All4Ed Unveils New High School Dropout Study

According to the Alliance for Excellent Education's latest analysis, halving the dropout rate of minority high school students would lead to $2.3 billion in increased earnings in an average year and an additional 17,450 jobs.

Those are part of the aggregate results from All4Ed's new study, which uses a model developed by EMSI and looks at the 45 biggest metro areas in the US. The report, released last week, comes after All4Ed's broader analysis in January of the economic benefits of lowering the high school dropout rate among all students.

Estimates show that approximately 50% of black, Native American, and Latino students - 20% less than their white counterparts - drop out of high school.

Nationally, students of color made up a sizeable portion of the estimated 600,000 students who dropped out from the Class of 2008 in the nation's forty-five largest metropolitan areas. Of these students, approximately 113,600 were African American, 200,000 were Latino, 30,800 were Asian American and 3,750 were American Indian. Cutting the number of these dropouts in half would likely produce vast economic benefits by boosting the spending power of these communities of color and spurring job and economic growth in these regions.

The study goes beyond estimating increased earnings of new graduates by also looking at increased spending and investment, additional home/auto sales, increased human capital, and state/local tax revenues.
Increased earnings in the All4Ed study for new grads "represent the combined additional earnings at the midpoint of these students' careers." The study's authors identified the career midpoint as the year when new grads are expected to make the average of their annual earnings. The other benefits are taken from that midpoint - age 39 for the purposes of the analysis - or all years prior to and including the midpoint.

The Role of Startups and a County-By-County Look at Establishments

What role do startups and small firms play in expanding the US economy? That question is at the center of a new Kauffman Foundation Study - and an Inc. article that's provoked a flood of strong opinions by commenters.

The Kauffman study, The Importance of Startups in Job Creation and Job Destruction, comes to a forceful conclusion: startups are the only creators of net job growth in the nation. "The study reveals that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing 1 million jobs net combined per year. By contrast, in their first year, new firms add an average of 3 million jobs."

Although the report (see the PDF here) doesn't explicitly refer to the size of these young firms that are so critical, it seems safe to assume most startups, which Kauffman classifies as 1-year-old or younger, fit in the "micro" (under 10 employees) or "small" (10-99) categories. Those are the definitions we used for an earlier post and graphic on U.S. establishments.

Yet for the time being, even small businesses - the only ones that create net job growth - are experiencing a hiring slowdown. New data from Intuit Inc. suggest that small firms made the fewest hires in June than in any month since last October. "It's a bad sign," Susan Woodward, an economist who tracks small business employment for Intuit, told the Los Angeles Times. "Small businesses hire first - and they're losing their steam."

Regardless of short- or long-term hiring trends, one thing is certain: small firms make up the huge majority of U.S. establishments. Our quick analysis from last month, using the Census Bureau's County Business Patterns, showed that nearly 79% of establishments nationwide have fewer than 10 employees and 99% have less than 100 employees. But what do the numbers show at the county level?

We took a look by mapping every county in the US using Many Eyes. Be sure to flip between the different subheadings in the drop-down menu after clicking the "interact" button. The micro map isn't all that compelling - the majority of counties fit in the 70-85% range - but highlights begin to emerge in the small, medium (100-499 employees), and large (500-plus) maps.

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