0:00:11.386,0:00:14.386 In this talk today,[br]I want to present a different idea 0:00:15.548,0:00:18.548 for why investing[br]in early childhood education 0:00:19.189,0:00:21.886 makes sense as a public investment. 0:00:22.062,0:00:24.076 It's a different idea, because usually, 0:00:24.097,0:00:26.361 when people talk about[br]early childhood programs, 0:00:26.382,0:00:29.382 they talk about all the wonderful[br]benefits for participants 0:00:29.403,0:00:32.298 in terms of former participants,[br]in preschool, 0:00:32.319,0:00:34.505 they have better K-12 test scores, 0:00:34.526,0:00:36.364 better adult earnings. 0:00:36.385,0:00:38.380 Now that's all very important, 0:00:38.401,0:00:42.221 but what I want to talk about[br]is what preschool does 0:00:42.594,0:00:44.174 for state economies 0:00:44.195,0:00:47.195 and for promoting[br]state economic development. 0:00:48.174,0:00:50.935 And that's actually crucial 0:00:51.195,0:00:54.559 because if we're going[br]to get increased investment 0:00:54.617,0:00:56.813 in early childhood programs, 0:00:56.834,0:01:00.194 we need to interest[br]state governments in this. 0:01:00.363,0:01:02.924 The federal government[br]has a lot on its plate, 0:01:02.945,0:01:05.389 and state governments[br]are going to have to step up. 0:01:05.389,0:01:07.225 So we have to appeal to them, 0:01:07.246,0:01:09.798 the legislators in the state government, 0:01:09.819,0:01:11.972 and turn to something they understand, 0:01:11.993,0:01:14.384 that they have to promote[br]the economic development 0:01:14.384,0:01:15.583 of their state economy. 0:01:15.604,0:01:17.607 Now, by promoting economic development, 0:01:17.628,0:01:19.162 I don't mean anything magical. 0:01:19.183,0:01:22.586 All I mean is, is that[br]early childhood education 0:01:23.030,0:01:26.030 can bring more and better jobs to a state 0:01:26.481,0:01:29.481 and can thereby promote[br]higher per capita earnings 0:01:29.502,0:01:31.451 for the state's residents. 0:01:31.727,0:01:35.624 Now, I think it's fair to say[br]that when people think about 0:01:36.006,0:01:37.934 state and local economic development, 0:01:37.955,0:01:41.505 they don't generally think[br]first about what they're doing 0:01:41.526,0:01:43.958 about childcare[br]and early childhood programs. 0:01:44.688,0:01:48.091 I know this. I've spent most of my career[br]researching these programs. 0:01:48.112,0:01:49.734 I've talked to a lot of directors 0:01:49.755,0:01:52.483 of state economic development agencies[br]about these issues, 0:01:52.483,0:01:54.455 a lot of legislators about these issues. 0:01:54.455,0:01:57.452 When legislators and others think[br]about economic development, 0:01:57.473,0:02:00.473 what they first of all think[br]about are business tax incentives, 0:02:00.756,0:02:03.633 property tax abatements,[br]job creation tax credits, 0:02:03.654,0:02:06.858 you know, there are a million[br]of these programs all over the place. 0:02:06.858,0:02:08.997 So for example,[br]states compete very vigorously 0:02:09.018,0:02:12.529 to attract new auto plants[br]or expanded auto plants. 0:02:12.550,0:02:14.789 They hand out all kinds[br]of business tax breaks. 0:02:14.810,0:02:16.888 Now, those programs can make sense 0:02:16.909,0:02:19.909 if they in fact induce[br]new location decisions, 0:02:19.930,0:02:21.597 and the way they can make sense is, 0:02:21.618,0:02:23.772 by creating more and better jobs, 0:02:23.772,0:02:27.317 they raise employment rates, raise[br]per capita earnings of state residents. 