Affordability Begins with Better Schools

Learning decline has blown a $90 trillion hole in our future standard of living

We have four problems and one solution to discuss today:

Problem #1. The news about Oregon’s 8th graders is not good

On the most recent National Assessment of Educational Progress (NAEP), they ranked 40th among states in math.¹ Their low performance stands out because Oregon is relatively affluent—20th in per capita income. Even so, Oregon’s students trail their peers in poorer states like Kentucky, Tennessee, and Missouri.

Fortunately, there’s an alternate universe where Oregon’s ranking is dramatically better - where it actually rises to the top, surpassing all others. That’s good news, right?

So where can we find this alternate universe?

It’s called “2013.” If only Oregon could have been judged in 2024 based on its NAEP performance from 2013, it would have ranked 1st. Numero uno.

But Oregon plummeted between 2013 and 2024. The same thing happened in most states. As you may have heard, we’re afflicted by an education depression.

Which is why Oregon could have skipped from 40th to 1st simply by stopping time and freezing its 2013 scores in place. Those 2013 scores weren’t magnificent, mind you. They ranked 29th in the moment. But in 2024, they would have ruled.

Spoiler: This is not really a story about Oregon. It is a story about America’s free-falling academic performance and the enormous economic consequences that will follow.

The chart below shows all 50 states plus DC. The blue dots show where each state actually ranked in 2024: Massachusetts was no. 1, Wisconsin was no. 2, etc. The orange dots show where each state would have ranked in 2024 if it could have submitted its 2013 score instead.

• In total, 29 different states could have ranked 1st in 2024 if they were judged by their score from 2013 rather than their actual 2024 score. Maine, Texas, Rhode Island… I feel like Oprah shouting “You get a car! You get a car!” So many Oregons. What used to be mediocrity would now be best-in-class.

• The worst performing state in 2024 - New Mexico - would have jumped to 26th if it substituted its 2013 score. Cellar-dweller no more.

• When you see a state in the chart whose 2013 score would not have helped so much - e.g. Tennessee, Mississippi, Alabama, DC - that’s a good thing. The more a state has to gain by substituting its 2013 score, the worse it has generally done since then. We are looking at you, Delaware and Maryland.

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Problem #2. Weaker academic results drag the economy

Stanford economist Eric Hanushek has been thinking about the alternate universe. He recently calculated what would have happened to the U.S. economy if achievement did not deteriorate over the past decade and instead remained at peak 2013 levels. As he put it, those who “know more earn more,” and "nations with a more skilled workforce grow faster in the long term.”

Hence, sustaining 2013 academic performance would have led to greater GDP (gross domestic product) going forward. How much greater? In present value, our economy would be $90 trillion larger by the end of this century. Our current GDP, for reference, is $30 trillion. The future loss is equal to 3x the size of today’s total economy.

That’s major cheddar. How can we put it in perspective?

• The combined net worth of all U.S. billionaires is about $6.7 trillion. They could forfeit all their assets and it would cover less than 10 percent of the economic losses we’re set to incur.

• Remember when the economy imploded in 2008? Mortgage-backed securities had some flaws, it turns out. Almost overnight, the federal government was propping up banks and bailing out the domestic car industry. We were two steps away from potato sack clothes. During the worst of that crisis - from late-2007 to mid-2009 - the economy shrank 4.3 percent. Hanushek projects that the hit we’ll take from lower student achievement will be 6 percent per year for 75 years. That’s not just worse. It’s many times worse.

Why are education and GDP connected? Better-educated adults produce more output per hour of work and adapt to new technology more easily. They develop more inventions and patents. They create something called “knowledge spillover,” which to my great surprise is a positive outcome that compounds the effects of higher skills on GDP over time.

When the economy does not grow, wages stagnate. Everyday essentials like housing, food, transportation, childcare, and healthcare eat up a larger share of income. In a nutshell, affordability goes to hell.

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Problem #3. Affordability’s big political moment has a blind spot for schools

Zohran Mamdani brilliantly harnessed affordability to score an out-of-nowhere mayoral victory this year in New York City, cruising past a creepy ex-governor everyone thought was in jail and the beret guy who founded a vigilante group.

