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Improve the local graduation rate, boost the economy

The L.A.-Long Beach-Santa Ana metro's economy could grow by more than $845 million if last year's dropout rate was cut in half.

By Kristen SchottPublished: April 29, 2011 10:55 AM

More than $800 million. That's the economic growth the Los Angeles-Long Beach-Santa Ana metro area would see in the long term if last year's local high school dropout rate of 80,500 was cut in half, according to a new study conducted by the Alliance for Excellent Education with support from State Farm Insurance.

The report seeks to demonstrate the connection that high school graduation rates have on the economy by reducing last year's number of dropouts by half – and the impact is clear.  

For example, if 40,250 "new grads" were added back into the local metro area, their additional spending and investments would be enough to support as many as 5,100 new jobs, and it would increase the gross regional product (GRP) by as much as $845 million by the time they reach the middle of their careers. (Nationally, if last year's dropout rate of 1.3 million was reduced to 650,000, that could lead to some 54,000 new jobs, and the GDP would grow by as much as $9.6 billion.)

Meanwhile, local new grads would likely make as much as $592 million more during a typical year than they would without a high school diploma. And, those increased earnings, when combined, would let them spend up to an extra $432 million and invest an addition $161 million in an average year.

That could lead to:

• A combined $1.8 billion in increased home purchases
• $34 million in increased auto sales during a normal year
• $71 million in increased state and local tax revenues during an average year

Nationally, the 650,00 new graduates would collectively make as much as $7.6 billion more in an average year than they would without a diploma. When combined, the increased wages and salaries would allow them to spend an extra $5.6 billion and invest an additional $2 billion during a normal 12-month period.

That could yield:

• $19 billion in increased home purchases
• $741 million in additional vehicle sales during a typical year
• $713 million in increased state tax revenues

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