0:00:01.286,0:00:05.774 In this talk today, I want to present a different idea 0:00:05.774,0:00:09.995 for why investing in early childhood education 0:00:09.995,0:00:12.694 makes sense as a public investment. 0:00:12.694,0:00:14.932 It's a different idea, because usually, 0:00:14.932,0:00:16.305 when people talk about early childhood programs, 0:00:16.305,0:00:19.646 they talk about all the wonderful benefits for participants 0:00:19.646,0:00:22.928 in terms of former participants, in preschool, 0:00:22.928,0:00:25.193 they have better K-12 test scores, 0:00:25.193,0:00:27.308 better adult earnings. 0:00:27.308,0:00:29.423 Now that's all very important, 0:00:29.423,0:00:33.519 but what I want to talk about is what preschool does 0:00:33.519,0:00:35.341 for state economies 0:00:35.341,0:00:38.638 and for promoting state economic development. 0:00:38.638,0:00:41.931 And that's actually crucial 0:00:41.931,0:00:45.255 because if we're going to get increased investment 0:00:45.255,0:00:47.598 in early childhood programs, 0:00:47.598,0:00:51.121 we need to interest state governments in this. 0:00:51.121,0:00:53.347 The federal government has a lot on its plate, 0:00:53.347,0:00:55.845 and state governments are going to have to step up. 0:00:55.845,0:00:58.028 So we have to appeal to them, 0:00:58.028,0:01:00.581 the legislators in the state government, 0:01:00.581,0:01:02.571 and turn to something they understand, 0:01:02.571,0:01:04.869 that they have to promote the economic development 0:01:04.869,0:01:06.556 of their state economy. 0:01:06.556,0:01:08.372 Now, by promoting economic development, 0:01:08.372,0:01:10.086 I don't mean anything magical. 0:01:10.086,0:01:13.549 All I mean is, is that early childhood education 0:01:13.549,0:01:17.452 can bring more and better jobs to a state 0:01:17.452,0:01:20.630 and can thereby promote higher per capita earnings 0:01:20.630,0:01:22.580 for the state's residents. 0:01:22.580,0:01:26.573 Now, I think it's fair to say that when people think about 0:01:26.573,0:01:28.577 state and local economic development, 0:01:28.577,0:01:32.359 they don't generally think first about what they're doing 0:01:32.359,0:01:34.914 about childcare and early childhood programs. 0:01:34.914,0:01:38.817 I know this. I've spent most of my career researching these programs. 0:01:38.817,0:01:40.440 I've talked to a lot of directors 0:01:40.440,0:01:42.768 of state economic development agencies about these issues, 0:01:42.768,0:01:45.310 a lot of legislators about these issues. 0:01:45.310,0:01:48.369 When legislators and others think about economic development, 0:01:48.369,0:01:51.625 what they first of all think about are business tax incentives, 0:01:51.625,0:01:54.503 property tax abatements, job creation tax credits, 0:01:54.503,0:01:57.190 you know, there are a million of these programs all over the place. 0:01:57.190,0:01:59.796 So for example, states compete very vigorously 0:01:59.796,0:02:03.461 to attract new auto plants or expanded auto plants. 0:02:03.461,0:02:05.601 They hand out all kinds of business tax breaks. 0:02:05.601,0:02:07.799 Now, those programs can make sense 0:02:07.799,0:02:10.801 if they in fact induce new location decisions, 0:02:10.801,0:02:12.186 and the way they can make sense is, 0:02:12.186,0:02:14.499 by creating more and better jobs, 0:02:14.499,0:02:18.082 they raise employment rates, raise per capita earnings of state residents. 0:02:18.082,0:02:20.152 So there is a benefit to state residents 0:02:20.152,0:02:22.301 that corresponds to the costs that they're paying 0:02:22.301,0:02:24.574 by paying for these business tax breaks. 0:02:24.574,0:02:28.382 My argument is essentially that early childhood programs 0:02:28.382,0:02:32.107 can do exactly the same thing, 0:02:32.107,0:02:36.016 create more and better jobs, but in a different way. 0:02:36.016,0:02:38.434 It's a somewhat more indirect way. 0:02:38.434,0:02:42.080 These programs can promote more and better jobs by, 0:02:42.080,0:02:44.955 you build it, you invest in high-quality preschool, 0:02:44.955,0:02:48.773 it develops the skills of your local workforce 0:02:48.773,0:02:52.516 if enough of them stick around, and, in turn, 0:02:52.516,0:02:54.669 that higher-quality local workforce 0:02:54.669,0:02:59.361 will be a key driver of creating jobs and creating 0:02:59.361,0:03:01.869 higher earnings per capita in the local community. 