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A ‘Great Start’ can pay big dividends later
Published 8:45pm Tuesday, June 28, 2011As the author of a book which advocates local communities invest in high-quality early childhood programs as a good way to provide economic development benefits, Timothy J. Bartik directs his remarks at “skeptics” who might disagree.
- Timothy J. Bartik
“Early childhood programs obviously include preschool,” the economist for The Upjohn Institute for Employment Research said Tuesday morning at the Cass County Great Start Business Summit at Southwestern Michigan College, “but it also includes high-quality child care, high-quality parenting programs and partnerships.
“By economic development benefits, I simply mean increase in per-capita earnings. When you do cost-benefit analyses of what we usually think of as economic development, namely business tax abatements and incentives. If you look at them seriously, the main social benefit is that they increase per-capita earnings. They raise employment rates. They raise wage rates by attracting more and better jobs to the community.”
But so do early childhood programs, Bartik asserts.
“They do the same thing, but through a somewhat different mechanism,” the keynote speaker told about 30 people at SMC’s Mathews Conference Center.
“They increase the job skills as adults of former child participants. Many child participants will stay, so as a result you have a local economy with a high-quality labor supply that attracts more and better jobs, thereby raising local earnings. In the book, I argue that based on review of the research evidence, for each dollar you invest in high-quality early childhood programs, you get two to three dollars in economic development benefits.”
“One objection I know you’ve heard here in Michigan is that the former early childhood participants won’t stick around and will move to some foreign place like Columbus, Ohio,” Bartik said.
“However, research suggests that’s not true. Most people will stay. In the U.S., about three-fifths of all Americans remain in their childhood state for most of their working careers. Over half remain in their childhood metropolitan area for most of their working careers. These percentages don’t decline much with smaller metropolitan areas or, for that matter, depressed areas. Economic depression tends to affect in-migration rates more than out-migration rates.”
A second objection Bartik hears is that the approach of increasing the quality of the workforce doesn’t seem to directly create jobs the way business tax incentives do, to which he replies, “That overlooks what people call the ‘business climate’ is more than tax incentives. In fact, the higher quality labor supply is probably the key determinant today of the local business climate. We’re in a global economy. Everyone recognizes that. What that means is lower transportation and communication costs. Businesses are much more footloose. They don’t necessarily need to be located close to raw materials or close to their final markets because it’s easy to ship things, but they do need to be located close to their labor force. Probably the quality of the local labor force is the key factor today in driving regional competitiveness. Any number of studies show that if you increase labor supply, it will lead to increase in labor demand and creation of jobs.”
A third objection, Bartik said, “is that these returns are long-term. Obviously, you’re not taking 4-year-olds out of preschool to work in factories at age 5. However, you need to recognize that there are some significant short-term benefits of early childhood programs. Such programs help attract parents, boosting local property values. Even in the unlikely event that parents place zero direct value on early childhood programs, we do know from numerous studies that parents place a value on higher test scores in elementary schools.
“A number of studies have shown that if you take two very similar houses in similar neighborhoods except for one feature — elementary test scores. Test scores have significant effects on property values. Homebuyers are willing to pay higher prices for access to what they perceive as higher quality educational opportunities for their child. We know that early childhood programs have effects on third grade test scores, and we know that third grade test scores affect property values. Parents who don’t care about preschool care about third grade test scores. You find that every dollar you invest in high-quality preschool, the result is an increase of $13 in local property values.”
Critics also argue that effects of early childhood programs on test scores “fade” as children advance into higher grades in the K-12 system.
“This may tend to be more pronounced on ‘hard skills.’ Effect on ‘soft skills’ actually seems to increase over time,” Bartik said. “Hard skills are whatever reading and math tests measure. Soft skills are social and character skills — how you get along with peers, teachers and other authority figures. Self-confidence. Ability to plan and defer gratification. Those are soft skills. The general theory is that soft skills build on themselves. Most business people will tell you that in terms of what makes a worker employable is the degree to which they can get along with their co-workers, get along with their supervisor, relate to customers and reliably show up on time. Soft skills are at least as important as hard skills in determining the productivity of a worker.”
Bartik acknowledged that state legislators get “inundated” by “umpteen” special interests touting programs as “the greatest thing since sliced bread,” with the research to support it, leaving them “skittish and cynical.”
“The reality is that in the case of early childhood programs, we have much more rigorous evidence for success than we do have for virtually any other government program — and more than we do for the effectiveness of third grade. We cannot ethically or politically assign some kids not to go to third grade. But we don’t have rigorous evidence third grade is needed.”
He answers criticism of “hothouse programs run by researchers” in an extremely high-quality way that a state government or large urban school district could not hope to replicate.
“In fact,” Bartik said, “we have some very good studies showing more short-term benefits from typical state-local governments — Oklahoma, West Virginia, South Carolina, New Jersey, New Mexico, North Carolina and Michigan.
Those studies conclude, “One year of half-day preschool can raise student learning during that year by somewhere between 50 and 100 percent of what it otherwise would be,” Bartik said. “Chicago Public Schools showed reduction of crime and high effects on earning and employment rates. I submit to you that if all these states and Chicago Public Schools can run large-scale preschool programs, so can your average state and local government.”
