Nearly nine out of ten students in California finish high school, eventually. But averages are dangerous abstractions. Imagine that you are in a Starbucks when Bill Gates walks in.

On average, you just became a billionaire. Right?

To make sense of averages, it is useful to find meaningful subgroups within a data sample. In the Starbucks example, we can probably refine our understanding by taking Bill Gates out of the sample — he is clearly an outlier. But that still would give us a flawed understanding of the wealth in front of the counter versus behind the counter.

"Dropouts" are not random

Let's leave the coffee shop and return to education. The classic symptom of educational failure is when a student stops coming to school. Students that "drop out" are not random — they are disproportionately African American and Latino, and they disproportionately come from low-income families. (Persistent, systematic differences in educational attainment by ethnicity, income, or gender are known as achievement gaps, a subject much studied in California by Education Trust-West.)

Educational failure is expensive. In the dry, neutral language of social science: low educational attainment is correlated with various social costs, including unemployment, low taxable earnings, homelessness, crime, and poor health.

The social costs are real and high

A small increase in the growth rate of high school graduation rate translates to billions of extra dollars.

When children don’t get the education they need, everyone loses. The cost of failure is enormous. Scholars have tried to quantify the social costs:

• A 2014 study by UCLA’s Civil Rights Project estimated that the impact of social losses caused by high school dropouts costs the state $37-$56 billion per cohort. Besides the consequences for the state of California, this loss affects tax revenue too - they estimated that the aggregate impact for California taxpayers is a loss of $11-$17 billion per class cohort.
• A 2013 report by Fight Crime Invest in Kids summarized the costs with a report from the perspective of law enforcement under the provocative title I'm the Guy You Pay Later.
• To examine how investment in the quality of public elementary schools affects crime rates, researchers at the University of Michigan followed the outcomes of two groups of students. They found that improving the quality of public schools is an effective way to reduce crime in the long term. Specifically, students who attended the better-funded elementary school were 15% less likely to be arrested by age 30 than those who did not.
• In a 2021 study of national data by the University of California San Diego, researchers found that every $1,000 per pupil spent by a school district led to a 2.35% decrease in property crime.
• In 2009, as the nation was emerging from a recession, a report by McKinsey argued that the failure to address achievement gaps created what amounted to a permanent recession, causing the US economy to underperform by many billions of dollars.
• In 2011 the NAACP issued a report, Misplaced Priorities, to "track the steady shift of state funds away from education and toward the criminal justice system." In 2012, the White House Council for Community Solutions picked up the topic, commissioning research and coining the rather optimistic term opportunity youth for youth aged 16-24 who are neither in school nor working. The term changed again, (to disconnected youth) in a series of reports from Measure of America, a project that compiles data about this costly, hard-to-serve segment. (See interactive charts.) In the aggregate, if America could persistently "connect" all young people as full participants in America's economy, our nation's balance sheet would expand on the order of about $5 trillion in taxes paid and direct costs avoided. That was trillion, with a "T," in case you missed it.

The cost of a year of prison is about seven times the cost of a year of education. This ratio is even higher in California than in most other states, but the long-term rising costs of incarceration are a national challenge. Since 1970, in every state expenditures for incarceration have grown faster than investments in education.

Don't get confused by this statistic. Keeping someone in a prison for a year is much more expensive than educating a student for a year, but there are far more students than prisoners. Governments spend significantly more on their education systems than they do on their prison systems. In context, investing in young people is cheap - and worth it.

Taxpayers are not the only ones that benefit, of course, when an at-risk student (or opportunity youth or disconnected youth) persists in school. The biggest beneficiary is the student. The personal stakes of educational attainment are huge. According to year after year of data from the US Census Bureau, economic prospects improve dramatically with every additional year of educational attainment.

Educational success benefits everyone

Schooling advances social mobility, especially for those who need it most... but not equally for all.

Social mobility is the movement of individuals or families within or between social strata in a society. This can happen within a generation or intergenerationally. However, not all children have the same magnitude of social mobility. For example, Black boys are less likely to move up the social ladder. A New York Times article allows you to make your own animated chart to explore the income mobility of different social groups. The Opportunity Atlas offers another interactive graph of child outcomes in neighborhoods across America. A study by Raj Chetty and others indicates that schooling, combined with efforts to achieve racial integration within neighborhoods and schools, can help minority children advance social mobility.

The College Board updates its ambitious Education Pays report every three years. According to the 2013 report, "during a 40-year full-time working life, the median earnings for bachelor’s degree recipients without an advanced degree are 65% higher than the median earnings of high school graduates.” In the 2019 report, this advantage was unchanged.

As in the coffee shop, averages can lie. The Education Pays report does a good job of sketching the broad systematic variations. For example, at any given level of educational attainment, earnings for women and minorities lag behind earnings for white men.

Deficit-Attention Disorder

Because the social cost of failure is so high, it's easy to hyper-focus on the problems, ignoring the experiences of the young people who do quite well. Dr. Robert K. Ross, President and CEO of the California Endowment, calls this phenomenon "Deficit-Attention Disorder." In a 2017 report "The Counter Narrative," UCLA Professor Tyrone C. Howard flips the focus, exploring patterns of resilience and success among Black and Latino males in Los Angeles County and how success is defined from their perspective.

Updated May 2, 2017 to incorporate new info about the comparative cost of a year of prison vs. school.

Updated May 2018, February 2019, August 2021, and July 2022.