0:03:01.869,0:03:04.833 Now, let me turn to some numbers on this. 0:03:04.833,0:03:09.416 Okay. If you look at the research evidence -- 0:03:09.416,0:03:14.079 that's extensive -- on how much early childhood programs 0:03:14.079,0:03:18.676 affect the educational attainment, wages and skills 0:03:18.676,0:03:22.185 of former participants in preschool as adults, 0:03:22.185,0:03:24.821 you take those known effects, 0:03:24.821,0:03:27.509 you take how many of those folks will be expected 0:03:27.509,0:03:31.210 to stick around the state or local economy and not move out, 0:03:31.210,0:03:35.030 and you take research on how much skills 0:03:35.030,0:03:38.201 drive job creation, you will conclude, 0:03:38.201,0:03:40.244 from these three separate lines of research, 0:03:40.244,0:03:44.323 that for every dollar invested in early childhood programs, 0:03:44.323,0:03:47.776 the per capita earnings of state residents 0:03:47.776,0:03:50.542 go up by two dollars and 78 cents, 0:03:50.542,0:03:52.409 so that's a three-to-one return. 0:03:52.409,0:03:55.442 Now you can get much higher returns, 0:03:55.442,0:03:59.516 of up to 16-to-one, if you include anti-crime benefits, 0:03:59.516,0:04:04.230 if you include benefits to former preschool participants 0:04:04.230,0:04:06.414 who move to some other state, 0:04:06.414,0:04:09.425 but there's a good reason for focusing on these three dollars 0:04:09.425,0:04:11.512 because this is salient and important 0:04:11.512,0:04:13.802 to state legislators and state policy makers, 0:04:13.802,0:04:15.946 and it's the states that are going to have to act. 0:04:15.946,0:04:19.245 So there is this key benefit that is relevant 0:04:19.245,0:04:22.494 to state policy makers in terms of economic development. 0:04:22.494,0:04:25.912 Now, one objection you often hear, 0:04:25.912,0:04:30.809 or maybe you don't hear it because people are too polite to say it, is, 0:04:30.809,0:04:35.272 why should I pay more taxes 0:04:35.272,0:04:39.550 to invest in other people's children? 0:04:39.550,0:04:42.044 What's in it for me? 0:04:42.044,0:04:44.323 And the trouble with that objection, 0:04:44.323,0:04:48.325 it reflects a total misunderstanding 0:04:48.325,0:04:51.342 of how much local economies 0:04:51.342,0:04:54.848 involve everyone being interdependent. 0:04:54.848,0:04:58.765 Specifically, the interdependency here is, is that 0:04:58.765,0:05:02.298 there are huge spillovers of skills -- 0:05:02.298,0:05:07.618 that when other people's children get more skills, 0:05:07.618,0:05:11.387 that actually increases the prosperity of everyone, 0:05:11.387,0:05:14.741 including people whose skills don't change. 0:05:14.741,0:05:17.145 So for example, numerous research studies have shown 0:05:17.145,0:05:19.724 if you look at what really drives 0:05:19.724,0:05:22.188 the growth rate of metropolitan areas, 0:05:22.188,0:05:27.858 it's not so much low taxes, low cost, low wages; 0:05:27.858,0:05:31.481 it's the skills of the area. Particularly, the proxy for skills 0:05:31.481,0:05:35.016 that people use is percentage of college graduates in the area. 0:05:35.016,0:05:38.095 So when you look, for example, at metropolitan areas 0:05:38.095,0:05:41.608 such as the Boston area, Minneapolis-St. Paul, 0:05:41.608,0:05:46.944 Silicon Valley, these areas are not doing well economically 0:05:46.944,0:05:49.253 because they're low-cost. 0:05:49.253,0:05:51.178 I don't know if you ever tried to buy a house in Silicon Valley. 0:05:51.178,0:05:53.995 It's not exactly a low-cost proposition. 0:05:53.995,0:05:59.940 They are growing because they have high levels of skills. 