School Vouchers, Prosperity, and Job Creation

Published June 28, 2010

States and localities are struggling with the need to slow the growth of spending for public K-12 education, while government employee unions and some legislators continue calling for ever-more money. The 2009 Digest of Education Statistics shows employment in K-12 education has nearly doubled, while enrollment rose by less than 9 percent, over the past 40 years.

Per-pupil spending in many U.S. school districts is almost triple that of the best-achieving nations, and K-12 education is the top spending item in almost every state budget. But U.S. students’ achievement test scores have been stagnant while per-pupil spending increased by more than 65 percent over the past 25 years in inflation-adjusted dollars, according to the Digest of Education Statistics. Neither children nor the public are being properly served by the current education system.

The most comprehensive alternative—school choice through education vouchers—would save money, according to such scholars as David Figlio, Greg Forster, and Susan Aud. Vouchers also have a proven track record of increasing student achievement, as observed in a 2010 study of the Florida voucher system. Improvements in student achievement, in turn, help increase economic prosperity and job creation, as noted in a 2010 study by Eric Hanushek and Ludger Woessmann. Another study released this year concludes a switch to a voucher system would be a boon to job creation for younger age groups.

School choice advances student achievement and provides long- and short-term economic benefits and job creation. The following articles discuss the job-creation and economic growth benefits of school choice.

How School Choice Can Create Jobs
Sven R. Larson examined five South Carolina counties and found school choice programs were associated with gains of up to 25 percent in youth self-employment. Larson writes, “School Choice raises academic achievement and reduces the problems and costs associated with high school dropouts. But it also has a decisively positive impact on youth entrepreneurship and could provide a critical boost for the economies of poor, rural counties.”

School Choice by the Numbers: The Fiscal Effect of School Choice Programs, 1990-2006
Susan Aud, a senior fellow at the Milton & Rose D. Friedman Foundation, examines the fiscal effects of school choice programs, finding $444 million in savings during the period studied, $422 million of which was from local school corporations. The direct passage of savings to school districts has a profoundly positive net benefit on districts, but not enough to enable them to compete in performance with private or charter schools.

Markets vs. Monopolies in Education: A Global Review of the Evidence
Education policy expert Andrew J. Coulson considers more than 25 years of international research that suggests, in Coulson’s words, “[the] margin of superiority is greatest when the freest and most market-like private schools are compared to the least open and least competitive government systems (i.e., those resembling a typical U.S. public school system). Given the breadth, consistency, relevance, and decisiveness of this body of evidence, the implications for U.S. education policy are profound.”

They Spend WHAT? The Real Cost of Public Schools
Cato Institute Policy Analyst Adam Schaeffer analyzes per-pupil public school spending in the United States as of March 2010, exploring major costs of education that are often omitted from reported figures. The gap between real and reported figures is never lower than 23 percent and can be as high as 90 percent (as in the Los Angeles Metro Region), Schaeffer finds. Even the reported public figures show school reform options such as vouchers, tuition tax credits, and charter schools are more efficient for the schools and the overall economy, Schaeffer finds.

Education Spending in the American Recovery and Reinvestment Act: Stimulating the Status Quo
Lindsey Burke of The Heritage Foundation examines education spending in the American Recovery and Reinvestment Act signed February 2009, which called for nearly $100 billion in new funding for the U.S. Department of Education. The article identifies the sharp increases in non-teaching staff in the United States and the dozens of requests already for increases to the promised money. Burke concludes the increased spending is unlikely to sustain any long-term, stable positions, and certainly none for teachers.

The Economics of International Differences in Educational Achievement
Using international comparisons, this 2010 National Bureau of Economic Research working paper by Eric A. Hanushek and Ludger Woessmann connects school choice to fiscal savings, and from there to job creation and economic prosperity.

Fear and Privatization
Bruce S. Cooper of Fordham University and E. Vance Randall of Brigham Young University examine public attitudes toward school choice models and find much anxiety among both private and public school advocates. The authors make many common mistakes and assumptions about school choice, but they come to an interesting conclusion: School choice advocates are successfully blurring the lines between the public and private school models by instituting a wide range of different choice plans.

NEA: Rankings of the States 2009 and Estimates of School Statistics 2010
This NEA document ranks the states on spending per pupil and per $1,000 of per-capita earned income.

School Choice vs. Public Schools: An International Model
Chilean researchers Alejandra Mizala and Pilar Romaguera examine a new Chilean voucher system versus schools funded by the typical centrally controlled public system. They found a significant gain in academic achievement among the voucher system schools as measured by a long-running, peer-reviewed, standardized test.

For further information on the subject, visit the School Reform News Web site at or The Heartland Institute’s Web site at

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, contact Marc Oestreich, legislative specialist in education, at 312/377-4000 or [email protected].