As Michael Bloomberg prepares his exit as New York City’s mayor, a new analysis suggests that his signature reforms of public education will comprise much of his legacy. Unsurprisingly, the reason is hard economics. Under his reforms, the share of NYC youths earning their high school diplomas and the share going on to college both rose sharply. For some 71,000 young New Yorkers, the “income premiums” associated with those improvements should add more than $15 billion to their lifetime incomes — and the benefits are not limited to those students. The study also found that home property values rose substantially in the neighborhoods where schools improved the most, by as much as $60 billion.
I conducted the study with my colleague Kevin Hassett, in conjunction with The Fund for Public Schools. We focused on changes in three objective measures of student performance: test scores by NYC public school students on statewide tests, high school graduation rates, and rates of college attendance.
We started with the test scores on statewide tests, to see if those scores tracked the improvements in graduation and college attendance rates. With other researchers, we found that they did: From 2006 to 2012, the “mean scale” scores of NYC students on English Language Arts tests rose two percent, twice the gains of all students across New York State. Similarly, NYC students’ scores on the statewide mathematics tests increased four percent, compared to a three percent gain across the State. Moreover, students from the poorest parts of the City, the Bronx and Brooklyn, showed the greatest improvements.
Students from low-income, minority backgrounds also account for much of the improvements in high-school graduation rates. From 2006 to 2012, the four-year graduation rate of NYC students increased from 49 percent to more than 60 percent, a jump of 23 percent. Progress by African-American and Hispanic students drove much of those increases. From 2006 to 2012, graduation rates for African-American students increased from less than 43 percent to 55 percent, a 28 percent jump. Similarly, the graduation rates of Hispanic students rose from 40 percent to nearly 53 percent, a 31 percent improvement.
It hardly bears repeating that students who graduate high school earn substantially higher incomes throughout the working lives than those who drop out. Economists use those differences to calculate the “net present value” of a high school diploma — the value in today’s dollars of the additional income which, on average, they will earn over their lifetimes. Today, that net present value comes to $218,000. Using 2006 graduation rates as our reference, we calculated that from 2008 to 2012, 41,000 more NYC public high school students earned their diplomas than would have occurred if the same share of students had graduated as in 2006. That tells us that the improvements in graduation rates under the Bloomberg reforms will raise their lifetime earnings by nearly $9 billion.
Similarly, from 2008 to 2012, nearly 31,000 more NYC public school students enrolled in institutions of higher learning than would have occurred if the college enrollment rates of NYC students in 2006 had persisted. To calculate the net present value of the additional lifetime income all of the additional NYC students who enrolled in college, compared to ending their educations with a high school diploma, we tracked the income differences, less the average cost of college tuition and their foregone income while in college. We found that the lifetime value of enrolling in college comes to $207,000, in today’s dollars – which tells us that the net present value of the additional income that the additional 31,000 NYC college attendees will earn comes to $6. 4 billion. On top of the income gains derived from higher high-school graduation rates, this suggests that improvements in student performance under Bloomberg’s reforms should raise the lifetime earnings of NYC students by some $15 billion.
Better schools also are associated with higher property values, so we tested whether these improvements had those effects in New York City. Using a technique that tests for statistical causality, called the “Granger Causality” test, we analyzed the relationship between changes in NYC property values by zip code, covering 94 NYC zip codes, and changes in graduation rates in those zip codes. It showed that each one percent improvement in the graduation rates in a zip code led to a 0. 53 percent increase in residential property values in that zip code, in the following year. On this basis, we estimate that NYC’s rising graduation rates from 2008 to 2012 have added more than $37 billion to the total value of NYC residential housing.
We also explored whether New York’s major expansion of charter schools has had economic effects. At a basic level, Bloomberg’s strategy granted schools and their principals much greater autonomy — and large funding increases to accompany it — in exchange for greater accountability for the results. The reforms also expanded school choice for NYC public school students, and then enhanced those choices by adding nearly 200 new public charter schools. This combination of greater accountability and enhanced choice intensified competition for students among schools, especially since funding follows the students.
