t be incarcerated, fllwed by yung Asian and White men, as shwn in the chart belw. Percent f Years Old Male High Schl Drputs in Massachusetts Wh Were Institutinalized at the Time f the 2 Census Ttal and by Race-Ethnic Grup All General Pp Black Asian White Mixed Race Hispanic Drputs make up the majrity f jail and prisn ppulatins. A 2 Massachusetts Department f Crrectins reprt fund that 7% f jail r prisn inmates lacked a high schl diplma r GED, thugh statewide, drputs represent 12% f the nn-elderly ppulatin. The higher incarceratin rates f drputs reinfrce their already decreased likelihd f btaining emplyment. Yung men with criminal cnvictins and prir incarceratin face severe difficulties in btaining emplyment and will earn cnsiderably less than their peers with n criminal recrds, especially Black men. V. Family Frmatin and the Accelerating Cycle f Pverty Drputs are less likely t participate in family and civic life, which affects the quality f life fr them and fr their children and has a variety f adverse implicatins fr the future f the Cmmnwealth. Drputs are less likely t marry and mre likely t becme single parents than any ther grup nw mre than ever. 8

9 Only 36% f female drputs ages 2-64 were married in 2, cmpared with 3% f high schl graduates and 8% f bachelr s degree hlders Only 43% f male drputs ages 2-64 were married in 2, cmpared with 6% f high schl graduates and 68% f bachelrs degree hlders The marriage rate fr male and female drputs has declined almst by almst 2 percentage pints ver 2 years, mre than ther grup. The 2 year decline was less steep fr high schl graduates, while Bachelrs Degree hlders shwed virtually n change at all, and thse with pst-graduate educatin increased their marriage rates. Trends in Marriage Rates f Massachusetts Native Brn High Schl Drputs 2-64 Years Old 198 t % The steep decline in marriage rates f drputs has nt been accmpanied by an equivalent decline in their rate f childbearing. As a cnsequence, a high and rising share f births t female drputs in Massachusetts has been taking place ut f wedlck. 77% f 2 births t female drputs were ut f wedlck, cmpared with 47% t high schl graduates and 6% t Bachelrs Degree hlders, as shwn in the chart n the next page. 9

10 Per Cent f Births t Massachusetts Native Brn Wmen (1- Years Old) That Were Out-f-Wedlck by Educatinal Attainment f the Mther, Per Cent <12 r 12 n diplm a H.S. graduate r G ED years B achelr's degree M aster's r higher degree Educatinal A ttainm ent Children f individuals with limited schling especially single parent families are mre likely t live in pverty and are mre at risk f drpping ut f schl themselves. These marriage and childbearing trends threaten t accelerate the pverty cycle. VI. Civic Participatin Drputs are less likely t be actively engaged in civic activities, including vting in lcal and natinal electins and vlunteering fr civic rganizatins. Vting rates f yung adults are strngly assciated with their levels f frmal schling, as shwn in the chart f vting rates fr the 1996 presidential electin. Per Cent f Year Olds Wh Vted in the 1996 Presidential Electin by Educatinal Attainment, U.S Per Cent H.S. D r p u t G E D H.S. G ra d u a te S m e C lle g e A ss ciate 's D e g re e B a c h e l r's D e g re e M a ste r's r H ig h e r D e g re e E d u c a ti n a l A tta in m e n t 1

11 Even in a presidential electin featuring a lcal presidential candidate, Massachusetts drputs vting rates were significantly lwer than thse with mre educatin, as shwn in the chart belw. Per Cent f Vting Eligible Adults (18 and Older) Wh Vted in the Nvember 24 Electin by Level f Educatinal Attainment, Massachusetts Versus the U.S. 1 Per Cent All <12 r 12, N H.S. Diplma High Schl Graduate Sme Cllege Bachelr Degree Master's r Higher Degree Educatinal Attainment Massachusetts U.S. Drputs are cnsiderably less likely t vlunteer in civic assciatins, as shwn in the chart belw. Per Cent f U.S. Adults 2 and Older Wh Did Vlunteer Wrk in 23 by Educatinal Attainment Per Cent <12 Years High Schl Graduate 1-3 Years Cllege B.A. r Higher Degree Educatinal Attainment The gaps in the civic behavirs, such as vter registratin and actual vting, between the best and least well educated adults in the natin have been grwing ver time. 11

