the einstein challenge: poverty reduction, mentoring, … · the einstein challenge: poverty...

TheEinsteinChallenge:

PovertyReduction,Mentoring,andEconomicDevelopment

ImagecourtesyofGenesysWorks

TXP,Inc.1310South1stStreet#105Austin,Texas78704www.txp.com

` 1 TheEinsteinChallenge:PovertyReduction,Mentoring,andEconomicDevelopment|Spring2016

OverviewAstheAustinareaeconomycontinuestogrow,theincreasingprosperityexperiencedbymanyresidentsisnotequallyseeninallpartsofthecommunity.Overthepastfewyears,themedianhouseholdincomehasrisenandunemploymentratehasreturnedtopre-recessionlevels.Atthesametime,thepovertyratehasalsoincreased.Poverty,anditsrelatedsocialcosts,isdetrimentalnotonlytothepeoplewhoexperienceitbutalsotothecontinuedcompetitivenessoftheentireAustineconomy.TheEinsteinChallengeisaneconomicdevelopmentinitiativefocusedonraisingthestandardoflivinginAustinthroughthecreationofahighlyskilledworkforcethatispreparedtomeetthechallengesofthemoderneconomy.Specifically,TheEinsteinChallengeisaimedatprovidingmentoringservicestodisadvantagedprimaryandsecondaryschoolstudentsexpandingtheireducationalandemploymentopportunities.Itsmethodologyisbothanattempttoleveragelocalprivatesectorstrengthsforpovertyalleviationaswellasarecognitionthateconomicandhumandevelopmentincreasinglyareintertwined.Seenthroughthislens,theEinsteinChallengeprogramsshouldbeevaluatedasinvestments,withanexpectedreturn,ratherthansimplycosts.TheprincipalpurposeofthisreportistoillustratethepotentialbenefitsoftheEinsteinChallengeprograms,andtocalculatetheimpliedrateofreturnthattheseinitiativescouldgenerate.Viewedinthislight,growthinTheEinsteinChallengeandothersimilarprogramsisnotsimplyanexpansionofthelocalsocialsafetynet.Rather,itisaprudent–andhighlyrewarding–investmentincreatingadditionaleconomicopportunitiesforAustinresidents.Thiskindof“win-win”opportunityisrareinmostpublicpolicyandfinancesettings,andshouldbeseized.Inthestudythatfollows,TXPwilldocumenttherelationshipbetweeneducationlevels,income,andsocialservicesspending,andwillallowanestimateoftheimpactsofincreasingeducationalattainmentonbothenhancingincomeandreducingsocialsafetynetrequirements.ThestudywillalsodescribetheprogramstofallundertheEinsteinChallengeumbrella.Additionally,itwillquantifytheconsequencesofsubstantiallyreducingpovertyintermsofincreasedlocalincomeandmunicipaltaxrevenues,aswellasreducedlocalmeans-testedsocialservicesprogramspending.Beyondthese“first-order”measurements,thereareadditionallocal,regional,andnational“secondorder”impactswhichwillbediscussed.Finally,thestudywillpresentconclusionsandrecommendations.


Education,Income,andRaceintheModernEconomyOverthepast50years,theskillsetsanddegreerequirementsindemandbyemployershasshifteddramatically.Individualswithoutacollegedegree,areincreasinglyatadisadvantagewhenseekingemployment.TheBureauofLaborStatisticscalculatedthatindividualswithoutacollegedegreeearn25percentlessperweekthanthosewithabachelor’sdegree.Furthermore,GeorgetownUniversity’sCenteronEducationandtheWorkforceestimatesthatapproximately60percentofthe55millionjobopeningsanticipatedintheeconomyby2020willrequireskillsbeyondahighschooleducation.Inanincreasinglyinterconnectedeconomy,theskillsgapofindividualsatthelowendoftheeducationalattainmentspectrumisdetrimentaltothenation’sabilitytocompeteintheglobaleconomy.RelationshipbetweenEarningsandSkillsHumancapitaltheorydescribestherolesofeducationandon-the-jobtraininginthedevelopmentofjobskills,andthecorrespondingrelationshipbetweenskillsandearnings.Firmspayhigherwagestomoreeducatedandexperiencedworkers,allelsebeingequal,becausetheiradditionalskillsraisetheirproductivitycomparedtoworkerswithlesseducationandexperience.Atthesametime,individualsinvestineducationandtraining,bothbypayingthedirectcostsandbyincurringtheopportunitycosts,intheexpectationthattheywillearnahigherwageinthefuture.Figure1showstheratiooftheaverageweeklyincomeforindividualswithcollegedegreestothatofindividualswithonlyahighschooldiploma.Figure1:RatioofEarningsforCollegevs.HighSchoolGraduates

Source:CurrentPopulationSurvey,BureauofLaborStatistics;TXP,Inc.