While two national studies have found that across the country, charter schools do not outperform other public schools, three recent studies of NYC concluded that students at those schools perform better than students at other City public schools. We tested whether Bloomberg’s expansion of charter schools also has affected property values in the City, independent of changes in graduation rates. We found that across nearly 200 NYC zip codes, the addition of one new NYC charter schools in a zip code led to a 3. 8 percent increase in residential property prices in that zip code in the following year. Based on the expansion of those schools in this period, the results suggest that the charter-school reforms have added more than $22 billion to NYC residential property values. On top of the boost in property values tied to higher graduation rates, these results suggest that Bloomberg’s reforms have added nearly $60 billion to NYC residential property values.
Across the country, the record of educational reforms is mixed. Nevertheless, by several objective measures, the academic performance of New York City public school students has improved markedly under the reforms enacted since 2002. Moreover, those improvements can be expected to generate large income benefits for tens of thousands of New York City students, and they already have produced substantial economic benefits for New York City homeowners. These achievements deserve emulation.
This post was originally published on Dr. Shapiro's blog
After two years directing NDN’s Middle East and North Africa Initiative, I have accepted a new position in the private sector and my last day at NDN will be Friday, December 20th. NDN will remain engaged on foreign policy and I am excited to embrace new challenges on a more diverse portfolio of issues.
When we started this Middle East and North Africa Initiative two years ago our goal was to help change the conversation around the U.S. response to the transitions in the Arab world, emphasizing that achieving broad-based economic growth and employment opportunities would be inextricably linked to the success of these democratic transitions. We have worked with policymakers to help them understand the medium and long-term importance of American leadership in the region, published reports and op-eds, hosted countless meetings and events with key officials, and labored to create more collaborative platforms for diverse stakeholders to seek solutions to these challenges.
We are proud of the work that we have done. Though the landscape of the Middle East is quite different now than in early 2012, I am optimistic that opportunities for productive engagement remain. Identifying and acting on those opportunities is more important than ever, and going forward I hope to be able to continue that work in new and different ways. To the many committed and brilliant individuals who work tirelessly to bring about a better future for the Arab world and a brighter day for the U.S. relationship with the region: Thank you for your partnership and friendship.
My replacement has not yet been named, but stay tuned for an announcement early next year.
As I look ahead to next year in Washington, there are four major battles our experienced team and well-wrought arguments are poised to add considerable value to: the debate over proper domestic economic policy in a new age of globalization; the passage of new, consequential trade and economic liberalization agreements; better strategies and policies towards the Middle East and North Africa; and completing the nine year old effort to pass comprehensive immigration reform. There are other areas where we have, and will continue, to offer leadership – political reform, better understanding of the changing demographics in the US, and the way mobile tech is changing us – but these four areas will be where NDN puts its stake in the ground, and fights the good fight next year.
Your support today will help fuel these efforts. It will pay for staff and contract policy work, help us upgrade our technology and improve the marketing of our ideas, and just give us a bit more muscle to engage during this consequential time in our nation’s history. That’s why I hope you will give what you can - $5, $25, $100 or more – today and help us go into 2014 at full strength.
With the House Republicans demonstrating last week that they may try harder to advance the national interest now, more is possible next year. Not assured, not likely, but possible. And we will be doing what we do here at NDN – sophisticated thought and political leadership on tough challenges – to take advantage of this opportunity ensure that 2014 is not just a good year for the center-left, but the nation as a whole.
Thanks for all that you do for us, and for the many other worthy organizations out there doing good work.
Join NDN and the New Policy Institute founder and President Simon Rosenberg tomorrow, Wednesday, December 18th, 2-3:30pm for a Google+ Hangout roundtable discussion on the future strategy for immigration reform. Leading the discussion with a true all star cast is Luis Ubinas, Former President of the Ford Foundation.