12 VII. Fiscal Cnsequences The drput crisis has fiscal cnsequences fr lcal, state and federal gvernments. The estimate belw cnsiders three types f fiscal cst: Lwer incme and payrll taxes due t lwer earnings Higher Medicaid, Medicare and public assistance csts Higher incarceratin csts. These csts are calculated fr average annual amunts and then multiplied by 47 years the estimated pre-retirement wrking lifetime f an individual. Estimates f payments int the system and transfer csts drawn frm the system were calculated using US Census Bureau Public Use Micrfiles fr each level f educatinal attainment. The average fiscal cst f a high schl drput is the difference between the net benefit cntributed by the average high schl graduate and the average high schl drput. This is a cnservative estimate f the fiscal cst, as the difference between the net benefit cntributed by the average drput and thse with mre educatin than high schl graduates wuld be even greater. A. Taxes Generated Each Massachusetts drput paid an annual average f $2,498 in federal and state incme taxes in 22-24, cmpared with the $,46 paid by the average high schl graduate. When emplyers payrll taxes are added t these figures, a drput generates an annual average f $4,31 in taxes, cmpared with an average f $7,696 generated by a high schl graduate. The table n the next page displays average taxes cntributed by drputs, high schl graduates and Bachelrs degree hlders. 12

13 Tax Payments Made by Massachusetts Adults t State and Lcal Gvernments By Level f Educatinal Attainment, 22/24 Tax Incme (A) High Schl Drput (B) High Schl Graduate (C) Bachelr's Degree Hlder Federal Incme Tax $1,136 $2,233 $8,4 State Incme Tax ,79 Federal Retirement Tax Scial Security Retirement Payrll Tax ,329 Ttal Tax Payments 2,639,9 14,74 Plus Emplyers Payrll Tax Cntributins $1,676 $2,61 $4,71 Ttal Individual and Emplyer $4,31 $7,696 $18,77 B. Public Assistance r Transfers The term transfers refers t public supprt f individual csts in the frm f cash and in-kind transfers. Cash transfers are payments, such as unemplyment benefits, Scial Security payments, public assistance, and wrkers cmpensatin. In-kind transfers, are direct supprt, such as fd stamps, rental subsidies, Medicaid r Medicare cverage. Average annual csts fr transfers were calculated by dividing the ttal value f transfers received by each subgrup by the ttal number f adults in the educatinal subgrup. Ttal Value f Transfers = Average cst f transfers per Ttal number in individual in that educatinal subgrup educatinal subgrup The tw tables n the next page display average csts f bth cash transfers and in-kind transfers received by drputs, high schl graduates and bachelr s degree hlders. 13

14 Cash Transfers Received by Massachusetts Adults by Level f Educatinal Attainment and Type f Transfer, 22/24 Type f Cash Transfer (A) High Schl Drput (B) High Schl Graduate (C) Bachelr's Degree Hlder Unemplyment Cmpensatin $111 $272 $167 Wrkers' Cmpensatin Scial Security Incme 1, Supplemental Scial Security Incme 1, Public Assistance Veteran's Payments Survivr's Incme 11 Disability Incme Energy Assistance Ttal 3,27 1, In-Kind Transfers Received by Massachusetts Adults by Level f Educatinal Attainment and Type f Transfer Type f In-Kind Transfer (A) High Schl Drput (B) High Schl Graduate (C) Bachelr's Degree Hlder EITC $126 $146 $32 Fd Stamp (Market Value) Medicare (Market Value) Medicaid (Market Value) Husing Subsidy (Market Value) Ttal

15 C. Incarceratin Csts The methd fr calculating the average annual cst f incarceratin fr each educatinal subgrup is similar t that used fr calculating the average csts f cash and in-kind transfers. Average annual cst Number in educatinal Average annual cst f incarceratin X subgrup incarcerated = f incarceratin Ttal number in educatinal subgrup The annual average cst was then multiplied by 47 t calculate the average lifetime csts f incarceratin. The table belw shws the average lifetime csts f incarceratin fr drputs, high schl graduates and bachelr s degree hlders. These figures are based n the Massachusetts Department f Crrectins annual cst f $43,2 (26) and d nt include the capital csts f prisn cnstructin r physical maintenance. The average lifetime per capita csts f incarceratin are $2,678 fr a drput, cmpared with $23,849 fr a high schl graduate and $3,133 fr a bachelr s degree hlder. The net incarceratin cst fr the drput is the difference between the high schl graduate average and the drput average, which is $28,829. Lifetime Per Capita Csts f Institutinalizatin fr Adults by Educatinal Attainment, Massachusetts, 2 (A) (B) (C) Average Lifetime Cst f Institutinalizatin f Males (in $) Average Lifetime Cst f Institutinalizatin f Females (in $) Weighted Average Lifetime Cst f Institutinalizatin f Bth Males and Females (in $) Educatinal Attainment 1-12 Years, N Diplma r GED $8,887 $18,2 $2,678 High Schl Diplma, N Cllege 38,399 6,67 23,849 Bachelr's Degree 4,42 2,22 3,133 1