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Asthedatashows,overthepastfifteenyears,collegegraduateshaveearnedmorethanoneandahalftimesthewagesearnedbyhighschoolgraduates.Atthesametime,workerswithoutahighschooldiplomacontinuetomakelessthanthree-quartersofthewagerateearnedbyhighschoolgraduates.In2014,theaverageweeklywagewas$1,131forworkerswithaBachelor’sdegree,$664forhighschoolgraduates,andonly$491forworkerswhodidnotgraduatehighschool.Asanationalaverage,thisdataincludesworkersofdifferentexperiencelevelsandindustries.TheIncreasingImportanceofAccesstoPost-SecondaryEducationOneoftheprincipledeterminantsofeconomicsuccessinamoderneconomyistheabilitytoacquire,process,andapplyknowledge.Educationalattainmentlevelsareaproxyforthisabilityandforeconomicwell-beingmoregenerally.Thosewhoarebettereducatedtendtohaveagreaterincidenceofknowledge-relatedskillsandabilities,and,asaresult,havemoreemploymentopportunitiesandarebettercompensated.TheNationalEducationalAttainmentNetworkestimatesthattheUSloses$192billioninGDPincombinedincomeandtaxrevenuewitheachcohortof18-yearoldswhonevercompletehighschool.Annuallossesexceed$50billioninfederalandstateincometaxesforall23millionofthenation’shighschooldropoutsofworkingage.Inadequateeducationalopportunitiesareaveryrealthreattolowincomecommunitiesasthebestjobsinthecurrenteconomyrequirehigherlevelsofskillandknowledgethaneverbefore.However,thehighestlevelsofeducationarenotcurrentlyattainedatanequalrateacrossallsegmentsofsociety.In2014,nearlyathirdofallWhiteshadabachelor’sdegreeorhigherlevelofeducation.Atthesametimeonly22percentofBlanksand15percentofHispanicshadthesamelevelofeducation.Asadvancedskillsandhighereducationareincreasinglyimportantforcompetitioninthemoderneconomy’shigh-skilledworkforce,itisnecessarytosupporttheopportunityforallindividuals,regardlessoftheirracialandethnicbackground,toreachthesehigherlevelsofeducationalattainment.Moretroubling,themedianwageforindividualsofdifferentraceswiththesameeducationalbackgroundcanvarywidely.Theoveralldifferenceinmedianwagesisgreatestbetweeneducationallevels,withworkerswhoearnedlessthanahighschooldiplomaearningamedianwageof$488perweekcomparedtoworkerswithabachelor’sdegreewhoearnedamedianwageof$1,101perweek.However,ateverylevelofeducationalattainment,Blacksearnamedianwagethatbetween10and20percentbelowthatofthemedianfortheoverallpopulation.Hispanicssimilarlyearnbetween5and15percentbelowthenationalmedianwageateachlevelofeducational


attainment.Evenso,acrossallracialandethnicbackgrounds,increasededucationalattainmentleadstoahighermedianwage.Figure2:EducationalAttainmentbyRace/Ethnicity(2014)

Source:CurrentPopulationSurvey,USCensusBureau;TXP,Inc.

Figure3:MedianWeeklyEarnings,byEducationalAttainmentandRace/Ethnicity

Source:BureauofLaborStatistics;TXP,Inc.

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RaceandPovertyinAustinWhilethereareseveralmethodsusedtomeasureandidentifypoverty,oneofthemostwidelyusedistheUSCensusBureaus’povertythresholdwhichusesacombinationofincome,householdsize,ageofhouseholder,andnumberofchildreninthehousehold.Usingthisdata,theDepartmentofHealthandHumanServicesdeterminesthepovertyguidelineor“federalpovertylevel”,anadministrativetoolwhichusedtodetermineeligibilityforfederalassistanceprograms.In2014,afamilyof4making$24,250orlessperyearwasdeterminedtobepoor.Bycomparison,thenationalmedianhouseholdincome(regardlessofhouseholdsize)wasestimatedat$51,759in2014.Figure4:FederalPovertyLevelin2015

PersonsinFamily/Household

IncomeLimit

1 $11,7702 $15,9303 $20,0904 $24,2505 $28,4106 $32,5707 $36,7308 $40,890

Source:DepartmentofHealthandHumanServices;TXP,Inc.

