New Model Links Decrease in Dropouts to Uptick in Homeowners, Wages

September 28, 2009 by Emsi Burning Glass

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Over the past several months EMSI has partnered with the Alliance for Excellent Education in developing a model that measures the economic benefits of decreased high school dropout rates. The model was unveiled recently by the Alliance (see the press release here) and highlighted by The Detroit News as a way to help solve Detroit’s “home abandonment crisis.”

Detroit, of course, has been rocked by foreclosures during the recession, but the model estimates that the city would see the amount of homeowners grow by 8,000 and an increase of $130 million in wages over an average year if the dropout rate was reduced by 50%.

That is one of the surprising findings produced in the new report by the Alliance for Excellent Education, a Washington, D.C.-based advocacy group. The Alliance teamed up with Editorial Projects in Education and Economic Modeling Specialists to develop economic projections for the largest 45 U.S. Census-defined metropolitan areas based on their current and potential graduation rates.

In the Detroit area, the research team found if dropouts were reduced by half, they would make a profound difference in the region’s economy and civic life. That’s because Americans with higher levels of education earn much higher levels of wages.

The model also estimates the percentage of those who don’t drop out who will further their education with postsecondary degrees. That number is 45% for Detroit and 71% for Oakland, the MSA with the highest percentage.

For more results from the model for other major metro areas, click here. And if you’re interested in learning more about the dropout model, please contact Rob Sentz.