16 D. Ttal Net Fiscal Impact T calculate the ttal fiscal impact, five steps were fllwed. 1. Average annual transfers (bth cash and in-kind) were subtracted frm annual taxes paid t give a figure fr net fiscal impact. By this calculatin, drputs were the nly educatinal subgrup that psed a net fiscal burden, with an annual average f -$4,76 in This cmpares with an annual average net fiscal benefit f +$4,369fr high schl graduates. Taxes Paid - Transfer Csts = Annual Net Fiscal Incurred Benefits Drputs $4,31 - $9,21 = - $4,76 HS Graduates $7,696 - $3,327 = +$4, The net annual average fiscal cst f the drput was subtracted frm the benefit generated by the high schl graduate. The difference between the tw estimates is $9,7 annually. 3. The difference was multiplied by 47 years (cvering ages 18 t 64) fr a lifetime cst, which is charted belw fr drputs, high schl graduates and bachelr s degree hlders. As shwn in the chart the next page, the average lifetime public benefit (really a deficit) generated by a drput is -$221,182, cmpared with +$2,343 by a high schl graduate and +$828,74 by a bachelr s degree hlder. 16

17 Lifetime Mean Taxes Paid- Transfers Received by Nn-Enrlled Year Old Adults in Massachusetts by Educatinal Attainment, Averages (in $) $1,, $8, $828,74 $6, $ $4, $2, $2,343 $ -$2, -$4, -$221,182 <12 High Schl Diplma Bachelr's Degree 4. The net fiscal benefit generated by a drput was then subtracted frm that f the fiscal benefit generated by a high schl graduate. The difference is $426,2.. Frm the previus page, the net difference between the lifetime incarceratin csts f high schl graduates and drputs is $28,829, which was added t $426,2 fr a ttal estimated cst f $46,34 almst half a millin dllars ver a lifetime. In annual terms, each drput csts $9,78. Bstn s apprximately 1, annual drputs will cst the public ver $14 millin a year. Massachusetts 11,14 annual drputs will cst the public ver $18 millin a year. E. Net Fiscal Impact n State and Lcal Gvernments: Islating the Cst t Massachusetts T lk mre specifically at the fiscal impact f the drput n the Cmmnwealth, state and lcal revenue taxes, cash transfer payments, in-kind transfers and incarceratin csts were separated frm federal taxes, transfers and csts. The csts cnsidered in each categry are listed in the chart n the next page. 17

18 State Taxes State and Lcal Revenue Surces, Cash Transfers, In-Kind Transfers, and Criminal Justice System Expenditures Impacted by High Schl Drputs in the Cmmnwealth State persnal incme taxes State sales taxes Unemplyment insurance and wrkers cmpensatin taxes Abve Three State Taxes Cmbined Lcal prperty taxes Cash Transfer Payments Temprary Assistance t Needy Families (TANF) Emergency Assistance t the Elderly, Disabled, and Children (EAEDC) Supplemental Security Incme fr the Aged and Disabled (SSI) Unemplyment Insurance Benefits In-Kind Transfers Medicaid Expenditures Public Husing Subsidies* Child Care Subsidies fr Lw Incme and TANF Recipients Husing Shelters* Incarceratin Csts Jail/Prisn Csts Prbatin/Parle Csts* Nte: (*) Specific estimates f these csts are nt included in this paper due t an inability t btain data n the educatinal attainment f the recipients f these services. Using a variety f surces and the calculatins utlined in Sectins A-D abve, the specific annual cst t the Cmmnwealth fr each drput n average was calculated. That cst the mean annual difference between the net fiscal cntributins f high schl graduates and high schl drputs was abut $3,8. Massachusetts high schl drputs impsed $1,67 mre in cash and in-kind transfers and incarceratin csts than they paid in state and lcal taxes. In sharp cntrast, high schl graduates paid $1,13 mre in state and lcal taxes than they received in transfers r impsed in incarceratin csts n state and lcal gvernment. Over the 47-year wrking-age lifetime, the fiscal cst t state and lcal gvernments f each drput (n average) wuld equal nearly $14,. The gap between high schl drputs and bachelr degree hlders wuld exceed $33,, as charted n the next page. The explanatins and calculatins shw that there is an pprtunity t have a prfundly psitive impact n the Cmmnwealth s budget by significantly reducing the drput rate. 18

19 Annual Net Fiscal Impact n the Cmmnwealth s Budget f Massachusetts Adults (18-64 Years f Age) by Level f Educatin Attainment 6,,8, 4, 3, 3,197 $ 2, 1,13 1, -1, -2, -1,67 <12 r 12, n diplma High Schl Diplma r GED 1-3 Years f Cllege, including Assc. degree Bachelr's Degree 19