The Reinventors team writes: "The current strategy for getting comprehensive immigration reform passed through Congress to become the law of the land is close – but no cigar. It’s doubtful that on its current trajectory that the bill will get across the finish line. It’s time to Reinvent Immigration Strategy. Luis Ubinas, recent president of the Ford Foundation and our anchor, thinks the basic strategy should shift to a focus on how Republicans have the most to gain from making immigration work. Given the current stall, what is a better short-term plan? What new tools or entrepreneurial approaches might shake up the status quo? If the current push falls short, then what’s plan B?"
More information is available here. We hope you can join us!
President Obama deserves at least two cheers for his recent economic address. In an unusually clear-eyed assessment of how the economy has shaped our current politics and national mood, he traced most people’s disillusion with government to their “daily battles to make ends meet.” The “defining challenge of our time,” he declared, is to make “sure our economy works for every working American.” For his part, the President pledged to devote his second term to restoring upward mobility and reducing inequality.
To make progress on these fronts, the President and many progressives should first step back from some common populist myths. In his address, for example, the President stressed the populist trope that the median income today is only 8 percent higher than it was in 1979. The clear implication is that middle-class Americans have been caught in an economic squeeze for nearly 35 years, and Washington should turn away from the policies of the 1980s and 1990s.
This view, at best, is only partly right. It is the case that today’s extraordinary inequality began in the latter-1970s. In 1976, the share of national income claimed by the top 1 percent of Americans fell to less than 9 percent, its lowest point in the 20th century. Since 1977, however, their share of the economy’s rewards has grown steadily and sharply, reaching more than 23 percent in 2008, its highest level since 1928. Nevertheless, most people’s incomes continued to grow at reasonable rates through the 1980s and 1990s. If that strikes many Americans as implausible from today’s vantage, it’s only because much of those income gains were swept away over the last decade. The challenge of restoring upward mobility comes mainly from what has happened economically since 2002.
Here is what has really happened to incomes, based on data released recently by the Census Bureau. Across all households – all ages, races, and both genders -- the inflation-adjusted median income increased by an average of 1.7 percent per-year from 1983 to 1989, or by nearly 12 percent over the course of the Reagan expansion. The recession of 1990-1991 took back about one-third of that progress, leaving a typical middle-class household with net income gains of just under 8 percent from 1983 to 1991. Those gains were followed by more income growth through the Clinton expansion, averaging another 1.4 percent per-year after inflation. The recession of 2001 took back one-fifth of those gains, leaving a typical middle-class household with net income growth of more than 10 percent from the 1990s and 18 percent from 1982 to 2002. Nor did upward mobility stall out in this period: Throughout the 1980s and 1990s, those who had long lagged behind achieved the greatest gains, namely, households headed by African Americans and by women.
The income squeeze most Americans feel today owes its bite almost entirely to the developments of the last decade. Through the Bush expansion of 2002 to 2007, household income growth plummeted to just 0.2 percent per-year. Moreover, those meager gains were followed by the Great Recession, which cost the average household an unprecedented 5 percent of their incomes. Those losses wiped out not only all of the income growth from 2002 to 2007, but also 40 percent of the net gains of the 1990s. Even worse, the economic damage from the 2008-2009 crisis, on top of some new problems, continued to eat away at incomes. In 2010-2011, American households gave back, on average, another 4 percent of their incomes. Those losses finally stabilized in 2012, when household incomes were virtually unchanged. All told, the median income of American households declined nearly 10 percent from 2002 to 2012.
To get out of this hole, policymakers have to confront the two new dynamics which largely define the last decade economically, globalization and technological change. There is no possible retreat from globalization, a historic advance that has drastically reduced poverty across much of the world and driven innovation and cost savings here at home. But the intense competition generated by globalization also produces unprecedented pressures on businesses to cut their costs, and then directs those pressures to jobs and wages. Policymakers can help relieve some of those cost pressures, starting with a stronger commitment to contain the health care costs for both employers and workers. They also could help jumpstart stronger job creation with financial reforms that link a bank’s access to the Fed’s virtually-free funds to its willingness to provide capital for young businesses.
Washington also can help tens of millions of Americans to upgrade their skills for an economy that now provides few rewards for those without the training and skills to operate effectively in workplaces dense with information and internet technologies. For a modest cost, for example, the federal government can provide grants to hundreds of community colleges to keep their computer labs open and staffed on weekends and evenings, so any adult can walk in and receive free training in information and internet technologies.
