The Long Term Labor Market and Fiscal Consequences of

Dropping Out of High School in Pennsylvania

Paul E. HarringtonCenter for Labor Market Studies

Northeastern UniversityBoston, Massachusetts

November 2008

Expected Lifetime Earnings of the 18 to 64 Year Old Civilian,

Non Institutional Population of Pennsylvania and the U.S., By Level of Educational Attainment, 2006 Cross Section.

(Excluding 18 to 22 Year Old Students)

$660,386

$1,037,809

$1,311,313

$2,047,449

$2,827,162

$1,432,050

$661,129

$1,053,854

$1,367,638

$2,161,306

$2,973,651

$1,489,139

$- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000

<12 or 12, No HS Diploma

HS Diploma/GED

1-3 Years of College

Bachelor's Degree

Masters or Higher Degree

Total

Pennsylvania U.S.

Expected Mean Annual Incidence of Work over the Year of the 18 to 64 Year Old Civilian, Non Institutional Population

of Pennsylvania and the U.S., By Level of Educational Attainment, 2006 Cross Section (Excluding 18 to 22 Year

Old Students)

61.0

78.9

84.8

88.7

90.2

81.4

65.2

78.9

84.5

88.0

89.9

81.3

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

<12 or 12, No HSDiploma

HS Diploma/GED

1-3 Years of College

Bachelor's Degree

Masters or HigherDegree

Total

Pennsylvania U.S.

Expected Mean Annual Hours of Work of the 18 to 64 Year Old Civilian, Non Institutional Population of Pennsylvania and the U.S., 2006, By Level of Educational Attainment

Cross Section. (Excluding 18 to 22 Year Old Students)

1,056

1,474

1,601

1,722

1,865

1,545

1,120

1,467

1,604

1,737

1,852

1,542

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

<12 or 12, No HSDiploma

HS Diploma/GED

1-3 Years of College

Bachelor's Degree

Masters or HigherDegree

Total

Pennsylvania U.S.

Expected Mean Annual Hourly Pay of the 18 to 64 Year Old Civilian, Non Institutional Population of Pennsylvania and the U.S., By Level of Educational Attainment, 2006 Cross

Section. (Excluding 18 to 22 Year Old Students)

$13.31

$14.98

$17.42

$25.30

$32.26

$19.72

$12.56

$15.28

$18.14

$26.47

$34.16

$20.54

$- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00

<12 or 12, No HSDiploma

HS Diploma/GED

1-3 Years of College

Bachelor's Degree

Masters or HigherDegree

Total

Pennsylvania U.S.

Trends in the Expected Lifetime Earnings of the 18 to 64 Year Old Population of Pennsylvania, by Level of

Educational Attainment, 2006 Cross Section. (Excluding 18 to 22 Year Old Students)

1979 1989 1999 2006 Absolute Change

Relative Change

<12 or 12, No HS Diploma $821,787 $759,676 $753,705 $660,386 $-161.401 -19.6% HS Diploma/GED $1,106,794 $1,084,217 $1,102,202 $1,037,809 $-68.986 -6.2% 1-3 Years of College $1,379,174 $1,463,661 $1,428,562 $1,311,313 $-67.861 -4.9% Bachelor's Degree $1,981,180 $2,215,099 $2,178,683 $2,047,449 $66.269 3.3% Masters or Higher Degree $2,533,395 $2,786,751 $2,889,288 $2,827,162 $293.767 11.6% Total $1,217,883 $1,354,968 $1,469,064 $1,432,050 $214.167 17.6%

Trends in the Relative Size of the Expected Lifetime Earnings of High School Dropouts Compared to the

Expected Lifetime Earnings of All Persons Aged 18 to 64 in Pennsylvania, 1979 to 2006 (Excluding 18 to 22 Year Old

Students)

67%

56%

51%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1979 1989 1999 2006

Fiscal Contributions by Educational Attainment

The Mean Net Annual Fiscal Contributions of 18-64 Year Old Adults in Pennsylvania and the U.S. by Educational Attainment, Annual Averages,

2004-2006 (Dollars)