0:02:27.317,0:02:29.292 So there is a benefit to state residents 0:02:29.313,0:02:31.647 that corresponds to the costs[br]that they're paying 0:02:31.668,0:02:33.735 by paying for these business tax breaks. 0:02:34.078,0:02:37.425 My argument is essentially[br]that early childhood programs 0:02:37.446,0:02:40.212 can do exactly the same thing, 0:02:41.318,0:02:44.355 create more and better jobs,[br]but in a different way. 0:02:45.386,0:02:47.526 It's a somewhat more indirect way. 0:02:47.547,0:02:50.937 These programs can promote[br]more and better jobs by, 0:02:51.362,0:02:54.236 you build it, you invest[br]in high-quality preschool, 0:02:54.816,0:02:57.816 it develops the skills[br]of your local workforce 0:02:57.897,0:03:01.033 if enough of them stick[br]around, and, in turn, 0:03:01.480,0:03:03.632 that higher-quality local workforce 0:03:03.871,0:03:07.653 will be a key driver of creating jobs 0:03:08.017,0:03:10.969 and creating higher earnings per capita[br]in the local community. 0:03:11.175,0:03:13.934 Now, let me turn to some numbers on this. 0:03:13.955,0:03:17.537 Okay. If you look[br]at the research evidence - 0:03:18.634,0:03:23.156 that's extensive - on how much[br]early childhood programs 0:03:23.177,0:03:27.426 affect the educational attainment,[br]wages and skills 0:03:28.069,0:03:31.069 of former participants[br]in preschool as adults, 0:03:31.570,0:03:33.950 you take those known effects, 0:03:33.971,0:03:36.658 you take how many of those folks[br]will be expected 0:03:36.679,0:03:39.767 to stick around the state or local economy[br]and not move out, 0:03:40.754,0:03:45.324 and you take research on how much[br]skills drive job creation, 0:03:46.081,0:03:47.384 you will conclude, 0:03:47.405,0:03:49.501 from these three separate[br]lines of research, 0:03:49.522,0:03:52.867 that for every dollar invested[br]in early childhood programs, 0:03:53.875,0:03:56.875 the per capita earnings of state residents 0:03:56.896,0:03:59.661 go up by two dollars and 78 cents, 0:03:59.682,0:04:01.548 so that's a three-to-one return. 0:04:01.659,0:04:04.659 Now you can get much higher returns, 0:04:04.680,0:04:08.607 of up to 16-to-one,[br]if you include anti-crime benefits, 0:04:08.628,0:04:13.363 if you include benefits[br]to former preschool participants 0:04:13.384,0:04:15.394 who move to some other state, 0:04:15.415,0:04:18.505 but there's a good reason[br]for focusing on these three dollars 0:04:18.526,0:04:20.680 because this is salient and important 0:04:20.701,0:04:22.990 to state legislators[br]and state policy makers, 0:04:23.011,0:04:25.462 and it's the states[br]that are going to have to act. 0:04:25.462,0:04:28.466 So there is this key benefit[br]that is relevant 0:04:28.487,0:04:31.487 to state policy makers in terms[br]of economic development. 0:04:31.721,0:04:34.721 Now, one objection you often hear, 0:04:35.480,0:04:39.686 or maybe you don't hear it because[br]people are too polite to say it, is, 0:04:40.607,0:04:43.607 why should I pay more taxes 0:04:44.966,0:04:47.966 to invest in other people's children? 0:04:48.641,0:04:50.696 What's in it for me? 0:04:51.398,0:04:53.676 And the trouble with that objection, 0:04:53.697,0:04:56.697 it reflects a total misunderstanding 0:04:57.496,0:05:00.496 of how much local economies 0:05:00.517,0:05:03.058 involve everyone being interdependent. 