The economic case for preschool
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0:01 - 0:06In this talk today, I want to present a different idea
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0:06 - 0:10for why investing in early childhood education
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0:10 - 0:13makes sense as a public investment.
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0:13 - 0:15It's a different idea, because usually,
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0:15 - 0:16when people talk about early childhood programs,
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0:16 - 0:20they talk about all the wonderful benefits for participants
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0:20 - 0:23in terms of former participants, in preschool,
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0:23 - 0:25they have better K-12 test scores,
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0:25 - 0:27better adult earnings.
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0:27 - 0:29Now that's all very important,
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0:29 - 0:34but what I want to talk about is what preschool does
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0:34 - 0:35for state economies
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0:35 - 0:39and for promoting state economic development.
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0:39 - 0:42And that's actually crucial
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0:42 - 0:45because if we're going to get increased investment
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0:45 - 0:48in early childhood programs,
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0:48 - 0:51we need to interest state governments in this.
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0:51 - 0:53The federal government has a lot on its plate,
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0:53 - 0:56and state governments are going to have to step up.
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0:56 - 0:58So we have to appeal to them,
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0:58 - 1:01the legislators in the state government,
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1:01 - 1:03and turn to something they understand,
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1:03 - 1:05that they have to promote the economic development
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1:05 - 1:07of their state economy.
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1:07 - 1:08Now, by promoting economic development,
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1:08 - 1:10I don't mean anything magical.
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1:10 - 1:14All I mean is, is that early childhood education
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1:14 - 1:17can bring more and better jobs to a state
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1:17 - 1:21and can thereby promote higher per capita earnings
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1:21 - 1:23for the state's residents.
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1:23 - 1:27Now, I think it's fair to say that when people think about
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1:27 - 1:29state and local economic development,
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1:29 - 1:32they don't generally think first about what they're doing
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1:32 - 1:35about childcare and early childhood programs.
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1:35 - 1:39I know this. I've spent most of my career researching these programs.
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1:39 - 1:40I've talked to a lot of directors
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1:40 - 1:43of state economic development agencies about these issues,
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1:43 - 1:45a lot of legislators about these issues.
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1:45 - 1:48When legislators and others think about economic development,
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1:48 - 1:52what they first of all think about are business tax incentives,
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1:52 - 1:55property tax abatements, job creation tax credits,
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1:55 - 1:57you know, there are a million of these programs all over the place.
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1:57 - 2:00So for example, states compete very vigorously
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2:00 - 2:03to attract new auto plants or expanded auto plants.
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2:03 - 2:06They hand out all kinds of business tax breaks.
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2:06 - 2:08Now, those programs can make sense
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2:08 - 2:11if they in fact induce new location decisions,
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2:11 - 2:12and the way they can make sense is,
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2:12 - 2:14by creating more and better jobs,
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2:14 - 2:18they raise employment rates, raise per capita earnings of state residents.
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2:18 - 2:20So there is a benefit to state residents
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2:20 - 2:22that corresponds to the costs that they're paying
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2:22 - 2:25by paying for these business tax breaks.
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2:25 - 2:28My argument is essentially that early childhood programs
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2:28 - 2:32can do exactly the same thing,
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2:32 - 2:36create more and better jobs, but in a different way.
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2:36 - 2:38It's a somewhat more indirect way.
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2:38 - 2:42These programs can promote more and better jobs by,
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2:42 - 2:45you build it, you invest in high-quality preschool,
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2:45 - 2:49it develops the skills of your local workforce
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2:49 - 2:53if enough of them stick around, and, in turn,
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2:53 - 2:55that higher-quality local workforce
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2:55 - 2:59will be a key driver of creating jobs and creating
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2:59 - 3:02higher earnings per capita in the local community.
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3:02 - 3:05Now, let me turn to some numbers on this.
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3:05 - 3:09Okay. If you look at the research evidence --
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3:09 - 3:14that's extensive -- on how much early childhood programs
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3:14 - 3:19affect the educational attainment, wages and skills
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3:19 - 3:22of former participants in preschool as adults,
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3:22 - 3:25you take those known effects,
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3:25 - 3:28you take how many of those folks will be expected
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3:28 - 3:31to stick around the state or local economy and not move out,
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3:31 - 3:35and you take research on how much skills
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3:35 - 3:38drive job creation, you will conclude,
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3:38 - 3:40from these three separate lines of research,
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3:40 - 3:44that for every dollar invested in early childhood programs,
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3:44 - 3:48the per capita earnings of state residents
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3:48 - 3:51go up by two dollars and 78 cents,
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3:51 - 3:52so that's a three-to-one return.