Another complaint is that with K-12 systems facing challenges, why not fix that first?
“Two points,” he said. “Preschool programs have been run successfully by public school districts, but they can be run privately, which Michigan also does. If you want vouchers, some states have done that. The more important point is that there’s no contradiction or conflict between providing better quality early childhood programs and improving K-12. We can do both. Studies show that if we just improve preschool and do nothing to improve the K-12 system, we still get better results. In the case of preschool, the evidence actually suggests that the returns, the benefits, seem to be almost as strong for children in working-class and middle-class families as they are for children from low-income families. Oklahoma has close to a universal preschool system. Seventy-one percent of all 4-year-olds are in preschool funded by the state. Combine that with Head Start and you essentially have universal access. Another noteworthy factor, if you actually look at U.S. preschool enrollments, families with $100,000+ income have the highest preschool enrollments. Obviously, they perceive preschool provides some benefit for their kid. One explanation is that soft skills are hard to teach, even for the most diligent parents, outside of a preschool setting. High-quality half-day preschool costs $4,500 a year. It’s expensive if you don’t have government subsidy. Another argument you hear is that public funding is unfair,” like the prominent author who argued, “My wife and I are working to give our daughter a better chance to succeed than other children, therefore, it is unfair for government to work to raise up other people’s children.”
“A lot of people believe there’s a fixed amount of good jobs,” Bartik said, “and we’re all competing for them, so if your kid gets ahead, my kid’s in trouble. But that’s not really the way the economy works. Research suggests that everyone benefits when other people’s children get better educations. When a metropolitan area has a higher percentage of college graduates, the wages of all groups go up. In a local economy, the productivity of one business may be increased by higher skills at other businesses because businesses steal ideas and people from other businesses. The overall skills of a metropolitan area of other people’s children affect what kind of wages and opportunities I can have.”
Finally, why do kids need preschool when I didn’t?
“We’ve learned a lot about child development from brain research,” Bartik answers. “We probably did need preschool back then, but we didn’t know. I do think there have been some societal changes which make early childhood programs more important. There are more fragile families than there once were. We have to address the big issue of why there are fragile families, but given that there are, we have to do something to work with the kids we have. Payoffs not only occur for kids who receive services, but in the broader economy, with a spillover effect for everyone. States and local areas should be investing more in these programs as part of a comprehensive economic development strategy. You need to have good incentives and a good business climate in a more conventional sense, but you also need to invest in your human capital. But what we actually see occurring around the country is programs threatened and cut back. Most recently, the North Carolina Legislature overrode the governor’s veto and significantly cut the state’s early childhood programs, which were nationally recognized for their high quality. That’s not true in all states. Oklahoma’s are so established, nobody would think of cutting back. It varies.”
Michigan mixes “good news and bad news” on that front.
“The good news is that despite cuts in many areas of the budget,” he said, “funding for pre-K education was largely held harmless and, in fact, increased slightly. In addition, Gov. Snyder has decided to consolidate early childhood services within an office in the Department of Education for greater focus. However, that’s within a context where Michigan is behind the average state. For example, 16 percent of all Michigan 4-year-olds are currently enrolled in state-financed pre-kindergarten programs. That’s about one third below the national average of 27 percent. As I mentioned, Oklahoma has 71 percent.
“The other concern I have is that cuts made to K-12 are likely to spill over into reducing access to high-quality preschool programs. The state provides $3,400 for a half-day slot that costs $4,500 nationally. Since 2000, per-child funding for pre-K has grown 3 percent, but the Consumer Price Index in Detroit has grown 25 percent. A lot of school districts are essentially subsidizing pre-K. Will they continue to be willing to do that with K-12 cuts?”
Michigan “needs to step forward,” Bartik said, “and make a commitment to early childhood programs. First, increase the state subsidy to pre-K. I suggest at least from $3,400 to $4,000, which would at least make up some of the ground lost in the last 10 years. That would help make sure that local districts continue offering high-quality programs. If you lose the quality, there’s no point in having the access. The cost would be about $20 million a year. In the short run, Michigan might want to set a goal of matching the national average in terms of slots available for 4-year-olds. That requires a funding expansion of about a third, or $80 million — $100 million a year would about double what the state spends on pre-K. It’s a lot of money, but in the context of a $12 billion K-12 budget, it’s not very large. One hundred million dollars is about $10 per Michigan resident per year for a two to three times return to the economy. People would see a payoff, with a short-term increase in property values 13 times as great, so $100 million would give you a $1.3 billion increase in property values.
“Long term,” Bartik said, “Michigan needs to move toward more universally accessible pre-K for 4-year-olds, as well as flexible support for other early childhood programs. In my ideal world, the state would simply guarantee $4,500 for every 4-year-old who wanted to go to a half-day preschool,” be it public schools or private providers.
At the local level, the business community is key, Bartik said.
“People who operate child care and preschool programs will advocate for these programs, but those groups by themselves are not a sufficient political coalition. They need the support of some other group, which I think has to be the business community. Why should the business community make this a priority? Because you want to increase the quality of the labor force and early childhood programs have the most demonstrated bang for the buck.”