0:05:04.217,0:05:06.777 Specifically, the interdependency here is, 0:05:07.992,0:05:10.992 is that there are huge spillovers[br]of skills - 0:05:11.517,0:05:15.413 that when other people's children[br]get more skills, 0:05:16.789,0:05:20.300 that actually increases[br]the prosperity of everyone, 0:05:20.517,0:05:23.517 including people[br]whose skills don't change. 0:05:23.825,0:05:26.513 So for example, numerous[br]research studies have shown 0:05:26.534,0:05:28.999 if you look at what really drives 0:05:29.284,0:05:31.435 the growth rate of metropolitan areas, 0:05:31.456,0:05:35.435 it's not so much low taxes,[br]low cost, low wages; 0:05:36.989,0:05:38.699 it's the skills of the area. 0:05:38.699,0:05:40.686 Particularly, the proxy for skills 0:05:40.686,0:05:43.686 that people use is percentage[br]of college graduates in the area. 0:05:44.353,0:05:47.353 So when you look, for example,[br]at metropolitan areas 0:05:47.374,0:05:50.374 such as the Boston area,[br]Minneapolis-St. Paul, 0:05:50.573,0:05:55.197 Silicon Valley, these areas[br]are not doing well economically 0:05:55.925,0:05:58.233 because they're low-cost. 0:05:58.311,0:06:01.340 I don't know if you ever tried[br]to buy a house in Silicon Valley. 0:06:01.340,0:06:03.392 It's not exactly a low-cost proposition. 0:06:03.392,0:06:07.949 They are growing because they have[br]high levels of skills. 0:06:09.150,0:06:12.264 So when we invest[br]in other people's children, 0:06:12.285,0:06:16.476 and build up those skills,[br]we increase the overall job growth 0:06:16.497,0:06:18.017 of a metro area. 0:06:18.051,0:06:21.081 As another example, if we look 0:06:21.884,0:06:24.884 at what determines an individual's wages, 0:06:25.444,0:06:28.749 and we do statistical exploration of that,[br]what determines wages, 0:06:29.225,0:06:33.384 we know that the individual's wages[br]will depend, in part, 0:06:34.041,0:06:36.202 on that individual's education, 0:06:36.223,0:06:39.215 for example whether or not[br]they have a college degree. 0:06:39.402,0:06:42.599 One of the very interesting facts[br]is that, in addition, 0:06:42.620,0:06:46.639 we find that even once[br]we hold constant, statistically, 0:06:46.842,0:06:49.745 the effect of your own education, 0:06:49.766,0:06:52.815 the education of everyone else[br]in your metropolitan area 0:06:52.836,0:06:54.807 also affects your wages. 0:06:54.828,0:06:58.680 So specifically, if you hold constant[br]your education, 0:06:59.061,0:07:03.056 you stick in percentage of college[br]graduates in your metro area, 0:07:03.265,0:07:07.238 you will find that has a significant[br]positive effect on your wages 0:07:07.614,0:07:10.397 without changing your education at all. 0:07:10.418,0:07:13.102 In fact, this effect is so strong 0:07:13.521,0:07:16.620 that when someone gets a college degree, 0:07:17.445,0:07:20.072 the spillover effects of this on the wages 0:07:20.093,0:07:21.985 of others in the metropolitan area 0:07:22.006,0:07:24.577 are actually greater[br]than the direct effects. 0:07:24.598,0:07:28.426 So if someone gets a college degree,[br]their lifetime earnings 0:07:28.447,0:07:31.447 go up by a huge amount,[br]over 700,000 dollars. 0:07:31.468,0:07:33.982 There's an effect on everyone else[br]in the metro area 0:07:34.003,0:07:37.588 of driving up the percentage of college[br]graduates in the metro area, 0:07:38.019,0:07:41.270 and if you add that up -[br]it's a small effect for each person, 0:07:41.308,0:07:44.832 but if you add that up across[br]all the people in the metro area, 0:07:44.853,0:07:48.396 you actually get that the increase[br]in wages for everyone else 0:07:48.417,0:07:51.329 in the metropolitan area[br]adds up to almost a million dollars. 