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3:52 - 3:55Now you can get much higher returns,
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3:55 - 4:00of up to 16-to-one, if you include anti-crime benefits,
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4:00 - 4:04if you include benefits to former preschool participants
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4:04 - 4:06who move to some other state,
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4:06 - 4:09but there's a good reason for focusing on these three dollars
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4:09 - 4:12because this is salient and important
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4:12 - 4:14to state legislators and state policy makers,
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4:14 - 4:16and it's the states that are going to have to act.
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4:16 - 4:19So there is this key benefit that is relevant
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4:19 - 4:22to state policy makers in terms of economic development.
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4:22 - 4:26Now, one objection you often hear,
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4:26 - 4:31or maybe you don't hear it because people are too polite to say it, is,
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4:31 - 4:35why should I pay more taxes
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4:35 - 4:40to invest in other people's children?
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4:40 - 4:42What's in it for me?
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4:42 - 4:44And the trouble with that objection,
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4:44 - 4:48it reflects a total misunderstanding
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4:48 - 4:51of how much local economies
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4:51 - 4:55involve everyone being interdependent.
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4:55 - 4:59Specifically, the interdependency here is, is that
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4:59 - 5:02there are huge spillovers of skills --
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5:02 - 5:08that when other people's children get more skills,
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5:08 - 5:11that actually increases the prosperity of everyone,
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5:11 - 5:15including people whose skills don't change.
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5:15 - 5:17So for example, numerous research studies have shown
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5:17 - 5:20if you look at what really drives
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5:20 - 5:22the growth rate of metropolitan areas,
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5:22 - 5:28it's not so much low taxes, low cost, low wages;
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5:28 - 5:31it's the skills of the area. Particularly, the proxy for skills
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5:31 - 5:35that people use is percentage of college graduates in the area.
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5:35 - 5:38So when you look, for example, at metropolitan areas
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5:38 - 5:42such as the Boston area, Minneapolis-St. Paul,
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5:42 - 5:47Silicon Valley, these areas are not doing well economically
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5:47 - 5:49because they're low-cost.
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5:49 - 5:51I don't know if you ever tried to buy a house in Silicon Valley.
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5:51 - 5:54It's not exactly a low-cost proposition.
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5:54 - 6:00They are growing because they have high levels of skills.
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6:00 - 6:03So when we invest in other people's children,
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6:03 - 6:07and build up those skills, we increase the overall job growth
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6:07 - 6:09of a metro area.
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6:09 - 6:13As another example, if we look
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6:13 - 6:16at what determines an individual's wages,
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6:16 - 6:20and we do statistical exploration of that, what determines wages,
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6:20 - 6:25we know that the individual's wages will depend, in part,
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6:25 - 6:27on that individual's education,
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6:27 - 6:30for example whether or not they have a college degree.
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6:30 - 6:33One of the very interesting facts is that, in addition,
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6:33 - 6:37we find that even once we hold constant, statistically,
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6:37 - 6:40the effect of your own education,
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6:40 - 6:44the education of everyone else in your metropolitan area
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6:44 - 6:46also affects your wages.
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6:46 - 6:50So specifically, if you hold constant your education,
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6:50 - 6:54you stick in percentage of college graduates in your metro area,
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6:54 - 6:58you will find that has a significant positive effect on your wages
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6:58 - 7:01without changing your education at all.
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7:01 - 7:04In fact, this effect is so strong
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7:04 - 7:08that when someone gets a college degree,
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7:08 - 7:11the spillover effects of this on the wages
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7:11 - 7:13of others in the metropolitan area
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7:13 - 7:16are actually greater than the direct effects.
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7:16 - 7:19So if someone gets a college degree, their lifetime earnings
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7:19 - 7:22go up by a huge amount, over 700,000 dollars.
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7:22 - 7:25There's an effect on everyone else in the metro area
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7:25 - 7:29of driving up the percentage of college graduates in the metro area,
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7:29 - 7:32and if you add that up -- it's a small effect for each person,
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7:32 - 7:36but if you add that up across all the people in the metro area,
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7:36 - 7:39you actually get that the increase in wages for everyone else
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7:39 - 7:42in the metropolitan area adds up to almost a million dollars.
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7:42 - 7:44That's actually greater than the direct benefits
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7:44 - 7:47of the person choosing to get education.
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7:47 - 7:49Now, what's going on here?
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7:49 - 7:53What can explain these huge spillover effects of education?
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7:53 - 7:54Well, let's think about it this way.
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7:54 - 7:57I can be the most skilled person in the world,
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7:57 - 8:01but if everyone else at my firm lacks skills,
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8:01 - 8:04my employer is going to find it more difficult
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8:04 - 8:08to introduce new technology, new production techniques.
