The Smart Economics of Early Childhood Education

Children who grow up in poverty are twice as likely to struggle with financial issues later in life, according to new data from a Federal Reserve survey cited Thursday by Fed chair Janet Yellen.

Yellen, keynoting a Fed conference in Washington on childhood education and community development, said a study to be released later this year “underscores the value of starting young to develop basic work habits and skills.”

“Broadly speaking, children who grow up in insecure circumstances . . .  seem disproportionately likely to encounter economic insecurity as adults,” Yellen said. “Ensuring that all of our kids have strong foundations will help build a similarly strong foundation for the U.S. economy.”

The Fed chair broke the challenges of preparing young people to succeed economically into three broad categories – categories mirrored in the agenda of the two-day conference, Strong Foundations: The Economic Futures of Kids and Communities. They are:

• Early childhood development in education
• Effects of neighborhood and community conditions on young people
• Skill development and workforce outcomes

A key theme throughout the conference was that investments in early childhood education pay economic dividends. The University of Minnesota’s Art Rolnick – one of the architects of that state’s scholarship-focused early childhood education program – said research shows that investments in early childhood learning pay an 18 percent, inflation-adjusted return. Rolnick compared that yield with the 5.8 percent cumulative return of the post-World War II stock market.

“We need a new narrative here,” said Jack Shonkoff, the director of the Center on the Developing Child at Harvard University. “The mindset needs to bring together the warm-hearted development approach and the hard-nosed economic approach . . . the evidence for the support of this is overwhelming.”

Katherine Magnuson, a professor of social work at the University of Wisconsin-Madison, cited her work cataloguing evaluations of early childhood education programs from 1960 through 2007, which found that “even average early childhood programs produce demonstrable, important results that will improve low-income children’s achievements.”

Another theme at the conference was that early childhood interventions must not focus solely on academics but also on promoting a child’s general sense of well-being. It’s “not just about exposing children to their ABCs and numbers,” Magnuson said. “When children experience stress . . . it has lasting implications for their development . . . it cues them up to have problems later in life with their stress response system.”

Shonkoff pointed to the opportunities for investments in research and development to continue breakthroughs in understanding the neuroscience behind childhood development. Putting low-income children in a position to succeed is not just about parent skills and workforce development strategies, Shonkoff said. “It’s about foundational capabilities . . . executive function and self-regulation skills. The ability to focus and sustain your attention, the ability to set goals, to make plans . . . these are the foundational skills for human capital development.”

Building political support for sustained investment in early childhood education remains a challenge that was noted frequently throughout the conference. “These kids don’t vote,” Rolnick said, noting that his home state of Minnesota seems more able to build support for building sports stadiums than for expending more resources to help children learn.

“For low-income kids and low-income families, it’s a political struggle,” said Rolnick. We can’t afford, as an economy, to leave this many kids behind.”