0:07:51.350,0:07:53.919 That's actually greater[br]than the direct benefits 0:07:53.940,0:07:56.672 of the person choosing to get education. 0:07:56.693,0:07:58.051 Now, what's going on here? 0:07:58.072,0:08:01.072 What can explain these huge[br]spillover effects of education? 0:08:02.026,0:08:03.855 Well, let's think about it this way. 0:08:03.855,0:08:06.526 I can be the most skilled person[br]in the world, 0:08:06.974,0:08:09.974 but if everyone else[br]at my firm lacks skills, 0:08:10.529,0:08:13.497 my employer is going[br]to find it more difficult 0:08:13.521,0:08:16.851 to introduce new technology,[br]new production techniques. 0:08:17.744,0:08:20.898 So as a result, my employer[br]is going to be less productive. 0:08:20.950,0:08:23.950 They will not be able to afford[br]to pay me as good wages. 0:08:24.836,0:08:27.836 Even if everyone at my firm[br]has good skills, 0:08:28.748,0:08:31.748 if the workers at the suppliers to my firm 0:08:31.769,0:08:33.658 do not have good skills, 0:08:33.679,0:08:36.075 my firm is going to be less competitive 0:08:36.096,0:08:38.480 competing in national[br]and international markets. 0:08:38.674,0:08:41.674 And again, the firm[br]that's less competitive 0:08:41.695,0:08:43.957 will not be able to pay as good wages, 0:08:43.977,0:08:46.978 and then, particularly[br]in high-tech businesses, 0:08:48.683,0:08:51.939 they're constantly stealing ideas[br]and workers from other businesses. 0:08:51.939,0:08:54.914 So clearly the productivity[br]of firms in Silicon Valley 0:08:54.935,0:08:58.274 has a lot to do with the skills[br]not only of the workers at their firm, 0:08:58.961,0:09:02.634 but the workers at all the other[br]firms in the metro area. 0:09:03.134,0:09:06.809 So as a result, if we can invest[br]in other people's children 0:09:06.830,0:09:09.307 through preschool and other[br]early childhood programs 0:09:09.328,0:09:12.645 that are high-quality,[br]we not only help those children, 0:09:13.044,0:09:16.044 we help everyone in the metropolitan area 0:09:16.522,0:09:20.161 gain in wages and we'll have[br]the metropolitan area 0:09:20.182,0:09:22.203 gain in job growth. 0:09:22.327,0:09:24.857 Another objection you sometimes hear 0:09:24.878,0:09:27.105 to invest in early childhood programs 0:09:27.126,0:09:30.126 is concern about people moving out. 0:09:30.782,0:09:34.475 So, you know, maybe[br]Ohio's thinking about investing 0:09:34.496,0:09:36.739 in more preschool education 0:09:37.055,0:09:39.792 for children in Columbus, Ohio, 0:09:40.916,0:09:43.393 but they're worried that these[br]little Buckeyes will, 0:09:43.414,0:09:46.414 for some strange reason,[br]decide to move to Ann Arbor, Michigan, 0:09:46.435,0:09:47.629 and become Wolverines. 0:09:47.650,0:09:50.896 And maybe Michigan[br]will be thinking about investing 0:09:50.917,0:09:53.357 in preschool in Ann Arbor, Michigan,[br]and be worried 0:09:53.378,0:09:56.861 these little Wolverines will end up[br]moving to Ohio and becoming Buckeyes. 0:09:56.861,0:10:00.221 And so they'll both under invest[br]because everyone's going to move out. 0:10:00.221,0:10:03.127 Well, the reality is,[br]if you look at the data, 0:10:03.628,0:10:07.069 Americans aren't as hyper-mobile[br]as people sometimes assume. 0:10:07.754,0:10:11.864 The data is that over 60 percent[br]of Americans 0:10:12.937,0:10:15.374 spend most of their working careers 0:10:15.395,0:10:18.395 in the state they were born in,[br]over 60 percent. 