Usingthefederalpovertyfiguresfigures,theCensusBureaudeterminedthat,in2014,19percentofthepopulationoftheCityofAustin,or160,532individuals,livedbelowthepovertyline.Inpublicpolicy,individualsandhouseholdsarediscussedatdifferentincomesegmentationswithrespecttothefederalpovertyline,thatis,whatproportionofthepopulationhasanincomeatorbelowaspecificpercentageofthepovertylineincome.Thegraphthatfollows(Figure5)showsthepovertyrateforindividualsat50percent,100percent,and125percentofthefederalpovertyrateforthepastfiveyears.Thesegroupscanbethoughtofasthe“verypoor”,“poor”,and“nearpoor,”respectively.Theproportionofpoorresidents(or100percentofthepovertyline)intheCityofAustingrewfrom16ofthecity’spopulationin2009to19percentin2014.Overthissameperiod,themedianhouseholdincomeforAustinresidentsgrew9percent,fromjustover$50,000peryearin2009tomorethan$55,000in2014.ThisindicatesthatwhileprosperityinAustinhasgrownoverthepastfewyears,itisnotbeingexperiencedequallybyallgroups.ThiscanbeseeninboththepovertyrateamongdifferentracialandethnicgroupsinAustinaswellasthepovertylevelindifferentneighborhoods.


Figure5:PovertyRateintheCityofAustin(2009to2014)

Source:AmericanCommunitySurvey,USCensusBureau;TXP,Inc.

TherisingpovertyrateintheCityofAustinhasnotimpactedallracialandethnicgroupsinthesameway.Formostracialandethnicgroups,thepovertyratehasheldsteadywithaslightincreasebetween2009and2014,mirroringoveralltrendsinAustin.BlacksandHispanicstendtohavethehighestratesofpoverty,withbothgroupsreachingnearly30percentinpovertyin2014.Figure6:PovertybyRace/EthnicityintheCityofAustin(2009to2014)


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PovertyinAustin,asinmanycommunitiesnationwide,hasageographiccomponent.MuchoftheCityandareastothenorthandwesthavepovertyratesbelowthatoftheCity’saverage.However,neighborhoodsalongtheI-35corridor,tendtohaveapovertyratemorethantwicetheaveragefortheCityasawhole.Thisgeographicconcentrationofpovertycanmakeexistinginequalitymorepersistentandpovertyreductioneffortsmorechallenging.Figure7:PovertyrateinCensusBlockGroupsintheAustinArea(2014)



MentoringProgramsandWorkforceDevelopmentTheEinsteinChallengeisapublic-privatepartnershipdesignedbytheCityofAustinthatincentivizeslocalcompaniesinthescienceandtechnologyindustriestoworkwithlowincomestudentsthroughouttheCity.Thisincentivizededucationalservicewillfocusonteaching,mentoring,andraisingawarenessofSTEM-relatedjobfieldswithlowincomeprimaryandsecondaryschoolstudentsintheAustinarea.AnessentialcomponentoftheEinsteinChallenge’smethodologyisaten-yearlongitudinalstudyofthereturnoninvestmentandperformanceassessmentofitsoutcomesconductedbytheUniversityofTexasatAustin’sRayMarshallCenter.ThefundingmechanismforthisprogramwillutilizetheCityofAustin’sexistingpropertytaxincentiveagreementstructure.Thiswillhelpbothensureprivatesectorparticipationandpredictablecitygovernmentfinancing.TheEinsteinChallengeisdesignedtoleveragetheknowledgebaseofthescientificandtechnologycommunityinAustintopreparetheleastadvantagedchildrentocompeteforthemostin-demandfutureemployment.Throughgradeleveltailoredactivitiessuchasworkplacevisitsandinternships,theEinsteinChallengewillprovidehands-ontrainingandindustryfamiliarizationtoinspireandengagelowincomestudentswhomightotherwisenotconsiderafutureSTEM-relatedcareerpath.Throughitsmentoring,tutoring,andfamiliarizingprograms,theEinsteinChallengewillhelpclosethesocialsupportandopportunitygapbetweenlowincomeAustinstudentsandtheirmoreaffluentcounterparts.ThedesiredoutcomeisapartnershipwhichwillcreateagenerationofchildrenwhoareleadersinAustin’sinnovationeconomy,generatingapositivereturnoninvestmentforthecityanditsresidents.unityThereareanumberoforganizationsworkinginthisspacealreadyinAustin.However,theCityofAustinhastheopportunitywiththeEinsteinChallengetosystematizetheseeffortstoservethebroaderAustin-arealowincomecommunity.Inthisway,itcanactasacatalysttoextendthereachoftestedinterventionstoallimpoverishedAustin-areayoungpeople.AnExistingExample:GenesysWorks