Educational Attainment

Mean Annual

Total Tax Payments

Mean Annual Total Transfers and

Institutionalization Costs

Annual Net Fiscal Contributions (total tax payments minus total transfers and institutionalization

costs)

Pennsylvania<12 or 12, No HS Diploma $7,106 $7,789 $-683HS Graduate or GED 10,097 4,030 6,0671-3 Years of College 12,358 2,873 9,485Bachelor's Degree 18,124 1,162 16,962Master's or Higher 29,519 1,336 28,183All education levels 13,713 3,317 10,396

U.S.<12 or 12, No HS Diploma $5,721 $6,382 $-661HS Graduate or GED 9,513 3,824 5,6891-3 Years of College 12,670 2,704 9,966Bachelor's Degree 19,797 1,365 18,431Master's or Higher 28,750 1,266 27,484All education levels 13,600 3,152 10,448

The Lifetime Net Fiscal Contributions of Adults (18-64) in Pennsylvania and the U.S. by Educational Attainment, 2004-2006 Averages (in Thousands of Dollars)

-32

273

408

695

1,071

-31

256

429

756

1,044

-200

0

200

400

600

800

1,000

1,200

<12 or 12, No HSDiploma

HS Graduate orGED

1-3 Years ofCollege

Bachelor'sDegree

Master's orHigher

Th

ou

san

ds

of

Do

llar

s

Pennsylvania U.S.

The Ratios of Mean Annual Tax Payments to the Combined Value of Cash and In-Kind Transfers and Institutionalization Costs (Net Fiscal Contribution Ratios) of 18-64 Year Old Residents of Pennsylvania and the U.S. by Educational Attainment

0.91

2.51

4.30

15.59

22.10

0.90

2.49

4.69

14.50

22.70

0

5

10

15

20

25

<12 or 12, No HSDiploma

HS Graduate orGED

1-3 Years ofCollege

Bachelor'sDegree

Master's orHigher

Pennsylvania U.S.

Trends in the Expected Mean LifetimeEarnings of All 18 to 64, by

Educational Attainment, Pennsylvania

Total 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 821,787$ 660,386$ (161,401)$ -19.6%HS Diploma/GED 1,106,794$ 1,037,809$ (68,986)$ -6.2%1-3 Years of College 1,379,174$ 1,311,313$ (67,861)$ -4.9%Bachelor's Degree 1,981,180$ 2,047,449$ 66,269$ 3.3%Masters or Higher Degree 2,533,395$ 2,827,162$ 293,767$ 11.6%

Total 1,217,883$ 1,432,050$ 214,167$ 17.6%

Labor Force Participation Rate of the Non Enrolled Population Aged 16 to 24 in

Pennsylvania, 2006

Labor Force

Population, 16-24

Labor Force Participation

Rate

<12 or 12, No H.S. Diploma 86,502 137,234 63.0%H.S. Diploma/GED 275,788 337,309 81.8%1-3 Years of College 156,851 175,999 89.1%Bachelor's or Higher Degree 89,178 96,343 92.6%

Total 608,319 746,885 81.4%

Labor Force Participation Rate of the Female Non Enrolled Population Aged 16 to 24

in Pennsylvania, 2006

Labor Force

Population, 16-24

Labor Force Participation

Rate

<12 or 12, No H.S. Diploma 34,115 57,840 59.0%H.S. Diploma/GED 108,254 147,583 73.4%1-3 Years of College 81,601 92,943 87.8%Bachelor's or Higher Degree 51,814 56,164 92.3%

Total 275,784 354,530 77.8%

Labor Force Participation Rate of the Male Non Enrolled Population Aged 16 to 24 in

Pennsylvania, 2006

Labor Force

Population, 16-24

Labor Force Participation

Rate

<12 or 12, No H.S. Diploma 52,387 79,394 66.0%H.S. Diploma/GED 167,534 189,726 88.3%1-3 Years of College 75,250 83,056 90.6%Bachelor's or Higher Degree 37,364 40,179 93.0%