President Trump, who won what Derek Thompson termed an “affordability election” last year, was so impressed that he invited Mamdani to the White House and said nice things about him. (He really did that, I know you think I’m joking.)

Correctly sensing the moment, Democratic gubernatorial candidates Abigail Spanberger (Virginia) and Mikie Sherrill (New Jersey) rode the affordability train to November routs. Affordability is “the new winning formula.”

Why? People apparently like affordability. They hate high prices. Such a revelation.

Mamdani has ambitious plans to arm-wrestle costs into submission through levers such as rent control, zoning, tenant rights, higher minimum wages, free transit, subsidized childcare, and city-owned grocery stores.

Will he succeed? I hope so. This may be controversial, but here at Education Daly world headquarters, we’re squarely in favor of families being able to afford stuff. Unfortunately, I’m totally unqualified to comment on the political or economic viability of Mamdani’s ideas. You are better off reading arguments from people who know what they are talking about.

But there’s one area where I’m quite confident, based on past evidence: One of the best ways to build long-term affordability is a high-performing public education system.

And when it comes to schools, this talented wave of affordability crusaders has offered too little. Mamdani plans to relinquish oversight of his city’s schools rather than make it his business to improve them. In a fall debate, Sherrill served up an embarrassing example of outdated condescension toward Mississippi and Louisiana’s rising performance. Spanberger’s education plan is paint-by-numbers gobbledygook.

We need better leadership - because of Problem #4.

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Problem #4. The real-world consequences of sinking achievement have already arrived

This fall, an internal report from the University of California San Diego (UCSD) found that over 1,000 newly admitted students need remedial coursework on basic concepts like rounding numbers and maneuvering fractions. That’s 30 times the number of UCSD students that required remediation just a few years ago. Most of them have sparkling transcripts full of good marks in advanced high school math courses. Otherwise, they wouldn’t have been admitted. But they cannot actually do much math. Their K-12 districts likely responded to lower student readiness with heaps of grade inflation.

If we could take that time warp back to 2013, students across the board - including UCSD freshmen - would have much stronger math skills. Instead, we’re stuck in the present, where kids are taking out loans to pay college tuition for classes that will teach them things they should have mastered years ago. They won’t graduate with the same ability to contribute in the workforce. Remedial education is not just a personal setback—it’s economic quicksand.

And that sound you hear? That’s $90 trillion of future GDP sliding into a money pit.

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Solution: Make education an explicit part of affordability

Lacking a workable time warp, education needs to become an affordability priority in two ways.

First, we need to produce better education results in the near term at an affordable price. We cannot be Oregon, which has spent far more money on its schools over the past decade for wildly worse results.² Nor can we be California, handing out high school A’s and B’s to students who will then be forced to repeat that coursework in college. We are seeing too little payoff for the investment of vast sums - just as we did with pandemic recovery funds. Inefficiency in K-12 is preventing more investment in childcare, housing, transportation, etc. It’s time for national and state leaders to lay out a clearer vision. Why do they believe results have fallen? And what are they doing about it?

Second, stronger learning outcomes must be a central element of the future affordability agenda. Better standards of living require a healthy, expanding economy that shares opportunity broadly. Childcare and groceries are critical. But if we continue to see more students with very low academic skills, they will earn less and it will be impossible to subsidize goods and services for all of them, no matter how aggressively redistributive we become. Alternatively, we can reverse our post-2013 trends and improve affordability by producing young people who are truly ready to support themselves and their families. Affordability will fail if it becomes a debate over distribution of a smaller pie. Cheaper housing? Yes - but only if those new houses are near strong schools.

Let’s hop aboard the affordability juggernaut recognizing that the only viable path to success includes education. Otherwise, our affordability dreams - and the future prospects of the politicians who have ushered them to the fore - will quickly evaporate.

1. When Oregon’s results are adjusted for demographics, it fares even worse: 49th place.

2. To its credit, Oregon’s governor has (belatedly) begun to address her state’s slide with a package of reforms that includes greater accountability. Good start, long way to go.