Say the graphic below represents a broad-based equity index. Would you think the index says the stock market it represents is a dog, or a buy? The index only recently returned to its level of four decades ago. A dog, right? Then again, after bottoming out around 1996 to 2000, the market has made an impressive comeback. Perhaps it’s a momentum play, a buy.
Here’s the thing: The chart doesn’t represent the performance of a stock, but America’s high school graduation rate, courtesy of the Federal Reserve Bank of Cleveland. Knowing that, how do you read the chart? (The average freshman graduation rate is an estimate of the percentage of high school students who graduate within four years of beginning the ninth grade.)
Is the graph a measure of despair, since over four decades all we’ve managed to do is get back to where we were in 1974? We all know America’s schools are terrible, right? Or are the more recent gains signs of a heartening rebound, a harbinger of a much brighter education future? My bet is on the latter. “This is positive news,” says Jonathan James, a research economist at the Cleveland Fed. “It will establish a better starting point for increasing human capital.”
The numbers are striking. During the 2009-10 school year, 78.2 percent of high school students got their diploma on time, up from 73.9 percent in 2002-03. All ethnic groups have shown improvement. The performance of Hispanic students stands out, with a nearly 8 percentage point gain from two years earlier. The estimated graduation rate for black students was up nearly 5 percentage points over the same period. The trend suggests that aggregate efforts such as the school accountability movement, the Bush administration’s No Child Left Behind, the Obama administration’s Race to the Top, and other initiatives are translating into progress.