Transcript Slide 1

ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
EARLY CHILDHOOD DEVELOPMENT:
IT’S GOOD FOR BUSINESS,
IT’S GOOD FOR THE STATE
WISCONSIN HEAD START
ASSOCIATION
Dennis
K. Winters
February 3, 2014
Chief, Office of Economic Advisors
Wisconsin Department of Workforce Development
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
February 3, 2014
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WHAT I WILL DO TODAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
 Tell you why early education is important
 Give you the ‘speak’
 Suggest some strategies
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WHAT ARE BUSINESSES
TOP CONCERNS
 Tax burden
 Skilled workforce
 Regulations
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
STATE BUDGET
COMMITMENTS
Of state GPR of $30.6 billion (FY 2013-15):
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K-12 Aides – $10.1B; 33.1%
Corrections – $2.1 B; 6.7%
UW System – $2.2 B; 7.3%
Medicaid – $4.6 B; 15.1%
Shared revenue – $1.8 B; 5.9%
Source: Wisconsin Taxpayers Alliance, Window on the Wisconsin State Budget,
Volume 81, Number 8, August 2013
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WISCONSIN’S WORKFORCE GROWTH
BECOMES FLAT
Wisconsin Population and Labor Force
7,000
POPULATION
6,000
CIVILIAN LABOR FORCE
( x 1000 )
5,000
4,000
3,000
2,000
1,000
1960
1970
1980
1990
2000
2010
2020
2030
February 3, 2014
Source: Bureau of Labor Statistics, OEA
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
RAMIFICATIONS OF WORKFORCE TRENDS
ARE:
 Unalterable – demographics and migration patterns
do not change quickly;
 Potentially devastating – without sufficient
productivity gains the state’s economy will
stagnate;
 Necessitating a focus on talent – large investments
in education and training are needed.
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
NEW ECONOMY
HIGHER SKILL SET REQUIRED
"The days are over when you could walk into
a paper mill with a high school diploma and
run one of the machines."
– Patrick Schillinger, Wisconsin Paper Council President,
Center will teach paper-industry technology,
Milwaukee Journal Sentinel, JS Online, October 21, 2004.
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
NEW ECONOMY
TALENT BASED
Carly Forina, former CEO HP –
Don’t show me your highway
interchange or TIF district, show
me the number of college graduates
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
NEW ECONOMY
SCARCITY OF SKILLED WORKERS
Former Federal Reserve Chairman Alan Greenspan voiced his
concern about a growing earnings gap between highly
skilled and unskilled workers.
"It's a problem caused basically by our skill
mix not keeping up with the technology
that our capital stock requires," the
Republican Fed chairman said. . . .
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
NEW ECONOMY
EDUCATION AND TRAINING REQUIRED
Disparities in education and training is “likely the
single greatest source of the long-term increase in
inequality.”
Thus, “policies that boost our national investment
in education and training can help reduce
inequality while expanding economic
opportunity,” he said."
– Ben Bernanke, Federal Reserve Board Chairman, speech to Omaha Chamber of
February 3, 2014
Commerce, February 6, 2007.
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
THREE TALENT OPTIONS
FOR BUSINESS
 Import the talent
 Export the job
 Grow the Talent here
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WHY IS
EARLY EDUCATION
IMPORTANT?
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
Normal vs. Sensory-deprived Brain
of a
Three-Year-Old Child
Sensory-Deprived
Normal
Normal
Sensory - Deprived
Children who don’t play much or are rarely touched develop brains 20% to 30% smaller
than normal for their age.
February 3, 2014
Baylor College of Medicine
WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“By 5, it is possible to predict, with
depressing accuracy, who will complete high
school and college and who won't.”
– David Brooks,
David Brooks: Schools and Skills
The New York Times; Editorial
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WHY EARLY EDUCATION?
AN EARLY FULCRUM
 Third Grade Reading Skills
 Learn to Read
Read to Learn
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
ACHIEVEMENT GAP
ESTABILISHED EARLY
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
ACHIEVEMENT GAP
DEPENDENT ON THE MOTHER’S EDUCATION
February 3, 2014
Source: Prof. James Heckman, Nobel Laureate, University of Chicago
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
POVERTY v. EDUCATION
USE THE CORRECT POLICIES
 Ed
≠ f (Poverty)
 Poverty
= f (Education)
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
MEDIAN FAMILY INCOME
BY EDUCATIONAL ATTAINMENT
Average Household Income by Educational Attainment
(real 2008 $)
$105,000
$90,000
1978
$75,000
2008
$60,000
$45,000
Less HS
HS
1-3 Yrs College
$104,162
$80,092
$63,570
$58,470
$49,925
$52,784
$0
$31,798
$15,000
$35,594
$30,000
4+ Yrs College
February 3, 2014
Source: U.S. Census Bureau
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WHAT IS THE
COST?
NO, WHAT IS THE
RETURN ON INVESTMENT
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“Investments in high-quality early education
programs have the highest rate of return of
any social investment.”
– Professor James Heckman
University of Chicago
Nobel Laureate in Economics
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“The best investment in economic
development that government and the private
sector can make is in the healthy
development of children .”
