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EARLY CHILDHOOD DEVELOPMENT: IT’S GOOD FOR BUSINESS, IT’S GOOD FOR THE STATE

EARLY CHILDHOOD DEVELOPMENT: IT’S GOOD FOR BUSINESS, IT’S GOOD FOR THE STATE. WISCONSIN HEAD START ASSOCIATION. Dennis K. Winters Chief, Office of Economic Advisors Wisconsin Department of Workforce Development. February 3, 2014. WHAT I WILL DO TODAY.

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EARLY CHILDHOOD DEVELOPMENT: IT’S GOOD FOR BUSINESS, IT’S GOOD FOR THE STATE

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  1. EARLY CHILDHOOD DEVELOPMENT: IT’S GOOD FOR BUSINESS, IT’S GOOD FOR THE STATE WISCONSIN HEAD START ASSOCIATION Dennis K. Winters Chief, Office of Economic Advisors Wisconsin Department of Workforce Development February 3, 2014

  2. WHAT I WILL DO TODAY • Tell you why early education is important • Give you the ‘speak’ • Suggest some strategies

  3. WHAT ARE BUSINESSESTOP CONCERNS Tax burden Skilled workforce Regulations

  4. STATE BUDGETCOMMITMENTS Of state GPR of $30.6 billion (FY 2013-15): K-12 Aides – $10.1B; 33.1% Corrections – $2.1 B; 6.7% UW System – $2.2 B; 7.3% Medicaid – $4.6 B; 15.1% Shared revenue – $1.8 B; 5.9% Source: Wisconsin Taxpayers Alliance, Window on the Wisconsin State Budget, Volume 81, Number 8, August 2013

  5. WISCONSIN’S WORKFORCE GROWTHBECOMES FLAT Source: Bureau of Labor Statistics, OEA

  6. RAMIFICATIONS OF WORKFORCE TRENDS ARE: Unalterable – demographics and migration patterns do not change quickly; Potentially devastating – without sufficient productivity gains the state’s economy will stagnate; Necessitating a focus on talent – large investments in education and training are needed.

  7. NEW ECONOMY HIGHER SKILL SET REQUIRED "The days are over when you could walk into a paper mill with a high school diploma and run one of the machines."– Patrick Schillinger, Wisconsin Paper Council President, Center will teach paper-industry technology, Milwaukee Journal Sentinel, JS Online, October 21, 2004.

  8. Carly Forina, former CEO HP – Don’t show me your highway interchange or TIF district, show me the number of college graduates NEW ECONOMYTALENT BASED

  9. 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. . . . NEW ECONOMYSCARCITY OF SKILLED WORKERS

  10. 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.

  11. THREE TALENT OPTIONS FOR BUSINESS • Import the talent • Export the job • Grow the Talent here

  12. WHY IS EARLY EDUCATION IMPORTANT?

  13. 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

  14. WHAT THEY SAY “By 5, it is possible to predict, with depressing accuracy, who will complete high school and college and who won't.” – David Brooks, David Brooks: Schools and Skills The New York Times; Editorial

  15. WHY EARLY EDUCATION? AN EARLY FULCRUM • Third Grade Reading Skills • Learn to Read Read to Learn

  16. ACHIEVEMENT GAP ESTABILISHED EARLY

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

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

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

  20. WHAT IS THE COST? NO, WHAT IS THE RETURN ON INVESTMENT

  21. WHAT THEY SAY “Investments in high-quality early education programs have the highest rate of return of any social investment.” – Professor James Heckman University of Chicago Nobel Laureate in Economics

  22. WHAT THEY SAY “The best investment in economic development that government and the private sector can make is in the healthy development of children .” – Art Rolnick Sr. Vice President (retired) Federal Reserve Bank of Minneapolis

  23. HUGE RETURN ON INVESTMENT HIGH/SCOPE PERRY PRESCHOOL (Per participant in 2000 constant dollars discounted 3% annually) Larry Schweinhart, High/Scope Educational Research Foundation, www.highscope.org