AnexampleofaprovenprogramtosupporttheincreasededucationandskillattainmentofchildreninpovertyisGenesysWorks.Withamission“toenableeconomically-disadvantagedhighschoolstudentstoenterandthriveintheeconomicmainstreambyprovidingthemtheknowledgeandworkexperiencerequiredtosucceedasprofessionals,”GenesysWorksseekstochangestudentslivesbychangingtheirschoolcultureviapositiverolemodels,mentoring,andreal-worldworkexperience.Theirprogramsfocusonchangingthemindsetoflow-incomestudentsandprovidingthemwithavisionofanalternativeeducationalandcareerpaththatthey


otherwisemaynothaveevenconsidered.Ashigherincomestudentstendtobeimmersedinasupportiveenvironmentofpurpose,support,andempowermenttheGenesysWorksmodelseekstoprovidethesameforlow-incomestudents.CurrentlywithoperationsintheBayArea,Chicago,Houston,andtheTwinCities,GenesysWorkshasdemonstratedthatbyenablingstudentstoexperiencelifeasprofessionals,bysettinghighexpectationsandofferingthesupportstructuretoachievethem,bymakingstudentsaccountablefortheiractionsandrewardingthemforgoodbehavior,bymakingtheirstudiesrelevanttotheirfuture,andbyintroducinghealthyadultmentoringrelationships,studentschangetheirbehaviorandperspectiveoflife.Throughouttheprogram,studentsrealizefirst-handthattheycanthriveinacorporateenvironmentandthatpursuingaprofessionalcareercanhelpthemachieveamuchhigherstandardoflivingthantheyareaccustomedto.WiththisknowledgeandcontinuousguidancefromtheGenesysWorksstaff,theysignificantlyredefinetheirlong-termgoalsandsetplanstopursuethem.Infact,over95percentofGenesysWorksgraduatesenrollincollegeimmediatelyafterhighschool.Mostarethefirstintheirfamilytodoso.Moreover,themedianincomeofprogramalumniworkingfull-timeaftercompletingcollegeis$50,000,whichishigherthanthenationalmedianthiseducationalattainmentandagegroup(25-34yearoldswithaBachelor’sdegree).

Public-SectorBenefitsofPovertyReductionTheimplicationsofpovertyextendacrossvirtuallyallareasofsocialactivity,includingthepublicsector.Itispossibletoquantifytheconsequencesofsubstantiallyreducingpovertyintermsofincreasedlocalincomeandmunicipaltaxrevenues,aswellasreducedlocalsocialservicesprogramspendingthatismeans-tested.Theseimpactsareseparatedintotwodistinctgroups:firstorderbenefits,whichwouldoccurimmediatelyuponadecreaseinthepovertyrate,andsecondorderbenefits,orpublicsectorexpenditureslessdirectlyimpactedbypovertyrates.Theimpactsoftheseprogramswouldaccrueatthelocal,regional,andnationallevel.FirstOrderBenefits:Income,TaxRevenue,andMeans-TestedSocialProgramsAshasbeenshownabove,theincidenceofpovertyisnotequallydistributeddemographically,asnon-White(Asians,Blacks,andHispanics)havelocalpovertyrateswellabovethatofWhites.Asaresult,iftheNon-WhitepovertyratewerereducedtoequalthatofWhitesinAustin,69,491people(or41,187households)wouldbemovedoutofpoverty.TheCityofAustinadministersarangeofmeans-testedsocialservicesprogramsthatinsomewayaddresspoverty.Atotalof35programswithFY2015-16annualbudgetstotaling$16.5millioninclientservicespendingwereidentified.Theactivitiesofthese