– Art Rolnick
Sr. Vice President (retired)
Federal Reserve Bank of Minneapolis
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
HUGE RETURN ON INVESTMENT
HIGH/SCOPE PERRY PRESCHOOL
Welfare
Education
Earnings
Taxes paid
Crime
Benefits
$15,166
(Per participant in 2000 constant dollars discounted 3% annually)
Costs
February 3, 2014
$0
Total return = $258,888; $17.07 per dollar invested:
$12.90 to the public, $4.17 to participants
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Larry Schweinhart, High/Scope Educational Research Foundation, www.highscope.org
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
THE EVIDENCE IS IN
HUGE RETURNS
• Perry Scope
• 17 : 1
• Chicago-Child Parent
• $7 to $1 total
• $4 to $1 public
• Abecedarian Educational Child Care
• $4 to $1 total
• Elmira Prenatal/Early Infancy Project
• $5 to $1 total
• $4 to $1 public
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
BENEFITS ARE SHARED
ACROSS SECTORS
 Personal Success – 20% of gains
• Higher Income
• Better Employment Attributes
• Better Health
 Public Externalities – 80% of gains
• Lower Crime
• Less Social Intervention
• Greater civil contributions
 Business
• More Skilled Workforce
• Higher Productivity
• Less Turnover
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WISCONSIN BUDGET IMPACTS
BENEFICIAL AND PERPETUAL
• Net cost is > 1% of K-12 budget
• Budget surplus in 2050 > $1 billion
• Benefits exceed costs in 8 years
• Benefit/Cost ratio equals 3.69
February 3, 2014
Robert Lynch, Enriching Children, Enriching the Nation, Economic Policy Institute, 2007.
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
STATE IMPACTS
BENEFICIAL AND PERPETUAL
Benefits vs. Costs
$
Yearly Budget Costs
Yearly budget benefits
2007
2012
2017
2022
2027
2032
2037
2042
2047
• Cost bump in 2021 due to higher post-secondary enrollments
• Benefits rise faster after 2021 due to higher earnings of graduates
February 3, 2014
Graph representative of data portrayed in Enriching Children, Enriching the Nation, Robert Lynch,
Economic Policy Institute, 2007.
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
NEW ECONOMIC DEVELOPMENT MODEL
USING THE RIGHT TOOLS
• Traditional
economic development tools
produce a zero public return or worse.
– See A. Rolnick, Federal Reserve Bank of Minneapolis
• Returns
to high-quality early-childhood
initiatives produce huge returns.
−and
Perry Preschool 40-year study reports $17-to-$1 total
$13-to-$1 public benefit-cost ratios.
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WHAT MORE DO YOU NEED?
THE QUESTIONS HAVE BEEN ANSWERED
 What is the greatest job need?
 Skilled, creative, interactive occupations
 What are the returns?
17: 1 returns; 80% to the Public
 Is it fiscally prudent?
 Relatively small cost, perpetual returns
 What is your alternative investment?
 Not a new mall !
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
STRANGE
BEDFELLOWS
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WAIT, WHAT, WHY ARE
THESE GROUPS ALIGNED
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Business
Law Enforcement
Corrections
Military
Health Care
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“Investing in the earliest years of life is the
first step in preparing a workforce that can
meet the demands of the 21st century.”
– Ann Cramer,
Director, Americas
IBM
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“Early childhood education has a
tremendous impact on the national economic
security.”
– U.S. Chamber of Commerce
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
WHAT THEY SAY
“We appreciate the opportunity to apply for
funding in support of our ongoing efforts to
increase engagement of the Wisconsin
business community in this important
initiative.
– Jim Haney
President Emeritus, WMC
Letter in support of national organization support of
Business Leader Summit on Early Childhood Investment
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“Early Childhood Development is recognized
within the business community for the
significant contributions it makes to
educational attainment leading to a more
productive workforce and to the resulting
long-term economic impact of these early
investments.”
– National Association of Manufacturers
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
"Here in Wisconsin, we need to invest in
early learning. Too many kids come to school
unprepared to learn, which leads to higher
dropout rates, a lagging workforce and a
damaged economy. We can invest now, or
pay later."
– Tim Sheehy,
President
Metropolitan Milwaukee Association of Commerce
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
REGIONAL & LOCAL
FOCUS
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
LOCAL FOCUS
AND APPROACH
 Respond to community challenges
 Closer relationships
 Keep efforts and resources in the
community
 Reticence to give money to faraway, non-accountable entities
 Familiarity
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“Investments in high quality early childhood
programs and services can be a powerful tool
for spurring economic development and
equal opportunity.”
– Jeff Joerres, Chairman & CEO, Manpower, Inc.
– Charles E. M. Kolb, President, CED
In invitation letter to Milwaukee business leaders to attend
an information meeting at Manpower headquarters,
March 3, 2009
February 3, 2014
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WHAT THEY SAY
ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
“The best and most effective way to increase
the quality of our workforce and lessen the
tax burden is to invest in quality early
childhood development. The sooner and the
earlier, the better.”
– Dennis Winters
Chief, Office of Economic Advisors
Wisconsin Department of Workforce Development
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
Questions ?
February 3, 2014
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ECD:
IT’S GOOD FOR
BUSINESS,
IT’S GOOD FOR
THE STATE
CONTACT INFORMATION
 Dennis Winters
 Phone: 608-267-3262
 Email: [email protected]
 Website: www.dwd.wisconsin.gov
 OEA website: www.dwd.wisconsin.gov/oea
February 3, 2014
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