Students face loss in lifetime earnings from pandemic, says study

Students who suffered through the pandemic and were subjected to lockdowns should brace for significant losses in lifetime earnings, says a Hoover Institution study published Wednesday. 

The study pulled data from a recent National Assessment of Educational Progress (NAEP) report showing a historic decline in test scores. The drop in average test scores in eighth-grade math, for example, was enough to wipe out all the gains since 2000. The average reading score for nine-year-olds dropped five points, the first decline in reading test scores in three decades. 

The Hoover study translates these declines into lifetime earnings, explaining that the average student during the pandemic faces roughly a 5.6% cut in the income they might have made. 

The lifetime earnings decrease varies by state; in Utah, students face a 2% drop, but in Delaware and Oklahoma, they face nearly a 9% drop. 

According to the study,

[T]he equivalent way of viewing the high rewards of skills is that the United States punishes those without skills more than other countries. In other words, those with lower achievement see larger negative impacts on their lifetime earnings than found elsewhere. 

This, in turn, will result in a drop in skilled labor, causing future cuts in GDPs. 

The pandemic’s effects imply that the future workforce will be less prepared to contribute to economic growth. Even if education returns to its pre-pandemic quality, there is a cohort of students that will move through the future labor force with lower skills and achievement than those both before and after them. This lowered aggregate skill level will, by historical observations, lead to a slowdown in growth relative to what would have occurred without the pandemic. 

Currently, as the students have not yet entered the workforce, the economic impact is zero. But that will eventually change, and the study warns the “economic impact is truly significant.” 

The GDP losses are expected to average 1.9% across states, though they vary in congruence with learning losses. Accordingly, Utah can expect a 0.6% loss in its GDP while Delaware and Oklahoma are facing a 2.9% drop. 

Those losses are expected to circle back to schools, which averaged 3.5% of the GDP in annual revenue. The expected GDP cuts may impact over half of school budgets. 

California is likely to take the hardest hit to its GDP with a $1.3 trillion loss. Texas, New York, Florida and Pennsylvania are looking at a $500 billion loss each. 

The pandemic has had devastating effects in many areas, but none are as potentially severe as those on education,” the study concludes. “There is overwhelming evidence that students in school during the closure period and during the subsequent adjustments to the pandemic are achieving at significantly lower levels than would have been expected without the pandemic. 

“Efforts to date,” the study notes, “have not been sufficient to arrest the losses.”