The Best Investment
By: Dr. M. Ray Perryman
Published in syndication March 08, 2023
It goes without saying that education is extremely beneficial to individuals, the economy, and society. It brings lower unemployment and higher earnings. Options and opportunities are much more plentiful for those with high school diplomas and post-high school training. Available jobs are not only better paying, but often more personally satisfying. From the perspective of the economy, education is crucial to workforce preparedness and, therefore, prosperity. Long-term demographic trends are not working in our favor, and worker shortages will persist for decades. Texas is better positioned than many states due to our younger population and in-migration, but only if students are well prepared. Excellent public education is the single most important factor in securing our future prosperity.
Adequate resources are essential to quality public education, and State funding for schools yields unparalleled economic benefits. We recently estimated the magnitude of returns on incremental State investment in public schools, including spinoff and productivity gains (see www.perrymangroup.com for more detail).
We estimated that every incremental $1 the State invests in public education yields a total lifetime economic benefit of $56.76. The major channels of impact include direct private-sector benefits from student productivity and earnings ($17.24) and multiplier effects on incremental production ($31.38). Each dollar yields $26.21 in gross product and $16.12 in personal income.
There are also benefits in the form of additional long-term tax revenues ($6.99 for each $1 invested) and reduced costs from lower outlays for health care and various social services ($1.15). Thus, governmental entities receive more than $8 for every $1 expended. That's some return!
These benefits dwarf other types of public outlays. For example, transportation infrastructure, which is both highly beneficial and essential to the economy, yields an estimated economic return per dollar invested of $8.01. They're also well above those for any private-sector industry, where the maximum is $17.81 (less than one-third of the public education return).
This timing is particularly crucial to fund public schools, as students are still recovering from the pandemic. As was true throughout the country, Texas students lost significant ground, and it will take time and resources to bridge the gaps. The state's large proportion of students who are English learners or are economically disadvantaged also brings additional challenges. Given the funds available to the State at present, there is no excuse for deficiencies or delays.
The primary reason to provide sufficient resources to Texas public schools is for the students, both now and when they enter the workforce. They deserve nothing less than the opportunity for success and wellbeing. Beyond that, investment in education is the ultimate key to sustainable prosperity, not to mention the best investment by far in our economic portfolio. It's a "no brainer." Stay safe!