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