  24. THE EVIDENCE IS IN HUGE RETURNS • Perry Scope • 17 : 1 • Chicago-Child Parent • $7 to $1 total • $4 to $1 public • Abecedarian Educational Child Care • $4 to $1 total • Elmira Prenatal/Early Infancy Project • $5 to $1 total • $4 to $1 public

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

  26. Net cost is > 1% of K-12 budget Budget surplus in 2050 > $1 billion Benefits exceed costs in 8 years Benefit/Cost ratio equals 3.69 WISCONSIN BUDGET IMPACTSBENEFICIAL AND PERPETUAL Robert Lynch, Enriching Children, Enriching the Nation, Economic Policy Institute, 2007.

  27. STATE IMPACTSBENEFICIAL AND PERPETUAL • Cost bump in 2021 due to higher post-secondary enrollments • Benefits rise faster after 2021 due to higher earnings of graduates Graph representative of data portrayed in Enriching Children, Enriching the Nation, Robert Lynch, Economic Policy Institute, 2007.

  28. Traditional economic development tools produce a zero public return or worse. See A. Rolnick, Federal Reserve Bank of Minneapolis Returns to 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. NEW ECONOMIC DEVELOPMENT MODELUSING THE RIGHT TOOLS

  29. 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? • Relatively small cost, perpetual returns • What is your alternative investment? • Not a new mall !

  30. STRANGE BEDFELLOWS

  31. WAIT, WHAT, WHY ARETHESE GROUPS ALIGNED Business Law Enforcement Corrections Military Health Care

  32. WHAT THEY SAY “Investing in the earliest years of life is the first step in preparing a workforce that can meet the demands of the 21st century.” – Ann Cramer, Director, Americas IBM

  33. WHAT THEY SAY “Early childhood education has a tremendous impact on the national economic security.” – U.S. Chamber of Commerce

  34. WHAT THEY SAY “We appreciate the opportunity to apply for funding in support of our ongoing efforts to increase engagement of the Wisconsin business community in this important initiative. – Jim Haney President Emeritus, WMC Letter in support of national organization support of Business Leader Summit on Early Childhood Investment

  35. WHAT THEY SAY “Early Childhood Development is recognized within the business community for the significant contributions it makes to educational attainment leading to a more productive workforce and to the resulting long-term economic impact of these early investments.” – National Association of Manufacturers

  36. WHAT THEY SAY "Here in Wisconsin, we need to invest in early learning. Too many kids come to school unprepared to learn, which leads to higher dropout rates, a lagging workforce and a damaged economy. We can invest now, or pay later." – Tim Sheehy, President Metropolitan Milwaukee Association of Commerce

  37. REGIONAL & LOCAL FOCUS

  38. LOCAL FOCUSAND APPROACH Respond to community challenges Closer relationships Keep efforts and resources in the community Reticence to give money to far-away, non-accountable entities Familiarity

  39. WHAT THEY SAY “Investments in high quality early childhood programs and services can be a powerful tool for spurring economic development and equal opportunity.” – Jeff Joerres, Chairman & CEO, Manpower, Inc. –Charles E. M. Kolb, President, CED In invitation letter to Milwaukee business leaders to attend an information meeting at Manpower headquarters, March 3, 2009

  40. WHAT THEY SAY “The best and most effective way to increase the quality of our workforce and lessen the tax burden is to invest in quality early childhood development. The sooner and the earlier, the better.” – Dennis Winters Chief, Office of Economic Advisors Wisconsin Department of Workforce Development

  41. Questions ?

  42. CONTACT INFORMATION • Dennis Winters • Phone: 608-267-3262 • Email: dennis.winters@dwd.wisconsin.gov • Website:www.dwd.wisconsin.gov • OEA website: www.dwd.wisconsin.gov/oea

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