The Economic Case for Investing in Preschool Education

Investing in early childhood education isn't just a feel-good initiative; it's a strategic move for state economic development. While the benefits to individual participants are well-documented, the broader impact on state economies often goes unnoticed. This article explores why state governments should prioritize early childhood programs as a key driver of economic growth and prosperity.

Promoting State Economic Development Through Early Childhood Education

Traditionally, when states seek to boost their economies, they turn to business tax incentives, property tax abatements, and job creation tax credits. These measures aim to attract new businesses and stimulate job growth. However, investing in high-quality preschool programs offers a powerful, albeit more indirect, approach to achieving the same goals.

Building a Skilled Workforce: High-quality preschool education develops the skills of the local workforce. A more skilled workforce attracts businesses and drives job creation.
Increased Earnings: Investing in early childhood education leads to higher per capita earnings for state residents.

The Research Evidence: A Compelling Return on Investment

Extensive research demonstrates the positive impact of early childhood programs on educational attainment, wages, and skills of former participants. By analyzing these effects, along with data on workforce retention and the link between skills and job creation, a clear picture emerges:

For every dollar invested in early childhood programs, the per capita earnings of state residents increase by $2.78.
Including additional benefits, the return on investment can be as high as 16 to 1.

This substantial return makes a compelling case for state investment in early childhood education.

Addressing the Objection: "Why Should I Pay for Other People's Children?"

A common objection to investing in early childhood programs is the sentiment that taxpayers shouldn't have to foot the bill for other people's children. However, this view overlooks the interdependence of local economies and the significant spillover effects of skills.

The Spillover Effects of Education

Research consistently shows that the skills of an area are a primary driver of economic growth. Metropolitan areas with high levels of education, like Boston, Minneapolis-St. Paul, and Silicon Valley, thrive not because of low costs, but because of their skilled workforce.

Increased Job Growth: Investing in early childhood education builds skills, leading to increased job growth in the metropolitan area.
Higher Wages: The education level of the entire metropolitan area positively impacts individual wages, even for those whose own education level remains unchanged.

These spillover effects demonstrate that investing in early childhood education benefits everyone in the community, regardless of whether they have children in the program.

The Impact of College Degrees

Interestingly, the spillover effects of someone obtaining a college degree on the wages of others in the metropolitan area are greater than the direct effects on the individual's earnings. While an individual with a college degree may see a significant increase in lifetime earnings, the collective increase in wages for everyone else in the metropolitan area is even larger.

Why Skills Matter

Even the most skilled individual can be limited by the skills of those around them. If colleagues, suppliers, or even competitors lack skills, it can hinder productivity and competitiveness, ultimately impacting wages. In high-tech industries, where innovation and collaboration are crucial, the skills of the entire workforce are essential for success.

Overcoming Barriers to Investment

Despite the compelling evidence, several barriers hinder investment in early childhood programs.

The Cost Factor

Implementing universal, full-day preschool for four-year-olds nationwide would cost an estimated $30 billion annually. While this may seem like a significant sum, it translates to roughly$ 100 per capita, an amount that any state government can afford with sufficient political will.

The Long-Term Nature of the Benefits

The benefits of early childhood education, in terms of workforce quality and economic development, typically materialize 15 to 20 years after the initial investment. This long-term perspective can be a challenge in a society often focused on short-term gains.

A Moral Imperative

Ultimately, the decision to invest in early childhood education is not just an economic one; it's a moral one. Are we, as a society, willing to sacrifice now to improve the long-term future of our children and our communities? This is a question that each citizen and voter must ask themselves.

Investing in early childhood education is an investment in our future. It's a commitment to building a stronger, more prosperous society for all.