0:10:19.113,0:10:22.258 That percentage does not vary much[br]from state to state. 0:10:22.993,0:10:25.993 It doesn't vary much[br]with the state's economy, 0:10:26.014,0:10:27.811 whether it's depressed or booming, 0:10:27.832,0:10:30.152 it doesn't vary much over time. 0:10:31.860,0:10:35.212 So the reality is, if you invest in kids, 0:10:36.609,0:10:38.507 they will stay. 0:10:38.528,0:10:41.528 Or at least, enough of them will stay 0:10:41.631,0:10:44.631 that it will pay off[br]for your state economy. 0:10:45.171,0:10:48.989 Okay, so to sum up,[br]there is a lot of research evidence 0:10:49.250,0:10:52.481 that early childhood programs,[br]if run in a high-quality way, 0:10:52.502,0:10:54.640 pay off in higher adult skills. 0:10:54.869,0:10:56.489 There's a lot of research evidence 0:10:56.510,0:10:59.510 that those folks will stick around[br]the state economy, 0:11:00.120,0:11:03.521 and there's a lot of evidence[br]that having more workers 0:11:03.542,0:11:05.736 with higher skills in your local economy 0:11:05.757,0:11:08.757 pays off in higher wages and job growth[br]for your local economy, 0:11:09.246,0:11:12.246 and if you calculate[br]the numbers for each dollar, 0:11:12.848,0:11:15.576 we get about three dollars back 0:11:15.597,0:11:17.771 in benefits for the state economy. 0:11:18.578,0:11:21.578 So in my opinion,[br]the research evidence is compelling 0:11:21.599,0:11:24.165 and the logic of this is compelling. 0:11:24.315,0:11:27.094 So what are the barriers[br]to getting it done? 0:11:27.878,0:11:30.470 Well, one obvious barrier is cost. 0:11:30.952,0:11:34.145 So if you look at what it would cost 0:11:35.194,0:11:37.752 if every state government invested 0:11:38.426,0:11:42.011 in universal preschool at age four,[br]full-day preschool at age four, 0:11:42.686,0:11:45.686 the total annual national cost[br]would be roughly 0:11:45.707,0:11:47.378 30 billion dollars. 0:11:47.978,0:11:50.402 So, 30 billion dollars is a lot of money. 0:11:50.705,0:11:53.380 On the other hand, if you reflect on 0:11:54.712,0:11:57.712 that the U.S.'s population[br]is over 300 million, 0:11:58.556,0:12:00.767 we're talking about an amount of money 0:12:00.788,0:12:03.407 that amounts to 100 dollars per capita. 0:12:03.478,0:12:06.455 Okay? A hundred dollars[br]per capita, per person, 0:12:06.551,0:12:09.551 is something that any state government[br]can afford to do. 0:12:10.429,0:12:13.615 It's just a simple matter[br]of political will to do it. 0:12:15.400,0:12:17.279 And, of course, as I mentioned, 0:12:17.300,0:12:19.453 this cost has corresponding benefits. 0:12:19.474,0:12:21.789 I mentioned there's a multiplier[br]of about three, 0:12:21.789,0:12:23.493 2.78, for the state economy, 0:12:23.514,0:12:26.514 in terms of over 80 billion[br]in extra earnings. 0:12:26.549,0:12:29.612 And if we want to translate that[br]from just billions of dollars 0:12:29.633,0:12:31.525 to something that might mean something, 0:12:31.546,0:12:34.937 what we're talking about is that,[br]for the average low-income kid, 0:12:35.204,0:12:38.204 that would increase earnings[br]by about 10 percent 0:12:38.225,0:12:41.429 over their whole career,[br]just doing the preschool, 0:12:41.489,0:12:44.003 not improving K-12[br]or anything else after that, 0:12:44.024,0:12:46.420 not doing anything[br]with college tuition or access, 0:12:46.441,0:12:48.865 just directly improving preschool, 0:12:48.986,0:12:51.706 and we would get[br]five percent higher earnings 0:12:51.727,0:12:52.801 for middle-class kids. 0:12:52.822,0:12:54.886 So this is an investment 0:12:54.960,0:12:57.867 that pays off in very concrete terms 0:12:57.888,0:13:01.754 for a broad range of income groups[br]in the state's population 0:13:02.249,0:13:05.451 and produces large and tangible benefits. 