0:05:59.940,0:06:03.095 So when we invest in other people's children, 0:06:03.095,0:06:07.280 and build up those skills, we increase the overall job growth 0:06:07.280,0:06:08.801 of a metro area. 0:06:08.801,0:06:12.689 As another example, if we look 0:06:12.689,0:06:15.924 at what determines an individual's wages, 0:06:15.924,0:06:20.149 and we do statistical exploration of that, what determines wages, 0:06:20.149,0:06:24.672 we know that the individual's wages will depend, in part, 0:06:24.672,0:06:27.103 on that individual's education, 0:06:27.103,0:06:30.096 for example whether or not they have a college degree. 0:06:30.096,0:06:33.434 One of the very interesting facts is that, in addition, 0:06:33.434,0:06:37.481 we find that even once we hold constant, statistically, 0:06:37.481,0:06:40.385 the effect of your own education, 0:06:40.385,0:06:43.585 the education of everyone else in your metropolitan area 0:06:43.585,0:06:45.557 also affects your wages. 0:06:45.557,0:06:49.761 So specifically, if you hold constant your education, 0:06:49.761,0:06:53.864 you stick in percentage of college graduates in your metro area, 0:06:53.864,0:06:57.824 you will find that has a significant positive effect on your wages 0:06:57.824,0:07:01.294 without changing your education at all. 0:07:01.294,0:07:04.445 In fact, this effect is so strong 0:07:04.445,0:07:08.258 that when someone gets a college degree, 0:07:08.258,0:07:10.699 the spillover effects of this on the wages 0:07:10.699,0:07:12.592 of others in the metropolitan area 0:07:12.592,0:07:15.694 are actually greater than the direct effects. 0:07:15.694,0:07:19.147 So if someone gets a college degree, their lifetime earnings 0:07:19.147,0:07:22.462 go up by a huge amount, over 700,000 dollars. 0:07:22.462,0:07:24.977 There's an effect on everyone else in the metro area 0:07:24.977,0:07:28.840 of driving up the percentage of college graduates in the metro area, 0:07:28.840,0:07:32.256 and if you add that up -- it's a small effect for each person, 0:07:32.256,0:07:35.688 but if you add that up across all the people in the metro area, 0:07:35.688,0:07:39.314 you actually get that the increase in wages for everyone else 0:07:39.314,0:07:42.227 in the metropolitan area adds up to almost a million dollars. 0:07:42.227,0:07:44.305 That's actually greater than the direct benefits 0:07:44.305,0:07:47.359 of the person choosing to get education. 0:07:47.359,0:07:48.718 Now, what's going on here? 0:07:48.718,0:07:52.641 What can explain these huge spillover effects of education? 0:07:52.641,0:07:54.115 Well, let's think about it this way. 0:07:54.115,0:07:57.438 I can be the most skilled person in the world, 0:07:57.438,0:08:01.239 but if everyone else at my firm lacks skills, 0:08:01.239,0:08:04.208 my employer is going to find it more difficult 0:08:04.208,0:08:08.264 to introduce new technology, new production techniques. 0:08:08.264,0:08:11.866 So as a result, my employer is going to be less productive. 0:08:11.866,0:08:15.467 They will not be able to afford to pay me as good wages. 0:08:15.467,0:08:19.148 Even if everyone at my firm has good skills, 0:08:19.148,0:08:22.656 if the workers at the suppliers to my firm 0:08:22.656,0:08:24.626 do not have good skills, 0:08:24.626,0:08:27.023 my firm is going to be less competitive 0:08:27.023,0:08:29.408 competing in national and international markets. 0:08:29.408,0:08:32.502 And again, the firm that's less competitive 0:08:32.502,0:08:35.191 will not be able to pay as good wages, 0:08:35.191,0:08:39.324 and then, particularly in high-tech businesses, 0:08:39.324,0:08:42.585 they're constantly stealing ideas and workers from other businesses. 0:08:42.585,0:08:45.805 So clearly the productivity of firms in Silicon Valley 0:08:45.805,0:08:49.600 has a lot to do with the skills not only of the workers at their firm, 0:08:49.600,0:08:54.019 but the workers at all the other firms in the metro area. 0:08:54.019,0:08:57.553 So as a result, if we can invest in other people's children 0:08:57.553,0:08:59.955 through preschool and other early childhood programs 0:08:59.955,0:09:03.611 that are high-quality, we not only help those children, 0:09:03.611,0:09:07.232 we help everyone in the metropolitan area 0:09:07.232,0:09:10.903 gain in wages and we'll have the metropolitan area 0:09:10.903,0:09:12.925 gain in job growth. 