programswerebroadlyrelatedtoworkforcedevelopment,transitionalhousing,victimservices/violenceprevention,childcare,andfinancialliteracy.Onlydirectprogramspendingisconsideredinthis$16.5millionfigure;noadministrativeorlaborcostswereincluded.Themajorityoftheclientsservedbytheseprogramsarebelowthepovertyline.Aswouldbeexpected,ashouseholdincomerises,theshareofoveralltheclientbasedeclinesacrossallprograms.Theassumptionisthatrisingincomeswilldecreasedemand/needproportionatetocurrentpatternsofusagebyhouseholdincome.Inotherwords,theshareofprogramparticipantsdeclinessharplyashouseholdincomeincreases.Basedoncurrentestimatesofpovertylevelsandderivedestimatesofaveragehouseholdsizeforthoseinpoverty,100%ofthepovertylevelinAustinforahouseholdof1.7(theaveragesizeforahouseholdinpoverty)is$14,342,withthoseactuallyinpovertyhavinganaverageincomeof$7,218,creatingadeficitof$7,124.Thetablebelow(Figure8)outlinestheincreaseinannualincomerequiredtoreachdifferentmilestonesabovethepovertylevel.Allfiguresaremultipliedagainstthe41,187figureabovetogeneratetheestimatesofadditionaltotalincome.AveragepercapitaincomeinAustinis$32,672.Withanaveragehouseholdinpovertysizeof1.7,thattranslatesintoaveragehouseholdincomeof$55,125,apotentialincreaseofjustover$48,000inincome.TheCityofAustinrealizestheequivalentof$0.0156inGeneralRevenueforeverydollarofincomeinAustin.TheAvoidedProgramCosts(formeans-testedsocialservices)reflectthefirst-orderprogramsavingsoutlinedabove.NetannualgainisderivedfromaddingGeneralRevenuetoAvoidedProgramCosts.

Figure8:CityofAustinGainsfromReducedPoverty

PovertyLevel

PerHouseholdIncomegain

TotalAdditionalincome

COAGeneralFund

AvoidedCOAProgramCosts

NetCOAAnnualgain

upto100% $7,124 $293,413,545 $4,568,266 $4,354,002 $8,922,268

125% $10,709 $441,083,563 $6,867,396 $5,650,462 $12,517,858

150% $14,295 $588,753,580 $9,166,526 $6,129,603 $15,296,129

175% $17,880 $736,423,598 $11,465,656 $6,608,744 $18,074,400

200% $21,466 $884,093,615 $13,764,786 $6,921,880 $20,686,666

ToReachHHAvg. $48,001 $1,976,982,851 $30,780,390 $7,235,015 $38,015,405

Note:allfiguresareexpressedin$2015


Tosumup,ifthepovertyrateexperiencedbypeopleofcolorinAustinwasreducedtobeequivalenttothatoftheWhiteresidents,andthosewhomovedoutofpovertyearnedtheaveragewage,themorethan41,000individualswhowouldbenefitcouldrealizeasmuchas$2billion($2015)inadditionalannualincome,contributingtoanetgain(viaincreasedtaxrevenueandreducedmeans-testedsocialservicesprogramcosts)ofover$38milliontotheCityofAustineachyear.

SecondOrderBenefits:Heath,PublicSafety,CriminalJustice,andCivicParticipationBeyondthelossofpersonalincome,economicactivity,andgeneratedtaxes,povertycanhaveothercosts.Individualsinpovertyaremorelikelytobearrested,usedrugs,experienceviolence,andrequirepublicassistance.Furthermore,thereiswideconsensusthattheeffectsofchildhoodpovertycontinuethroughoutadulthood.TheNationalPovertyCenterestimatesthatthecostofchildhoodpoverty,inthetermofforegoneearningsandproductivity,highercrimerates,andlowerhealthoutcomes,imposesasocialcostequivalenttonearly$500billionperyearorapproximately3.8percentofGDP.Thesearenottheonlypossiblecoststopoverty,buttheyarelikelytobethelargestandarethosethatarenoteasilycapturedbythemetricoflostwages.Poorhealthandincreasedcriminalbehaviorimposelargesocialcosts,beyondthatofthelostearningsofasick,disabled,orincarceratedindividual.Eachofthesesocialcostshasawidevarietyofcauses,beyondaperson’sincomelevel,whichmakesitdifficulttospecifyexactlyhowmitigatedthesecostswouldbebyanoverallreductioninpoverty.HealthcareImpact

