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From Talent Economy

Does the US Get a Good Return on its Investment in Education?

Problems persist in the United States’ educational system, but it remains among the most efficient countries in maximizing the billions of dollars it invests in education each year.

ROI, education attainment, resultsI come from a family with a long tradition of military service. One of the phrases I grew up hearing so often that it became slightly annoying was, “You have to have the right tools and talent.” Tools and talent was always said in such a way that you could really hear the emphasis on those two words more than the others, so when I was pulling the data for the Summer 2017 Talent Economy dashboard, I was most interested in data that dealt with the United States’ investment in talent, primarily through its investments in education. It’s no secret that education spending is a hot topic politically, with some arguing we should spend less while others saying we should spend more. Let’s examine what we actually spend.

According to the National Center for Education Statistics, the U.S. spent $620 billion on primary and secondary education in the 2012-13 academic year. In the 2013-14 academic year, post-secondary schools spent $517 billion. And according to World Bank estimates from 2011, the most recent year from which figures are available, U.S. spending on education accounted for roughly 13 percent of government expenditures.

Finding out how much public support there is for post-secondary educational institutions is a difficult and murky question to answer — since the waters are muddied by the federal student financial aid program and the division between state and federal responsibilities for post-secondary educational funding.

That seems like a staggering amount of money. What does it buy?

For one thing, the U.S. has an exceptionally educated labor force. About 67 percent of adults 25 years or older have at least some college education; roughly 73 percent and 74 percent of bachelor’s degree and advanced degree holders, respectively, above that age are employed. For comparison, only 57.5 percent of those in the 25 years or older age group are employed with only a high school diploma.

Great labor force participation isn’t the only thing that the country’s substantial investment in education buys. According to a report published by the Economic Policy Institute, a nonprofit think tank based in Washington, D.C., there is a probable link between educational attainment and productivity. After analyzing Bureau of Labor Statistics data for the time period 1979–2012, EPI found that states with increasing educational attainment also experience increased workforce productivity.

Comparing the United States’ performance in education against international competitors is even more complicated, because the international community measures educational attainment differently. According to United Nations data from 2014, the most recent year for which there is a substantive pool of participants, the U.S. had the fourth highest population percentage aged 25 or older having completed the International Standard Classification of Education level 5 or higher. ISCED level 5 roughly correlates to a U.S. associate degree.

It’s also difficult to compare domestic to international educational spending. As previously mentioned, in 2011 about 13 percent of U.S. government spending went toward education. Compare this to the international median of roughly 13 percent. The U.S. currently ranks 62ndof 110 countries for which the World Bank has data in 2011. While the U.S. may not prioritize educational spending at the same rate as other countries, it accomplishes a great deal with that money as evidenced by its educational attainment rates.

Does this translate into productivity metrics or monetary measures? There is currently no specific way to say that the U.S. educational system is the reason that the U.S. performs so competitively in the international economic arena. Though the U.S. ranked as the seventh highest GDP per capita in 2015, according to the World Bank, it is impossible to say that this is due exclusively (or even significantly) to education investment — although there are indicators that education is an essential part of U.S. economic strategy.

I hesitate to suggest that all is perfect in the U.S. educational system. There are many complicated structural issues that deserve critical examination, and Talent Economy may cover some of those in the future. But, in the quest to ensure an abundant supply of tools and talent, the U.S. has at least half of that equation covered.

Grey Litaker is a data scientist with Talent Economy’s research advisory unit, Talent Tracker. Comment below, or email editor@CLOmedia.com. Also, visit thetalenttracker.com.

This essay was originally published in Chief Learning Officer‘s sister publication, Talent Economy.

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