Total 332,535 392,355 84.8%

Employment to Population Ratio of the Non Enrolled Population Aged 16 to 24 in

Pennsylvania, 2006

EmployedPopulation,

16-24Employment

Rate

<12 or 12, No H.S. Diploma 74,010 137,234 53.9%H.S. Diploma/GED 241,623 337,309 71.6%1-3 Years of College 146,256 175,999 83.1%Bachelor's or Higher Degree 82,089 96,343 85.2%

Total 543,978 746,885 72.8%

Employment to Population Ratio of the Female Non Enrolled Population Aged 16 to 24

in Pennsylvania, 2006

EmployedPopulation,

16-24Employment

Rate

<12 or 12, No H.S. Diploma 30,458 57,840 52.7%H.S. Diploma/GED 93,585 147,583 63.4%1-3 Years of College 75,833 92,943 81.6%Bachelor's or Higher Degree 46,826 56,164 83.4%

Total 246,702 354,530 69.6%

Employment to Population Ratio of the Male Non Enrolled Population Aged 16 to 24 in

Pennsylvania, 2006

EmployedPopulation,

16-24Employment

Rate

<12 or 12, No H.S. Diploma 43,552 79,394 54.9%H.S. Diploma/GED 148,038 189,726 78.0%1-3 Years of College 70,423 83,056 84.8%Bachelor's or Higher Degree 35,263 40,179 87.8%

Total 297,276 392,355 75.8%

Unemployment Among the 16 to 24 Year Old Pennsylvania Non Enrolled Population, 2006

Educational Attainment UnemployedLabor Force

Unemployment Rate

<12 or 12, No H.S. Diploma 12,492 86,502 14.4%H.S. Diploma/GED 34,165 275,788 12.4%1-3 Years of College 10,595 156,851 6.8%Bachelor's or Higher Degree 7,089 89,178 7.9%

Total 64,341 608,319 10.6%

Labor Market Underutilization of the Non Enrolled

16-24 Year Old Pennsylvania Population, 2006

Educational Attainment Unemployed

Working Part-Time for

Economic Reason

Labor Force

ReserveUnderutilized

PoolAdjusted

Labor ForceUnderutilization

Rate

<12 or 12, No H.S. Diploma 12,492 4,695 12,176 29,363 98,678 29.8%

H.S. Diploma/GED 34,165 19,681 14,980 68,826 290,768 23.7%

1-3 Years of College 10,595 7,489 4,067 22,151 160,918 13.8%

Bachelor's or Higher Degree 7,089 5,164 3,753 16,006 92,931 17.2%

Total 64,341 37,029 34,976 136,346 643,295 21.2%

Trends in the Expected Mean Work Rate of All Persons 18 to 64, by

Educational Attainment, Pennsylvania

Total 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 59.8 61.0 1.2 1.9%

HS Diploma/GED 75.0 78.9 4.0 5.3%

1-3 Years of College 81.8 84.8 2.9 3.6%

Bachelor's Degree 87.0 88.7 1.8 2.1%

Masters or Higher Degree 92.2 90.2 -2.0 -2.1%

Total 74.0 81.4 7.4 10.0%

Trends in Expected Mean Work Rate of Females Aged 18 to 64, by Educational Attainment

Pennsylvania

Female 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 42.1 51.1 9.0 21.4%

HS Diploma/GED 61.9 72.9 11.0 17.8%

1-3 Years of College 70.8 80.6 9.8 13.9%

Bachelor's Degree 76.4 84.4 8.0 10.5%

Masters or Higher Degree 83.1 87.6 4.6 5.5%

Total 60.0 76.5 16.5 27.6%

Trends in Expected Mean Work Rate of Males Aged 18 to 64, by Educational Attainment

Pennsylvania

Male 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 78.3 68.9 -9.4 -12.0%

HS Diploma/GED 91.8 84.6 -7.2 -7.8%

1-3 Years of College 93.4 89.7 -3.8 -4.0%

Bachelor's Degree 95.4 93.4 -1.9 -2.0%

Masters or Higher Degree 97.2 92.9 -4.3 -4.4%

Total 89.3 86.3 -3.0 -3.3%

Trends in the Expected Mean Annual Hours of Work of All Persons 18 to 64, by

Educational Attainment, Pennsylvania

Total 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 1,045 1,056 11.3 1.1%