Peopleinpoorcommunitiesarebothmorelikelytobelesshealthyandhavelessaccesstomedicalcarethantheirmoreaffluentneighbors.Thesecanbemutuallyreinforcing,asdecreasedaccesstoqualitymedicalcarecanleadtodelayingtreatmentuntilaminorhealthcomplaintbecomesamedicalemergency.Withoutregularpreventativecareoradequatefollow-upcare,theseindividualsarebothmoreexpensivetotreatandmorelikelytobereadmittedforfuturecomplicationsoncetheyhavebeenseeninahospital.Highschooldropoutshavehigherratesofcardiovascularillnesses,diabetes,andotheralimentswhichrequireanaverageof$35,000inannualhealthcarecosts.Atthesametime,collegegraduatesrequireapproximately$15,000worthofannualhealthcare.Onaverage,a65-year-oldpersonwithahighschooldiplomahasabetterhealthstatusthana45-year-oldpersonwhodroppedoutinthe10thgrade.TheNationalPovertyCenterestimatesthatpovertyraisesdirectexpendituresonhealthcarebyabout$22billioneachyear.


Morethantheincreasedcostofhealthcare,theimpactofworsenedhealthoutcomescanbemeasureinqualityoflifeaswellasprematuredeath.Forexample,TheNationalEducationAccessNetworkestimatesthathighschooldropoutshavealifeexpectancythatis9.2yearsshorterthanhighschoolgraduates.Similarly,health-relatedlossesortheestimated600,000highschooldropoutsin2004totaledatleast$58billion,ornearly$100,000perstudent.Further,aCentersforDiseaseControlandPreventionstudyconductedbyUniversityofWisconsinresearchersreviewedtrendsinprematuredeathatthecountylevelintheUS.Itfoundthattheoverallrateofdeathbeforetheageof75was417deathsper100,000.However,inlowincomecounties,theaveragewas480deathsper100,00whileinhigherincomecountiestheprematuredeathratewas345per100,000.Themetricmosttypicallyusedforthisanalysisisthe“quality-adjustedlifeyears”(QALYs),whichareessentiallyameasurementoflifeexpectancyadjustedfortheeffectofillnessordisabilityonqualityofhealth.InthiswaytheQALYmeasurementcapturesbothmortalityandmorbidityinasinglemetric.Forexample,theQALYmeasurementcancapturethedifferencebetweenlivingfor10yearsasahealthyadultandthosesame10yearsinacoma.TheNationalPovertyCenterestimatesthatthe“healthcapital”lossduetochildhoodpovertyis$149billionperyear.Thisrepresentsapproximately1.1percentofGDPandcapturestheeconomicvalueoflostquantityandqualityoflife,butdoesnotincludelostearnings.PublicSafetyandCriminalJusticeImpact

TheUnitedStateshasthehighestrateofincarcerationintheworld,withmorethan2.2millionprisonersor730prisonersforevery100,000citizens.Publicexpendituresoncorrectionsisthefastest-growingbudgetitemorstatesbehindMedicaid.AreportbytheVeraInstituteofJusticefoundthattheannualperprisonercostofthecriminaljusticesystemrangedfromapproximately$14,000perprisonertomorethan$60,000perprisoner,dependingonthestate.Unfortunately,thesamereportfoundthatthecostperprisonerhaslittletodowithcostefficiency,effectiveness,orreturntothecommunity.Themosteffectivewaytodecreasethecostofthecriminaljusticesystemistodecreasetherateoffcriminalbehavior.TheNationalEducationAccessNetworkestimatesthataone-yearincreaseintheaverageyearsofschoolforhighschooldropoutswouldhaveasignificantreductioninviolentcrime.Inastudycomparingcriminalactivitybeforeandafterstatesenactedcompulsoryschoollaws,itwasestimatedthatitwouldreducemurderandassaultratesbyalmost30percent,motorvehicletheftby20percent,arsonby13percent,andburglaryandlarcenybyabout6percent.Moreover,inastudyoftheeconomiccostsofchildhoodpoverty,researchersattheNationalPovertyCenterfoundthatlowchildhood


incomedoublesthelikelyhoodthatindividualscommitandreportcostlycrimes,relativetochildrengrowingupinfamilieswithincomesaroundtwicethepovertyline.ThisstudyfurtherestimatedtheoverallannualcostofcrimeintheUSduetochildhoodpovertyatapproximately$170billion,or1.3percentofGDP.Theimpactofcriminalbehaviorgoesbeyondthatofthecostofcrimeandvictimization.Incarcerationhaslonglastingeffectsonemployabilityandaverageincomes.Notonlyispovertyafactorincriminalbehavior,butincarcerationfurthercontributestoapersonandcommunity’simpoverishmentperpetuatinganegativecycleofpovertyandincarceration.Acriminalrecordcreatesemploymentbarriers,reducesearnings,impedesaccesstopublicbenefits,anddisruptsacommunity’ssocialnetwork.CivicParticipationImpact