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8:08 - 8:12So as a result, my employer is going to be less productive.
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8:12 - 8:15They will not be able to afford to pay me as good wages.
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8:15 - 8:19Even if everyone at my firm has good skills,
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8:19 - 8:23if the workers at the suppliers to my firm
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8:23 - 8:25do not have good skills,
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8:25 - 8:27my firm is going to be less competitive
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8:27 - 8:29competing in national and international markets.
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8:29 - 8:33And again, the firm that's less competitive
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8:33 - 8:35will not be able to pay as good wages,
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8:35 - 8:39and then, particularly in high-tech businesses,
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8:39 - 8:43they're constantly stealing ideas and workers from other businesses.
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8:43 - 8:46So clearly the productivity of firms in Silicon Valley
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8:46 - 8:50has a lot to do with the skills not only of the workers at their firm,
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8:50 - 8:54but the workers at all the other firms in the metro area.
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8:54 - 8:58So as a result, if we can invest in other people's children
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8:58 - 9:00through preschool and other early childhood programs
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9:00 - 9:04that are high-quality, we not only help those children,
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9:04 - 9:07we help everyone in the metropolitan area
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9:07 - 9:11gain in wages and we'll have the metropolitan area
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9:11 - 9:13gain in job growth.
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9:13 - 9:15Another objection used sometimes here
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9:15 - 9:18to invest in early childhood programs
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9:18 - 9:21is concern about people moving out.
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9:21 - 9:26So, you know, maybe Ohio's thinking about investing
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9:26 - 9:28in more preschool education
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9:28 - 9:32for children in Columbus, Ohio,
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9:32 - 9:34but they're worried that these little Buckeyes will,
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9:34 - 9:37for some strange reason, decide to move to Ann Arbor, Michigan,
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9:37 - 9:38and become Wolverines.
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9:38 - 9:42And maybe Michigan will be thinking about investing
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9:42 - 9:44in preschool in Ann Arbor, Michigan, and be worried
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9:44 - 9:47these little Wolverines will end up moving to Ohio and becoming Buckeyes.
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9:47 - 9:51And so they'll both underinvest because everyone's going to move out.
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9:51 - 9:54Well, the reality is, if you look at the data,
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9:54 - 9:59Americans aren't as hyper-mobile as people sometimes assume.
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9:59 - 10:04The data is that over 60 percent of Americans
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10:04 - 10:06spend most of their working careers
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10:06 - 10:10in the state they were born in, over 60 percent.
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10:10 - 10:14That percentage does not vary much from state to state.
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10:14 - 10:17It doesn't vary much with the state's economy,
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10:17 - 10:19whether it's depressed or booming,
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10:19 - 10:21it doesn't vary much over time.
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10:21 - 10:27So the reality is, if you invest in kids,
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10:27 - 10:29they will stay.
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10:29 - 10:32Or at least, enough of them will stay
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10:32 - 10:36that it will pay off for your state economy.
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10:36 - 10:40Okay, so to sum up, there is a lot of research evidence
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10:40 - 10:43that early childhood programs, if run in a high-quality way,
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10:43 - 10:46pay off in higher adult skills.
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10:46 - 10:47There's a lot of research evidence
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10:47 - 10:51that those folks will stick around the state economy,
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10:51 - 10:54and there's a lot of evidence that having more workers
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10:54 - 10:56with higher skills in your local economy
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10:56 - 11:00pays off in higher wages and job growth for your local economy,
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11:00 - 11:04and if you calculate the numbers for each dollar,
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11:04 - 11:06we get about three dollars back
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11:06 - 11:08in benefits for the state economy.
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11:08 - 11:12So in my opinion, the research evidence is compelling
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11:12 - 11:15and the logic of this is compelling.
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11:15 - 11:19So what are the barriers to getting it done?
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11:19 - 11:22Well, one obvious barrier is cost.
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11:22 - 11:26So if you look at what it would cost
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11:26 - 11:29if every state government invested
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11:29 - 11:33in universal preschool at age four, full-day preschool at age four,
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11:33 - 11:37the total annual national cost would be roughly
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11:37 - 11:3930 billion dollars.
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11:39 - 11:41So, 30 billion dollars is a lot of money.
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11:41 - 11:45On the other hand, if you reflect on
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11:45 - 11:49that the U.S.'s population is over 300 million,
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11:49 - 11:52we're talking about an amount of money
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11:52 - 11:54that amounts to 100 dollars per capita.
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11:54 - 11:57Okay? A hundred dollars per capita, per person,
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11:57 - 12:01is something that any state government can afford to do.
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12:01 - 12:06It's just a simple matter of political will to do it.