HS Diploma/GED 1,327 1,474 147.4 11.1%

1-3 Years of College 1,462 1,601 139.2 9.5%

Bachelor's Degree 1,568 1,722 153.5 9.8%

Masters or Higher Degree 1,827 1,865 38.0 2.1%

Total 1,321 1,545 223.7 16.9%

Trends in the Expected Mean Annual Hours of Work of Females 18 to 64, by Educational Attainment, Pennsylvania

Females 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 612 769 156.9 25.6%HS Diploma/GED 934 1,226 292.2 31.3%1-3 Years of College 1,065 1,392 326.9 30.7%Bachelor's Degree 1,103 1,468 365.0 33.1%Masters or Higher Degree 1,283 1,644 361.3 28.2%

Total 896 1,314 417.7 46.6%

Trends in the Expected Mean Annual Hours of Work of Males 18 to 64, by

Educational Attainment, Pennsylvania

Males 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 1,496 1,288 -208.7 -13.9%HS Diploma/GED 1,832 1,708 -124.2 -6.8%1-3 Years of College 1,879 1,847 -32.7 -1.7%Bachelor's Degree 1,938 1,995 57.0 2.9%Masters or Higher Degree 2,125 2,092 -32.6 -1.5%

Total 1,783 1,778 -4.5 -0.3%

Trends in the Expected Mean LifetimeEarnings of Females 18 to 64, by Educational

Attainment, Pennsylvania

Female 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 328,183$ 386,865$ 58,682$ 17.9%HS Diploma/GED 551,395$ 729,860$ 178,465$ 32.4%1-3 Years of College 701,536$ 995,614$ 294,078$ 41.9%Bachelor's Degree 882,051$ 1,391,862$ 509,811$ 57.8%Masters or Higher Degree 1,295,974$ 2,033,907$ 737,933$ 56.9%

Total 572,232$ 1,037,534$ 465,302$ 81.3%

Trends in the Expected Mean LifetimeEarnings of Males 18 to 64, by

Educational Attainment, Pennsylvania

Male 1979 2006Absolute Change

Relative Change

<12 or 12, No HS Diploma 1,335,992 879,559 (456,433)$ -34.2%HS Diploma/GED 1,857,816 1,328,068 (529,748)$ -28.5%1-3 Years of College 2,100,100 1,684,648 (415,452)$ -19.8%Bachelor's Degree 2,763,400 2,665,646 (97,754)$ -3.5%Masters or Higher Degree 3,108,155 3,545,901 437,747$ 14.1%

Total 1,926,547 1,837,922 (88,625)$ -4.6%

Trends in the Relative Size of the Advantage in Expected Lifetime Earnings of High School Graduates (only)

Compared to High School Dropouts in Pennsylvania, 1979 to 2006

(Excluding 18 to 22 Year Old Students)

135%

143%

146%

157%

120%

125%

130%

135%

140%

145%

150%

155%

160%

1979 1989 1999 2006

Trends in the Relative Size of the Advantage in Expected Life Time Earnings of Bachelor’s Degree Recipients (only)

Compared to High School Graduates (only) in Pennsylvania, 1979 to 2006

(Excluding 18 to 22 Year Old Students)

179%

204%

198% 197%

165%

170%

175%

180%

185%

190%

195%

200%

205%

210%

1979 1989 1999 2006

Trends in the Relative Size of the Advantage in Expected Life Time Earnings of Graduate and Professional Degree Recipients Compared to Bachelor’s Degree Recipients

(only) in Pennsylvania, 1979 to 2006 (Excluding 18 to 22 Year Old Students)

128%

126%

133%

138%

118%

120%

122%

124%

126%

128%

130%

132%

134%

136%

138%

140%

1979 1989 1999 2006

Trends in the Ratio of Mean Expected Lifetime Earnings of the 18 to 64 Year Old Civilian Dropout Population in Pennsylvania Relative to Those with Higher Levels of

Educational Attainment. (Excluding 18 to 22 Year Old Students)

1979 1989 1999 2006

HSDO/High School Grad 74% 70% 68% 64%

HSDO/Bachelor's Only 41% 34% 35% 32%

HSDO/Advanced Degree 32% 27% 26% 23%