The economic record also tells us that the government got a number of things right in the 1980s and 1990s. As in the 1950s and 1960s, usually sensible macroeconomic policies tempered the business cycles, especially after dealing with the oil-shock inflations of the 1970s. Successive presidents and congresses also continued to liberalize trade in the 1980s and 1990s, encouraging businesses and workers to shift their resources to areas where they held powerful advantages even as Germany, Japan and other advanced countries began to compete actively again. And from the late 1970s onward, Washington reinforced those advantages by deregulating transportation, telecommunications, and other sectors -- including finance, where policymakers went too far in the late 1990s.
Public investments in infrastructure remained generally robust until the 1990s, and even then, the private sector sunk tens of billions of dollars into new information and telecommunications infrastructure. Higher education programs helped tens of millions of Americans expand their human capital, building on the GI Bill of the 1950s and 1960s with major expansions in student assistance in the 1980s and 1990s. And science and technology policies continued to promote innovation by aggressively funding government research institutes and through technology competitions sponsored by the Pentagon (including the internet).
To restore income gains and upward mobility, Washington also needs to revisit what works. Recommit macroeconomic policy to healthy growth by ending mindless austerity and doubling down on public investments in infrastructure and basic research and development. Further expand the markets for innovative American goods and services by completing the current trade liberalization talks with the European Union and much of Asia. Help millions of young people complete their higher education by reforming student assistance – for example, by replacing most current loan and grant programs with federally-funded free tuition at public institutions that limit their future cost increases to overall inflation.
There is no iron-clad guarantee that these approaches will restore the reasonable income gains of the 1980s and 1990s, much less the stronger progress seen in the 1950s and 1960s. Nevertheless, they provide a credible place to begin, one based on the real economic record and the actual nature of our economic problems.
This post was originally published on Dr. Shapiro's blog
“Today’s upbeat jobs news is, simply put, quite good news. Yes, the sharp dip in unemployment from 7.3 percent in October to 7.0 percent in November, with gains of 203,000 nonfarm jobs, reflects in part the return of furloughed federal workers and those whose jobs depend on them. But the November gains were so substantial, because the government shutdown obscured steady improvements in the jobs market through both October and November. That’s why the jobless rate dropped three-tenths of a percent even as labor force participation rose, average working hours increased, and the number of part-time workers who want full-time work declined steeply. And this is the second encouraging report in two days -- we found out yesterday that GDP grew at a 3.6 percent rate in the third quarter. All of this helps explain why the largest employment gains last month came not in government, but in consumer-sensitive areas such including manufacturing, health care and transportation and warehousing.”
On November 22, NDN and the New Policy Institute were honored to welcome Alan Bersin, Assistant Secretary of International Affairs and Chief Diplomatic Officer at the US Department of Homeland Security (DHS), to discuss the deepening and vital US-Mexico bilateral relationship.
You can watch the discussion here:
A/S Bersin highlighted how increasingly coordinated US-Mexico efforts on security that were “unthinkable 15 years ago” are paving the way for a greater focus on shared economic prosperity and global competitiveness. This year US and Mexico officials committed to joint border patrols and to work to strengthen Mexico’s rule of law on its border with Guatemala. The vision of our shared US-Mexico border is shifting from a divisive line to the focal point of “the movement of goods, people, ideas, [and] images on a massive scale back and forth between our two countries.” While there is still much work to do on issues of security, immigration reform, and bilateral communications, the prospects for a shared future are bright. That is especially evident when considering the $1.4 billion dollars worth of trade crosses the US-Mexico border per day and the endless prospects for educational and energy exchange.
A/S Bersin and NDN remain confident that Congress is not as divided on immigration reform as commonly believed and that it can pass meaningful reform that further develops this relationship with our southern neighbor. (See our recent discussion with Reps. Garcia, Denham, and Horsford).
As A/S Berson stated: "el futuro ya no es lo que era antes" (“the future isn’t what it used to be”). The “future of the next 50 years, if we continue to get this right, is actually the US-Mexico Relationship and more broadly the North American relationship.”