0:13:07.632,0:13:09.172 Now, that's one barrier. 0:13:09.193,0:13:12.193 I actually think the more profound barrier 0:13:13.013,0:13:16.961 is the long-term nature of the benefits[br]from early childhood programs. 0:13:17.022,0:13:19.945 So the argument I'm making[br]is, is that we're increasing 0:13:19.966,0:13:21.786 the quality of our local workforce, 0:13:21.807,0:13:24.292 and thereby increasing[br]economic development. 0:13:24.312,0:13:27.312 Obviously if we have a preschool[br]with four-year-olds, 0:13:27.748,0:13:30.115 we're not sending these kids out[br]at age five 0:13:30.136,0:13:31.976 to work in the sweatshops, right? 0:13:31.976,0:13:33.622 At least I hope not. 0:13:33.622,0:13:36.307 So we're talking about an investment 0:13:36.996,0:13:39.465 that in terms of impacts[br]on the state economy 0:13:39.486,0:13:43.251 is not going to really pay off[br]for 15 or 20 years, 0:13:43.474,0:13:46.331 and of course America[br]is notorious for being 0:13:46.443,0:13:49.098 a short term-oriented society. 0:13:49.464,0:13:51.363 Now one response you can make to this, 0:13:51.363,0:13:53.339 and I sometimes have done this in talks, 0:13:53.339,0:13:56.330 is people can talk about,[br]there are benefits for these programs 0:13:56.330,0:13:59.262 in reducing special ed[br]and remedial education costs, 0:13:59.287,0:14:01.621 there are benefits,[br]parents care about preschool, 0:14:01.642,0:14:03.843 maybe we'll get some migration effects 0:14:03.864,0:14:06.181 from parents seeking good preschool, 0:14:06.202,0:14:07.848 and I think those are true, 0:14:07.869,0:14:09.929 but in some sense[br]they're missing the point. 0:14:09.950,0:14:12.389 Ultimately, this is something 0:14:12.410,0:14:15.410 we're investing in now for the future. 0:14:16.380,0:14:19.380 And so what I want to leave you with 0:14:20.416,0:14:22.721 is what I think is the ultimate question. 0:14:22.742,0:14:25.575 I mean, I'm an economist,[br]but this is ultimately 0:14:25.596,0:14:27.756 not an economic question, 0:14:28.823,0:14:30.976 it's a moral question: 0:14:31.243,0:14:34.373 Are we willing, as Americans, 0:14:35.272,0:14:37.999 are we as a society still capable 0:14:38.940,0:14:42.634 of making the political[br]choice to sacrifice now 0:14:43.787,0:14:45.986 by paying more taxes 0:14:46.302,0:14:49.808 in order to improve the long-term future 0:14:51.578,0:14:54.629 of not only our kids, but our community? 0:14:54.979,0:14:58.296 Are we still capable of that as a country? 0:14:59.046,0:15:01.735 And that's something[br]that each and every citizen 0:15:01.756,0:15:04.298 and voter needs to ask themselves. 0:15:04.319,0:15:07.263 Is that something that you[br]are still invested in, 0:15:07.450,0:15:09.923 that you still believe[br]in the notion of investment? 0:15:09.923,0:15:11.676 That is the notion of investment. 0:15:11.676,0:15:13.777 You sacrifice now for a return later. 0:15:13.975,0:15:16.975 So I think the research evidence 0:15:17.597,0:15:20.234 on the benefits[br]of early childhood programs 0:15:20.255,0:15:22.999 for the local economy is extremely strong. 0:15:23.921,0:15:26.987 However, the moral and political choice 0:15:28.299,0:15:31.299 is still up to us,[br]as citizens and as voters. 0:15:33.244,0:15:36.244 Thank you very much.[br](Applause)