0:09:12.925,0:09:15.456 Another objection used sometimes here 0:09:15.456,0:09:17.684 to invest in early childhood programs 0:09:17.684,0:09:21.405 is concern about people moving out. 0:09:21.405,0:09:25.640 So, you know, maybe Ohio's thinking about investing 0:09:25.640,0:09:27.884 in more preschool education 0:09:27.884,0:09:31.694 for children in Columbus, Ohio, 0:09:31.694,0:09:33.953 but they're worried that these little Buckeyes will, 0:09:33.953,0:09:36.870 for some strange reason, decide to move to Ann Arbor, Michigan, 0:09:36.870,0:09:38.387 and become Wolverines. 0:09:38.387,0:09:41.681 And maybe Michigan will be thinking about investing 0:09:41.681,0:09:44.122 in preschool in Ann Arbor, Michigan, and be worried 0:09:44.122,0:09:47.357 these little Wolverines will end up moving to Ohio and becoming Buckeyes. 0:09:47.357,0:09:51.349 And so they'll both underinvest because everyone's going to move out. 0:09:51.349,0:09:54.290 Well, the reality is, if you look at the data, 0:09:54.290,0:09:58.503 Americans aren't as hyper-mobile as people sometimes assume. 0:09:58.503,0:10:03.623 The data is that over 60 percent of Americans 0:10:03.623,0:10:06.061 spend most of their working careers 0:10:06.061,0:10:09.831 in the state they were born in, over 60 percent. 0:10:09.831,0:10:13.926 That percentage does not vary much from state to state. 0:10:13.926,0:10:17.030 It doesn't vary much with the state's economy, 0:10:17.030,0:10:18.828 whether it's depressed or booming, 0:10:18.828,0:10:21.149 it doesn't vary much over time. 0:10:21.149,0:10:26.962 So the reality is, if you invest in kids, 0:10:26.962,0:10:29.461 they will stay. 0:10:29.461,0:10:32.499 Or at least, enough of them will stay 0:10:32.499,0:10:35.920 that it will pay off for your state economy. 0:10:35.920,0:10:39.844 Okay, so to sum up, there is a lot of research evidence 0:10:39.844,0:10:42.998 that early childhood programs, if run in a high-quality way, 0:10:42.998,0:10:45.854 pay off in higher adult skills. 0:10:45.854,0:10:47.421 There's a lot of research evidence 0:10:47.421,0:10:51.045 that those folks will stick around the state economy, 0:10:51.045,0:10:54.362 and there's a lot of evidence that having more workers 0:10:54.362,0:10:56.452 with higher skills in your local economy 0:10:56.452,0:11:00.131 pays off in higher wages and job growth for your local economy, 0:11:00.131,0:11:03.574 and if you calculate the numbers for each dollar, 0:11:03.574,0:11:06.303 we get about three dollars back 0:11:06.303,0:11:08.478 in benefits for the state economy. 0:11:08.478,0:11:12.090 So in my opinion, the research evidence is compelling 0:11:12.090,0:11:14.914 and the logic of this is compelling. 0:11:14.914,0:11:18.604 So what are the barriers to getting it done? 0:11:18.604,0:11:21.868 Well, one obvious barrier is cost. 0:11:21.868,0:11:26.198 So if you look at what it would cost 0:11:26.198,0:11:29.025 if every state government invested 0:11:29.025,0:11:33.230 in universal preschool at age four, full-day preschool at age four, 0:11:33.230,0:11:36.645 the total annual national cost would be roughly 0:11:36.645,0:11:38.950 30 billion dollars. 0:11:38.950,0:11:41.375 So, 30 billion dollars is a lot of money. 0:11:41.375,0:11:45.120 On the other hand, if you reflect on 0:11:45.120,0:11:48.980 that the U.S.'s population is over 300 million, 0:11:48.980,0:11:51.663 we're talking about an amount of money 0:11:51.663,0:11:54.283 that amounts to 100 dollars per capita. 0:11:54.283,0:11:57.261 Okay? A hundred dollars per capita, per person, 0:11:57.261,0:12:01.266 is something that any state government can afford to do. 0:12:01.266,0:12:06.015 It's just a simple matter of political will to do it. 0:12:06.015,0:12:07.895 And, of course, as I mentioned, 0:12:07.895,0:12:10.049 this cost has corresponding benefits. 0:12:10.049,0:12:12.225 I mentioned there's a multiplier of about three, 0:12:12.225,0:12:14.325 2.78, for the state economy, 0:12:14.325,0:12:17.354 in terms of over 80 billion in extra earnings. 0:12:17.354,0:12:20.378 And if we want to translate that from just billions of dollars 0:12:20.378,0:12:22.271 to something that might mean something, 0:12:22.271,0:12:25.859 what we're talking about is that, for the average low-income kid, 0:12:25.859,0:12:28.976 that would increase earnings by about 10 percent 0:12:28.976,0:12:32.175 over their whole career, just doing the preschool, 0:12:32.175,0:12:34.690 not improving K-12 or anything else after that, 0:12:34.690,0:12:37.238 not doing anything with college tuition or access, 0:12:37.238,0:12:39.934 just directly improving preschool, 0:12:39.934,0:12:42.233 and we would get five percent higher earnings 0:12:42.233,0:12:43.629 for middle-class kids. 0:12:43.629,0:12:45.694 So this is an investment 0:12:45.694,0:12:48.602 that pays off in very concrete terms 0:12:48.602,0:12:53.022 for a broad range of income groups in the state's population 0:12:53.022,0:12:57.532 and produces large and tangible benefits. 0:12:57.532,0:13:00.086 Now, that's one barrier. 0:13:00.086,0:13:03.508 I actually think the more profound barrier 0:13:03.508,0:13:07.938 is the long-term nature of the benefits from early childhood programs. 0:13:07.938,0:13:10.784 So the argument I'm making is, is that we're increasing 0:13:10.784,0:13:12.539 the quality of our local workforce, 0:13:12.539,0:13:15.205 and thereby increasing economic development. 0:13:15.205,0:13:18.585 Obviously if we have a preschool with four-year-olds, 0:13:18.585,0:13:20.953 we're not sending these kids out at age five 0:13:20.953,0:13:24.468 to work in the sweatshops, right? At least I hope not. 0:13:24.468,0:13:27.880 So we're talking about an investment 0:13:27.880,0:13:30.350 that in terms of impacts on the state economy 0:13:30.350,0:13:34.311 is not going to really pay off for 15 or 20 years, 0:13:34.311,0:13:37.169 and of course America is notorious for being 0:13:37.169,0:13:40.176 a short term-oriented society. 0:13:40.176,0:13:41.836 Now one response you can make to this, 0:13:41.836,0:13:43.361 and I sometimes have done this in talks, 0:13:43.361,0:13:46.438 is people can talk about, there are benefits for these programs 0:13:46.438,0:13:50.085 in reducing special ed and remedial education costs, 0:13:50.085,0:13:52.391 there are benefits, parents care about preschool, 0:13:52.391,0:13:54.641 maybe we'll get some migration effects 0:13:54.641,0:13:56.959 from parents seeking good preschool, 0:13:56.959,0:13:58.606 and I think those are true, 0:13:58.606,0:14:00.768 but in some sense they're missing the point. 0:14:00.768,0:14:03.339 Ultimately, this is something 0:14:03.339,0:14:07.264 we're investing in now for the future. 0:14:07.264,0:14:11.213 And so what I want to leave you with is 0:14:11.213,0:14:13.519 what I think is the ultimate question. 0:14:13.519,0:14:16.353 I mean, I'm an economist, but this is ultimately 0:14:16.353,0:14:21.898 not an economic question, it's a moral question: 0:14:21.898,0:14:26.105 Are we willing, as Americans, 0:14:26.105,0:14:29.555 are we as a society still capable 0:14:29.555,0:14:34.339 of making the political choice to sacrifice now 0:14:34.339,0:14:36.988 by paying more taxes 0:14:36.988,0:14:42.193 in order to improve the long-term future 0:14:42.193,0:14:45.610 of not only our kids, but our community? 0:14:45.610,0:14:50.057 Are we still capable of that as a country? 0:14:50.057,0:14:52.498 And that's something that each and every citizen 0:14:52.498,0:14:55.041 and voter needs to ask themselves. 0:14:55.041,0:14:57.986 Is that something that you are still invested in, 0:14:57.986,0:15:00.720 that you still believe in the notion of investment? 0:15:00.720,0:15:02.119 That is the notion of investment. 0:15:02.119,0:15:04.693 You sacrifice now for a return later. 0:15:04.693,0:15:08.331 So I think the research evidence 0:15:08.331,0:15:10.969 on the benefits of early childhood programs 0:15:10.969,0:15:14.576 for the local economy is extremely strong. 0:15:14.576,0:15:18.858 However, the moral and political choice 0:15:18.858,0:15:23.962 is still up to us, as citizens and as voters. 0:15:23.962,0:15:27.985 Thank you very much. (Applause)