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