It's 'Invest in Education, Stupid'

"It's the economy, stupid," Clinton campaign manager James Carville famously said during the 1992 U.S. presidential election campaign.

Remembering this phrase, we decided "it's invest in education, stupid" was an apt way to sum up the findings of an important new policy brief, A Well Educated Workforce is Key to State Prosperity, released yesterday by the Economic Analysis Research Network (EARN). EARN is a great network of 61 state/local and 25 national think tanks that Keystone Research Center helped found in the late 1990s. You'll be hearing more from EARN in the months ahead as it lifts its voice through multi-state releases co-branded by the network and individual groups.

Written by researchers affiliated with state think tanks in Iowa and Massachusetts, and released by Keystone in Pennsylvania, the new brief points out that states with higher educational attainment enjoy higher productivity growth and higher increases in pay for typical workers.

The numbers are quite striking.

For example, the top 10 states (measured by change in education levels) increased their share of adults (25 and over) with a bachelor's degree by an average of 18 percentage points, twice as much as the bottom 10 states. These same top 10 states experienced productivity growth nearly twice as large as the bottom 10 states: 82% versus 44% in the bottom 10 states. Median compensation (pay plus benefits) in these top 10 states rose by about 20% compared with a paltry 4% increase in the bottom 10 states.

States waste a lot of money on poorly targeted business incentives that don't strengthen their economies. The new brief makes clear that one way states can make a big difference to future growth and living standards is by investing in education.

Of Pennsylvania's neighbors, Maryland and New Jersey illustrate best the payoff to investing in education over the past three decades. Ohio and West Virginia illustrate the pitfalls of failing to invest in education. Pennsylvania is in the middle, doing quite well measured by improvements in the share of adults with a four-year college degree but still ranked near the bottom when it comes to the share of adults with at least some education beyond high school.

Pennsylvania is not in the middle in the last few years. Recently, the state has deeply cut investment in K-12 and higher education. This misguided direction poses a deep threat to future growth and living standards in the state. That's why we think it's important to be blunt about what the research evidence across the 50 states tells us: "It's invest in education, stupid."

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