On December 5th, 2013 – NDN’s Middle East and North Africa Initiative hosted a discussion with Rep. Adam Smith, Ranking Member of the House Armed Services Committee. Topics covered include economic and diplomatic engagement, Iran, Egypt, Syria, military aid, and a broader regional strategy. Full video of the event is available below.
“There isn’t much to actually do in Dakhla, but it’s a beautiful place to just be.” This aphorism came from a middle-aged Moroccan woman seated next to me as we flew into the small coastal city in the Western Sahara. She was right that Dakhla is gorgeous, but if the Moroccan government sees its vision come to pass, there will soon be much more than beaches and dunes to attract people to the city, and much more to do.
The small metropolis of 170,000 barely existed a decade a ago, but after millions of dollars of investment it now boasts greatly expanded infrastructure, housing, business activity, and stands ready to play an important role at the front lines of Morocco’s plan to become a platform for access to the greater African continent. The continually expanding port now supplies over three quarters of the seafood in Morocco in addition to growing exports to Europe, Asia, and Latin America. Meanwhile, the last ten years have seen the creation of over 3,000 small and medium sized businesses in the area. And this growth is no accident. Now that the violence between the Polisario Front and the Moroccan government is in the distant past and a final negotiated settlement appears eventually inevitable — the government believes that Dakhla and the greater south are positioned to be one of the first success stories of the new economic regionalization plan and can serve as a springboard for investments from international corporations interested in serving larger markets in west and central Africa.
Since the uprisings of the Arab Spring, the Kingdom of Morocco has fared far better than many of its neighbors, with a new constitution ushering in several years of reform rather than revolution. This has allowed the country to set itself apart from some regional competitors and left it prepared to leverage its significant advantages in banking, location, and stability — key considerations for succeeding on a continent that is quickly becoming harder and harder for corporations to ignore. Africa already represents more consumer spending than Russia with a larger GDP than Brazil and Russia combined. Over the next decade those numbers are projected to grow tremendously as 17% of the world’s population will call Africa their home by 2020 and rapid urbanization and economic growth will continue to expand the middle class.
It is often said in Morocco that Tangier is their gateway to the north while Dakhla is their gateway to the south. With free trade agreements in place with the United States, EU, Turkey, and several Arab countries, the government appears to have the international structures in place that can compliment their long term investments in education and governance — critical to realizing their vision of becoming a regional platform and keeping those doors wide open. When King Mohammed VI visits Washington, DC this week to there will surely be discussions about security cooperation and cultural dialogue. But rest assured that the delegation will also be looking to put on their best business-friendly face as they roll out the welcome mats to potential investors. At a time when stable governments in the region seem scarce and economic diplomacy has become the norm rather than the exception, the Moroccans are likely to find a warm reception.
NDN thanks Representatives Joe Garcia (D-FL), Jeff Denham (R-CA), and Steven Horsford (D-NV), as well as TV host and reporter Fernando Espuelas for joining us today for a discussion of immigration reform.
Reps Garcia and Horsford are original sponsors of House comprehensive immigration reform bill H.R. 15, and Rep Denham is the first Republican cosponsor. Whether via that bill or others, all are united in their determination to continue working on immigration reform this year. They challenge the House to "have a full debate on these issues," to bring bills to the floor, and to pass legislation that boosts the US economy, creates jobs, secures our future workforce, secures our borders, and brings 11 million people out of the shadows. They are confident there is enough support in the House to pass meaningful immigration reform.
Representative Denham hinted there would be more Republican cosponsors of H.R. 15 coming soon, but also mentioned other possible bills from Reps Issa and Cantor. He encouraged advocates to ask their Members who don't support existing legislation 'what they do stand for' so that together, Republicans and Democrats can reach a solution that fixes our broken immigration system.
In case you missed it, the video is available here:
"It's time for all of us to work together to get comprehensive immigration reform done now....The support is there in a bipartisan way," said Rep. Horsford.
Also see the following articles covering the event: