[Revised] Why Educational Investment is Non-Negotiable

The United States must invest in education because of the returns to GDP an educated population can create.

When addressing current economic issues one cannot ignore human capital, specifically investment in education. Educational outcomes strongly affect the economic growth of a country. George P. Shultz and Eric A. Hanushek, contributors for The Wall Street Journal, compared the GDP-per-capita growth rates between the years 1960 and 2000 with achievement results as determined by an international math assessment test. The majority of countries followed a straight line that revealed that as the scores on the assessment test increased so did economic growth. Although the U.S. remained above the average, this position will not hold strong for long in the future unless we make significant increases in overall education in the U.S. Students of today, the labor force of the future, are no longer competitive in comparison to other developed countries. The U.S. was ranked 31st in math according to the OECD’s Programme for International Student Assessment, an alarming statistic.

The importance of education on the economy cannot be understated. Better education leads to a faster growing economy. Education directly correlates to higher wages. The median weekly earnings in 2013 were $472 for someone with less than a high school diploma compared to $1,108 for individuals with a bachelor’s degree. Educational disparities lead to economic disparities that without new reform will maintain and foster the inequality problems that continue to hurt the economy for decades to come. For this reason, we must increase national investment in education.

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Noah Berger and Peter Fisher, researchers from the Economic Policy Institute, investigated how the state government can boost the economic well-being of their people. Berger and Fisher revealed that high-wage states are the same states with well-educated workforces, which reveals a strong correlation between educational attainment of a state’s workforce and median wages. Therefore, investing in state-wide education is necessary to build a strong foundation for economic prosperity. The U.S. must focus on educational investment soon. In addition to building a strong base, investing in education upfront will show a greater return in the long run in terms of state budgets. Since individuals with higher levels of educational attainment will ultimately have higher incomes, these individuals will therefore contribute more to the state’s taxes over the course of their lifetime.

The students of today are the laborers of the future. The need to invest in education is non-negotiable when considering the investment that is being made. Without an educated labor force our economy will suffer, but with an increased investment in education the possibilities look promising.


10 thoughts on “[Revised] Why Educational Investment is Non-Negotiable

  1. Craig Friend

    Intresting post. I understand the need for an eduacated population and I wholeheartedly agree that our education system has fallen behind what it used to be. What I think should be considered is what educated means. Not everybody needs a four year degree, there are plenty of trade jobs at there that need only two year degrees. Just something to consider.

  2. KT Lee

    Agree with your point. Even though I am not a citizen of the U.S, I am worried that not enough people in the U.S study engineering in graduate school. Most of the students in the field such as applied physics, electrical engineering, etc are from China and India. These people start to come back to their countries with the knowledge learned in the U.S institution, establishing ‘Silicon Valley’ in their nations. I feel that young people in the U.S should be more inspired and motivated to study engineering more and deeply into higher level.

  3. Linda Sun

    Investment in education is needed, I agree with your point. Personally thinking, how to make the investment in education more efficient is another important question. I don’t think that encouraging every one go to college is a wise education investment. Rather, as Fraig mentioned, provide students a chance to find their matched education is a key.

  4. Justin Lee

    Even with all the ideological point of education, it is all about politics. Politico wants their term to be expanded, which they don’t want to pass the bill in unnoticeable time other than election year. Teacher’s union and lobbyists does not want balanced structure to control the quality.

    Human capital (education in this case) is important for long term growth. However, for politics, it is just another bump.

    I always wondered why my high school teachers were in low quality (unwillingness to teach, if you will). Now, I have the answer.

  5. Jonathan Zimmermann

    Good article.
    In the current situation, I think it is more important to invest in the redesign of the education system than in education per say. Except for a few top universities (that are also much more expensive than they should be in an international comparison), the education system in the US is very inefficient and very expensive.

  6. Chang Tian

    Jobs like delivery man may not need even higher education level. A higher investment in education postpone the working age of workers whose work only needs low level techniques, and therefore, lower the overall wealth of those workers. With a higher education level, those workers may find better jobs but after all, we at least need some people to work in those simple jobs. How to deal with that?

  7. Chang Tian

    And if assuming that all workers with high and low technique requirements would be better off with a higher education, then your points is consistent. With a higher human capital investment, would it lead to a higher wage to compensate for those investment? So if wages for high and low tech workers are increasing, will there be an inflation? If all wages are increased, how can we say one is better off? Just interesting to think.

  8. Michael Giedzinski

    The US has had lower test scores in nearly every class of study despite its funneling money into education. The funding is not the problem. It’s the use of the funding. Things such as common core have so many errors in them. No one wants to take the time and argue. Therefore, you end up with flaws.

  9. njbeck@umich.edu'Nathaniel Beck

    The increase in social capital from education cannot be argued. However, why do the costs of education not reflect this? The price of tuition is steadily increasing and I think a cap needs to be put on these prices or more universities erected to avoid an even larger wealth gap.

  10. Dan Miller

    Interestingly, some of the biggest recent wage gains are for skilled manual labor, sewing machine operators, boilermakers, etc. as some manufacturing production moves back to America. What is the evidence that more education leads to a better economy? Just because more education means higher wages does not mean that the entire economy will be better. The inflation-adjusted earnings of highly educated Americans have gone nowhere since the late 1990s. The notion that highly skilled workers are generally in demand and will be more in demand in the future is false, low skilled professions are not going extinct.

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