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ECONOMIC RETURNS to EARLY CHILDHOOD DEVELOPMENT

ECONOMIC RETURNS to EARLY CHILDHOOD DEVELOPMENT. Dennis K. Winters. May 5, 2007. WHY IS WORKFORCE DEVELOPMENT IMPORTANT?. Old Economy Raw Materials Cost Race to Bottom Workers Chased Jobs Quality of Life was luck of the draw. New Economy QoL attracts talent Businesses Chase Talent

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ECONOMIC RETURNS to EARLY CHILDHOOD DEVELOPMENT

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  1. ECONOMIC RETURNStoEARLY CHILDHOOD DEVELOPMENT Dennis K. Winters May 5, 2007

  2. WHY IS WORKFORCE DEVELOPMENT IMPORTANT?

  3. Old Economy Raw Materials Cost Race to Bottom Workers Chased Jobs Quality of Life was luck of the draw New Economy QoL attracts talent Businesses Chase Talent Value-Added Products Brain Power NEW ECONOMYTURNED UPSIDE-DOWN

  4. WORKPLACE REQUIREMENTS CHANGES IN SKILLS USED AT WORK* * Based on the Dictionary of Occupational Titles Nonroutine interactive Nonroutine analytic. Routine manual Routine cognitive Nonroutine manual Source: Autor, Levy and Murnane, 2003. Source: K-12 Education and Economic Summit presentation by Alan B. Krueger, Princeton University

  5. LABOR FORCE GROWTHBECOMES FLAT Source: Bureau of Labor Statistics, OEA

  6. DESIGNED HERE MANUFACTURED THERE • Designed in California • Assembled in China

  7. SLOW INCOME AND ECONOMIC GROWTH LEADS TO : DETERIORATION OF ECONOMIC CONDITION AND QUALITY OF LIFE • Lower per capita income • Decreased tax base / Budget deficits • Decreased school funding and teacher salaries • Less & fewer public services • Lower quality of life

  8. Ed = ED Workforce development and economic development are interrelated and interdependent.

  9. NEW ECONOMYOPPORTUNITY FOR EVERYONE Former Federal Reserve Chairman Alan Greenspan voiced his concern about a growing earnings gap between highly skilled and unskilled workers. "It's a problem caused basically by our skill mix not keeping up with the technology that our capital stock requires," the Republican Fed chairman said. . . .

  10. MEDIAN FAMILY INCOME BY EDUCATIONAL ATTAINMENT Source: U.S. Census Bureau

  11. WHY IS EARLY CHILDHOOD DEVELOPMENT IMPORTANT?

  12. THREE OPTIONS FOR TALENT • Import the talent • Export the job • Grow the talent here

  13. NEW ECONOMYEDUCATION AND TRAINING REQUIRED Disparities in education and training is “likely the single greatest source of the long-term increase in inequality.” Thus, “policies that boost our national investment in education and training can help reduce inequality while expanding economic opportunity,” he said." – Ben Bernanke, Federal Reserve Board Chairman, speech to Omaha Chamber of Commerce, February 6, 2007.

  14. WHY EARLY CHILDHOOD DEVELOPMENT? AN EARLY FULCRUM • Third Grade Reading Skills Learn to Read Read to Learn

  15. ACHIEVEMENT GAP ESTABILISHED EARLY Source: Prof. James Heckman, Nobel Laureate, University of Chicago

  16. ACHIEVEMENT GAP DEPENDENT ON THE MOTHER’S EDUCATION Source: Prof. James Heckman, Nobel Laureate, University of Chicago

  17. POVERTY v. EDUCATION USE THE RIGHT POLICIES • Ed≠f(Poverty) • Poverty =f (Education)

  18. Children who don’t play much or are rarely touched develop brains 20% to 30% smaller than normal for their age. Baylor College of Medicine Normal Normal vs. Sensory-deprived Brain of a Three-Year-Old Child Sensory-Deprived Normal Sensory - Deprived

  19. Brain Development Public Spending* PUBLIC SPENDING & BRIAN DEVELOPMENTTHE DISCONNECT Source: The RAND Corporation

  20. WHAT IS THE BEST INVESTMENT AVAILABLE?

  21. QUALITY EARLY EDUCATIONHUGE RETURN ON INVESTMENT (Per participant in 2000 constant dollars discounted 3% annually) Larry Schweinhart, High/Scope Educational Research Foundation, www.highscope.org

  22. ECONOMIC RETURNSTO EARLY INTERVENTION CostBenefitsB/C • Perry Pre-K $15,386 $262,642 17.1 • Chicago P/C $ 7,384 $ 74,981 10.1 • Elmira Prenatal $ 7,109 $ 49,217 6.9 • Abecedarian $35,864* $130,666 3.6 • Nurse-Family $ 9,118 $ 26,298 2.9 * Marginal cost, net or existing child care costs. (In 2002 dollars, 3% discount rate) Barnett, W. S., & Masse, L. N. (2007). Early childhood program design and economic returns: Comparative benefit-cost analysis of the Abecedarian program and policy implications, Economics of Education Review, 26, 113-125; Belfield, C., Nores, M., Barnett, W.S., & Schweinhart, L.J. (2006). The High/Scope Perry Preschool Program. Journal of Human Resources, 41(1), 162-190; Temple, J. A., & Reynolds, A. J. (2007). Benefits and costs of investments in preschool education: Evidence from the Child-Parent Centers and related programs. Economics of Education Review, 26(1), 126-144.

  23. BENEFITS ARE SHAREDACROSS SECTORS • Personal Success – 20% of gains • Better Employment Attributes • Higher Income • Better Health • Public Externalities – 80% of gains • Lower Crime • Less Social Intervention • Greater Civil Contributions • Business • More Skilled Workforce • Higher Productivity • Less Turnover

  24. NEW ECONOMIC DEVELOPMENT MODELUSE THE RIGHT TOOLS • Traditional economic development tools produce a zero public return or worse. • See A. Rolnick, Federal Reserve Bank of Minneapolis • High-quality early-childhood initiatives produce huge returns. • Perry Preschool 40-year study reports $17-to-$1 total and $13-to-$1 public benefit-cost ratios.

  25. WHAT MORE DO YOU NEED? THE QUESTIONS HAVE BEEN ANSWERED • What is the greatest job need? • Skilled, creative, interactive occupations • What are the returns? • 17: 1 returns; 80% to the Public • Is it fiscally prudent? • Tiny fraction of total public school funding • What is your alternative investment? • Not a new mall !

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