it 's a different idea because usually when people talk about early childhood programs they talk about all the wonderful benefits for participants in terms of former participants in preschool they have better k twelve test scores better adult earnings now that 's all very important
but what i want to talk about is what preschool does for state economies and for promoting state economic development
and that 's actually crucial
because if we 're going to get increased investment in early childhood programs
we need to interest state governments in this the federal government has a lot on its plate
and state governments are going to have to step up so we have to appeal to them the legislators in the state government and turn to something they understand that they have to promote the economic development of their state economy now by promoting economic development i don 't mean anything magical all i mean is is that early childhood education
can bring more and better jobs to a state and can therebypromote higher per capita earnings for the state 's residents now i think it 's fair to say that when people think about state and local economic development
they don 't generally think first about
what they 're doing about childcare and early childhood programs i know this i 've spent most of my career researching these programs i 've talked to a lot of directors of state economic development agencies about these issues a lot of legislators about these issues
when legislators and others think about economic development what they first of all think about are business tax incentives property tax abatements job creation tax credits you know there are a million of these programs all over the place so for example states compete very vigorously to attract
they raise employment rates raise per capita earnings of state residents so there is a benefit to state residents that corresponds to the costs that they 're paying by paying for these business tax breaks
my argument is essentially that early childhood programs can do
exactly the same thing create more and better jobs
but in a different way it 's a somewhat more indirect way these programs can promote more and better jobs by you build it you invest in high quality preschool it develops the skills of your local workforce if enough of them stick around
okay if you look at the research evidence
that 's extensive on how much early childhood programs affect the educationalattainment wages and skills
of former participants in preschool as adults you take those known effects you take how many of those folks will be expected to stick around the state or local economy and not move out
and you take research on how much skills drive job creation you will conclude from these three separate lines of research that for every dollar invested in early childhood programs
the per capita earnings of state residents go up by two dollars and seventy eight cents so that 's a three to one return
now you can get much higher returns of up to sixteen to one if you include anti crime benefits if you include benefits to former preschool participants who move to some other state
but there 's a good reason for focusing on these three dollars because this is salient and important to state legislators and state policy makers and it 's the states that are going to have to act
so there is this key benefit that is relevant to state policy makers in terms of economic development
and the trouble with that objection it reflects a total misunderstanding of how much local economies involveeveryone being interdependent
specifically the interdependency here is is that there are huge spillovers of skills that when other people 's children
get more skills that actually increases the prosperity of everyone including people whose skills don 't change
so for example numerous research studies have shown if you look at what really drives the growth rate of metropolitan areas it 's not so much low taxes low cost low wages
it 's the skills of the area particularly the proxy for skills that people use is percentage of college graduates in the area so when you look for example at metropolitan areas such as the boston area minneapolis st paul silicon valley
these areas are not doing well economically because they 're low cost
they are growing because they have high levels of skills so when we invest in other people 's children and build up those skills we increase the overall job growth of a metro area as another example
if we look at what determines an individual 's wages and we do statistical exploration of that what determines wages we know that the individual 's wages will depend in part on that individual 's education for example whether or not they have a college degree
one of the very interesting facts is that in addition we find that even once we hold constant statistically the effect of your own education
the education of everyone else in your metropolitan area also affects your wages so specifically if you hold constant your education you stick in percentage of college graduates in your metro area you will find that has a significantpositive effect on your wages
without changing your education at all in fact this effect is so strong
that when someone gets a college degree
the spillover effects of this on the wages of others in the metropolitan area are actually greater than the direct effects
so if someone gets a college degree their lifetimeearnings go up by a huge amount over seven hundred thousand dollars there 's an effect on everyone else in the metro area of driving up the percentage of college graduates in the metro area
and if you add that up it 's a small effect for each person but if you add that up across all the people in the metro area you actually get that the increase in wages for everyone else in the metropolitan area adds up to almost a million dollars that 's actually greater than the direct benefits of the person choosing to get education
now what 's going on here what can explain these huge spillover effects of education
but if everyone else at my firm lacks skills my employer is going to find it more difficult to introduce new technology new production techniques
so as a result my employer is going to be less productive they will not be able to afford to pay me as good wages
even if everyone at my firm has good skills
if the workers at the suppliers to my firm do not have good skills my firm is going to be less competitive competing in national and international markets and again
the firm that 's less competitive will not be able to pay as good wages and then particularly in high tech businesses they 're constantly stealing ideas and workers from other businesses so clearly the productivity of firms in silicon valley has a lot to do with the skills not only of the workers at their firm
but the workers at all the other firms in the metro area so as a result if we can invest in other people 's children through preschool and other early childhood programs that are high quality we not only help those children we help everyone in the metropolitan area
gain in wages and we 'll have the metropolitan area gain in job growth
another objection used sometimes here to invest in early childhood programs is concern about people moving out
so you know maybe ohio 's thinking about investing in more preschool education for children in columbus ohio
americans aren 't as hyper mobile as people sometimes assume
spend most of their working careers in the state they were born in over sixty percent
that percentage does not vary much from state to state it doesn 't vary much with the state 's economy whether it 's depressed or booming it doesn 't vary much over time so the reality is if you invest in kids
they will stay or at least enough of them will stay that it will pay off for your state economy
okay so to sum up there is a lot of research evidence that early childhood programs if run in a high quality way pay off in higher adult skills
there 's a lot of research evidence that those folks will stick around the state economy and there 's a lot of evidence that having more workers with higher skills in your local economy pays off in higher wages and job growth
we get about three dollars back in benefits for the state economy so in my opinion the research evidence is compelling and the logic of this is compelling so what are the barriers to getting it done
well one obviousbarrier is cost so if you look at what it would cost if every state government invested
in universal preschool at age four full day preschool at age four the total annual national cost would be roughly thirty billion dollars
that the u s s population is over three hundred million
we 're talking about an amount of money that amounts to one hundred dollars per capita okay a hundred dollars per capita per person is something that any state government can afford to do it 's just a simple matter of political will to do it
and of course as i mentioned this cost has corresponding benefits i mentioned there 's a multiplier of about three two point seven eight for the state economy in terms of over eighty billion in extra earnings
and if we want to translate that from just billions of dollars to something that might mean something what we 're talking about is that for the average low income kid
that would increase earnings by about ten percent over their whole career
just doing the preschool not improving k twelve or anything else after that not doing anything with college tuition or access just directly improving preschool
and we would get five percent higher earnings for middle class kids so this is an investment that pays off in very concrete terms for a broad range of income groups in the state 's population
and produces large and tangible
is the long term nature of the benefits from early childhood programs so the argument i 'm making is is that we 're increasing the quality of our local workforce and thereby increasing economic development
obviously if we have a preschool with four year olds we 're not sending these kids out at age five to work in the sweatshops right at least i hope not so we 're talking about an investment that in terms of impacts on the state economy is not going to really pay off
for fifteen or twenty years and of course america is notorious for being a short term oriented society now one response you can make to this and i sometimes have done this in talks is people can talk about there are benefits for these programs in reducing
special ed and remedial education costs there are benefits parents care about preschool maybe we 'll get some migration effects
from parents seeking good preschool and i think those are true but in some sense they 're missing the point
and so what i want to leave you with
is what i think is the ultimate question i mean i 'm an economist but this is ultimately not an economic question
it 's a moral question
are we willing as americans are we as a society still capable of making the political choice to sacrifice now by paying more taxes in order to improve
but our community are we still capable of that as a country and that 's something that each and every citizen and voter
needs to ask themselves is that something that you are still invested in that you still believe in the notion of investment that is the notion of investment you sacrifice now for a return later so i think the research evidence
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