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12:06 - 12:08And, of course, as I mentioned,
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12:08 - 12:10this cost has corresponding benefits.
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12:10 - 12:12I mentioned there's a multiplier of about three,
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12:12 - 12:142.78, for the state economy,
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12:14 - 12:17in terms of over 80 billion in extra earnings.
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12:17 - 12:20And if we want to translate that from just billions of dollars
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12:20 - 12:22to something that might mean something,
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12:22 - 12:26what we're talking about is that, for the average low-income kid,
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12:26 - 12:29that would increase earnings by about 10 percent
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12:29 - 12:32over their whole career, just doing the preschool,
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12:32 - 12:35not improving K-12 or anything else after that,
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12:35 - 12:37not doing anything with college tuition or access,
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12:37 - 12:40just directly improving preschool,
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12:40 - 12:42and we would get five percent higher earnings
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12:42 - 12:44for middle-class kids.
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12:44 - 12:46So this is an investment
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12:46 - 12:49that pays off in very concrete terms
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12:49 - 12:53for a broad range of income groups in the state's population
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12:53 - 12:58and produces large and tangible benefits.
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12:58 - 13:00Now, that's one barrier.
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13:00 - 13:04I actually think the more profound barrier
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13:04 - 13:08is the long-term nature of the benefits from early childhood programs.
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13:08 - 13:11So the argument I'm making is, is that we're increasing
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13:11 - 13:13the quality of our local workforce,
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13:13 - 13:15and thereby increasing economic development.
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13:15 - 13:19Obviously if we have a preschool with four-year-olds,
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13:19 - 13:21we're not sending these kids out at age five
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13:21 - 13:24to work in the sweatshops, right? At least I hope not.
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13:24 - 13:28So we're talking about an investment
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13:28 - 13:30that in terms of impacts on the state economy
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13:30 - 13:34is not going to really pay off for 15 or 20 years,
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13:34 - 13:37and of course America is notorious for being
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13:37 - 13:40a short term-oriented society.
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13:40 - 13:42Now one response you can make to this,
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13:42 - 13:43and I sometimes have done this in talks,
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13:43 - 13:46is people can talk about, there are benefits for these programs
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13:46 - 13:50in reducing special ed and remedial education costs,
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13:50 - 13:52there are benefits, parents care about preschool,
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13:52 - 13:55maybe we'll get some migration effects
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13:55 - 13:57from parents seeking good preschool,
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13:57 - 13:59and I think those are true,
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13:59 - 14:01but in some sense they're missing the point.
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14:01 - 14:03Ultimately, this is something
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14:03 - 14:07we're investing in now for the future.
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14:07 - 14:11And so what I want to leave you with is
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14:11 - 14:14what I think is the ultimate question.
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14:14 - 14:16I mean, I'm an economist, but this is ultimately
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14:16 - 14:22not an economic question, it's a moral question:
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14:22 - 14:26Are we willing, as Americans,
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14:26 - 14:30are we as a society still capable
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14:30 - 14:34of making the political choice to sacrifice now
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14:34 - 14:37by paying more taxes
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14:37 - 14:42in order to improve the long-term future
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14:42 - 14:46of not only our kids, but our community?
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14:46 - 14:50Are we still capable of that as a country?
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14:50 - 14:52And that's something that each and every citizen
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14:52 - 14:55and voter needs to ask themselves.
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14:55 - 14:58Is that something that you are still invested in,
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14:58 - 15:01that you still believe in the notion of investment?
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15:01 - 15:02That is the notion of investment.
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15:02 - 15:05You sacrifice now for a return later.
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15:05 - 15:08So I think the research evidence
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15:08 - 15:11on the benefits of early childhood programs
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15:11 - 15:15for the local economy is extremely strong.
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15:15 - 15:19However, the moral and political choice
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15:19 - 15:24is still up to us, as citizens and as voters.
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15:24 - 15:28Thank you very much. (Applause)
- Title:
- The economic case for preschool
- Speaker:
- Timothy Bartik
- Description:
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In this well-argued talk, Timothy Bartik makes the macro-economic case for preschool education -- and explains why you should be happy to invest in it, even if you don't have kids that age (or kids at all). The economic benefits of well-educated kids, it turns out, go well beyond the altruistic. (Filmed at TEDxMiamiUniversity.)
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 15:45
Thu-Huong Ha edited English subtitles for The economic case for preschool | ||
Thu-Huong Ha approved English subtitles for The economic case for preschool | ||
Thu-Huong Ha edited English subtitles for The economic case for preschool | ||
Morton Bast accepted English subtitles for The economic case for preschool | ||
Morton Bast edited English subtitles for The economic case for preschool | ||
Joseph Geni added a translation |