Notonlyisincreasededucationalattainmentimportantforeconomicgrowththroughthegenerationofhumancapital,itisessentialforthecreationofsocialcapitalaswell.Aperson’soverallenfranchisement,ortheirpersonalstakeinsociety,closelymirrorstheireducationallevel.Anindividualwithacollegedegreeismorelikelytobeawareofcurrentpoliticalissues,knowledgeableaboutthoseissues,andparticipateinelectionsandotherpoliticalactivitiesthanalesseducatedindividual.

ConclusionsExpendituresonpovertyreductionandincreasingeducationalattainment,suchasthoseincludedintheEinsteinChallenge,shouldbeviewedasinvestmentswhichgeneratefirst-orderreturnsovertimeintheformofincreasedeconomicproductivity,risingincomes,greatertaxrevenue,andreducedpublicexpendituresonsocialprograms.ThequantitativeanalysisofthesefactorsfindsthataligningtheNon-AnglopovertyrateintheAustinareawiththeAngloratewouldcreatebillionsofdollarsinadditionalhouseholdincome,generatinganetgainoftensofmillionsofdollarsfortheCityofAustin(vianewtaxrevenueandavoidedsocialservices).Foranygivenindividual,theseresultscouldbeconservative;withanaverageannualtechnologywageinAustinofapproximately$100,000,individualswhogoontoSTEMcareerscoulddoubletheassociatedtaxrevenuegaintoAustin,aswellasobviouslynolongerneedingsocialservices.Thesefindingsshouldnotbeviewedasaforecastofwhatwilloccur,butratheranillustrationofthegainsthatcouldaccrueatahighlevelofprogramsuccess.Beyondthesebenefits,itisalsolikelythatpovertyreductionwillyieldimprovedhealthoutcomes(anddecreasedhealthcarecosts),lowerratesofcriminalbehavior,andstrongersocialcohesionandcivicparticipation.Clearly,theoverallcost-benefitofinvestinginenhancingworkforcecapacityviatargetedeffortstochangethetrajectoryofimpoverishedyoungpeoplecouldbehighlypositive.


Amaturetechnologyeco-systemmakesAustininparticularisripeforeffortsofthistype.Theprimarycompetitiveadvantageanareacanpossessisawelltrained,educatedlaborforce.Giventhatknowledge,especiallyembodiedintechnology,isaprimarycomponentoftheoverallvaluecreatedinmanyfirms,itfollowsthat,asageneralrule,thattechnologycompaniesrequirebetter-educatedworkersthaninmoretraditionalindustries.Furthermore,theinnovationprocessintheseindustriesdemandsacertainlevelofeducation.Itisdifficulttocreatethenextgenerationofmicrochipsifyoudonotfirstknowhowexistingmicrochipswork.Whileitisabsurdtosuggestthateveryonemusthaveanadvanceddegreeinordertofunctioninthemoderneconomy,itisevidentthatamorecomplexandcompetitiveeconomicenvironmentrequiresagreatercommitmenttoeducationandtraining.Theprocessofskilldevelopmentbeginsinearlychildhood,andcontinuesthroughoutanindividual’slifetime,includingtheirparticipationinformaleducationandongoingjobtraining.Interventiontoassistthisprocessatvirtuallyanypointhasbeentoshowntohavepositiveoutcomes,asqualitychildcareprograms,educationenrichment,highereducationpreparation,jobtraining,andliteracyarealldesignedtofacilitatethecognitive,social,emotional,andinterpersonalskillsnecessaryforsuccessinthemodernworkforce.Thiscontinuesonintoadulthood,wheretheimpactofhighereducationisequallycompelling.Theresultsareclear;notonlydotheseprogramsbenefittheparticipantsandtheorganizationsthatultimatelyemploythem,buttheyprovideapositivefinancialreturntothepublicsectoraswell.Asaresult,thecaseforstrengtheningtheseprogramsseemsevident.


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the einstein challenge: poverty reduction, mentoring, … · the einstein challenge: poverty...

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