Closing the Achievement Gap

During the recent struggle over collective-bargaining rights in Wisconsin, a number of left-of-center observers, including New York Times columnist Paul Krugman, pointed out that students in unionized Wisconsin do better on average than students in non-unionized Texas. The obvious conclusion, or so we were led to believe, is that teachers’ unions lead to better education.

There is, however, a problem with this argument. Drawing on data from the 2009 National Assessment of Educational Progress, the political commentator David Burge pointed out that white students in Texas outperform white students in Wisconsin, black students in Texas outperform black students in Wisconsin, and Hispanic students in Texas outperform Hispanic students in Wisconsin. This may look like a statistical paradox; Wisconsin does better on average, even though all groups do worse in Wisconsin. But there is an explanation: Wisconsin has a considerably larger share of white students than Texas, and white students tend to fare better than black and Hispanic students. This example highlights the increasing importance of demographics to the American education debate.

It is not difficult to understand the sources of the achievement gap. Particularly when confronted with the fact that more K–12 spending hasn’t generally meant better educational outcomes, even defenders of the teachers’ unions often highlight the role of poverty, family disruption, and historical disadvantage in limiting the ability of black and Hispanic students to thrive in school. As a general rule, native-born non-Hispanic whites have reaped the benefits of many generations of relative peace and prosperity. And this long experience of prosperity has contributed to the intergenerational transmission of wealth, tacit knowledge, and social networks that can give one a leg up. Social capital might also contribute to the stability of non-Hispanic white families, in which children are typically raised by both biological parents.

This is in stark contrast to the experience of African Americans, in no small part because of the lingering legacy of enslavement and segregation. {snip}

America’s Hispanic population, much of which has its origins in Mexico, faces its own set of challenges. Family breakdown is not as severe among Hispanics as it is among blacks, but it is still troubling, with 53 percent of Hispanics born out of wedlock. {snip}

Over time, the gap between the children of Mexican immigrants and the children of native-born parents tends to shrink but not disappear. Perhaps we should not be surprised that those with illiterate grandparents in rural Mexico are on average less likely to succeed than those with grandparents who led a prosperous middle-class life in the suburbs of Boston or Detroit.

{snip} But if our K–12 students are having a much harder time because of a complex, interrelated set of social problems, what are the implications for our economic future? What are we to make of the fact that a unionized public-education system in Wisconsin failed to meet these challenges, while the Texas model (when properly measured) has proven more successful?

We take no joy in bringing attention to a neglected problem: the ongoing lowering of the skill level of the U.S. work force. This phenomenon is caused by two factors: the stubborn achievement gap between ethnic minorities and the majority population, and the demographic transformation of the work force, which will soon have a “majority minority” composition. {snip}

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The sheer size of America’s racial and ethnic disparities may surprise readers. According to the latest statistics from the Census Bureau, the per capita income of whites is 76 percent higher than that of African Americans, and an astonishing 101 percent higher than that of Hispanics. {snip} One recent estimate shows that about one-sixth of whites do not graduate from high school. The corresponding figure is twice as high for African Americans, and nearly three times as high for Hispanics. Even after years of focused attention on the achievement gap, the differences in income and educational attainment between whites and minority groups are roughly the same now as they were a generation ago. {snip}

The Left often argues that the root cause of disparities in earnings is structural racism and discrimination. But a new study by economist James Heckman demonstrates that the disparities largely vanish once differences in skills are taken into account. This confirms similar findings in a study by the University of Chicago’s Derek Neal and another by Harvard University’s Roland Fryer. Overall, Hispanics and blacks who attain the same test scores as whites do not earn lower wages and are no less likely to enter college. We believe that disadvantages earlier in life account for the existence of skill disparities. Being assigned to worse schools and having a less stable family environment cause members of minority groups to enter the labor market with fewer skills than whites do, and therefore to earn less. But discrimination in the labor market itself does not appear to be the main explanation for the differences we have discussed.

The achievement gap is not new, but its impact on U.S. economic performance is growing. The reason for this is simply that the number of minority-group members, in particular Hispanics, as a share of the population is rising. {snip}

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It is very difficult to predict the trajectory of future economic growth. We can, however, offer crude estimates by drawing on what we know about the relationship between the skill level of workers and overall economic growth. Per capita GDP growth has already been dampened by the combination of an increasing Hispanic population share and a persistent ethnic gap in average income. In the coming four decades, the effect of demographic change is expected to be even more dramatic.

Let us extrapolate the historical average of 2 percent annual per capita income growth until 2050, and take aging and demographic change into account. Aging will shrink the working-age population, bringing income growth down to about 1.75 percent. Also, whites and Asians will go from two-thirds to a little over half of the working-age population–and the effect of that shift will depend on changes in the achievement gap.

The worst-case scenario is that the gaps between whites and non-whites in education and earnings will not change. In this scenario, the skills and earnings of the American work force decline, and per capita income growth falls to 1.49 percent per year. However, if we assume that policy reform or assimilation will close half of the educational-achievement gap by 2050, and that this in turn will close the earning gap by half, then the average growth rate per capita will be 1.85 percent per year. In this second scenario, the growing Hispanic population not only doesn’t reduce income growth, but actually mitigates some of the effects of population aging.

Comparing the two scenarios vividly illustrates the economic value of closing the achievement gap. The alternative futures available to us are an economy producing $38 trillion per year and an economy producing $44 trillion per year.

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According to the OECD, the United States currently spends over $1 trillion per year on education, more than 8 percent of its national income. This makes the U.S. the second-highest spender on education among industrialized nations, whether we measure by share of national income or absolute dollars per pupil. Expenditure per pupil in elementary and secondary school is now in excess of $10,000 per year. Adjusted for inflation, this is two and a half times the sum that was spent per pupil in 1970, according to the Digest of Education Statistics. Despite this spending increase, reading and math test scores were virtually flat over the same time period, while, as mentioned above, high-school-graduation rates actually declined.

We know by now that increased funding will not miraculously close the achievement gap. We also know that there is no single recipe for improving educational outcomes for minority students. Reducing the influence of the teachers’ unions seems to be an important first step, as Texas’s experience suggests. {snip}

Closing the achievement gap through new methods and new policy is not impossible, as gains made in recent years by black students demonstrate. In a recent study, Harvard economist Roland Fryer found that African-American students who entered high-quality charter schools in the Harlem Children’s Zone scored as well in mathematics as white children nationally.

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What hasn’t happened, and what needs to happen, is for middle-class voters to recognize that the achievement gap isn’t some sentimental side issue that shouldn’t concern serious people. Rather, it is absolutely central to America’s economic future.