American Education and its Impact on the World Economy

Research suggests that the American education system, rather than improving over time, is stagnating or even deteriorating.  Eric A. Hanushek, a Senior Fellow at Stanford University’s Hoover Institution, asserts that “US students’ [test] scores have been stagnant for the past decade.”  Students in many other countries such as Israel and Poland, however, have made substantial improvements (75).  This deficiency in recent American education extends beyond the classroom and includes issues such as a lack of social skills, difficulty communicating ideas, and an inability to understand subjective biases.  The extent of this phenomenon is significant, as is its impact on American commerce and the world economy as a whole.

In addition to struggling in the classroom, American students today are having trouble with social skills, communicating effectively, and critically thinking about the world to understand subjective biases.  Students have been displaying increasing measures of anti-social behavior over the past 30 years.  They feel less empathy and are more narcissistic than past students (Zaki 1).  Today’s students also tend to have smaller social circles.  This behavior may be attributed to more technology use in schools, and to an increase in activities, such as video games, that contribute neither to social development nor to education (Dimick).

Today’s students, especially heavy users of technology such as social media, tend to have more psychological health risks and difficulty verbally communicating their ideas (Drussell 10).  In addition, students in schools with greater emphasis on technology, rather than on books, tend to have trouble developing critical thinking skills with which to view the world around them.  Most of these problems seem to arise from an excess of technology use among adolescents.  UCLA psychology professor Patricia Greenfield contends that digital media is not necessarily harmful, but students need a balance of digital and print media to gain a balanced education and healthy development (Wolpert).

The American education system, predictably, has a marked impact on American business.  It may seem as though the United States’ economy is an unstoppable force, but this is because the United States already has strong economic, financial, and political institutions, most of which were put in place when the American education system was regarded as one of the best in the world.  These pre-existing institutions have protected us from the shortcomings of the current education system, however these systems and institutions will erode and falter when not sustained by skilled human capital.  It is also well documented that overall economic health is closely tied to the state of a nation’s educational institutions, and if our educational deficiency continues, our institutions may cease to protect us and our economy will slump (Hanushek 76).

American education affects the American economy in other ways.  More jobs today require a college education than in the past.  This becomes problematic when American schools fail to prepare students for college.  The unemployment rate for college graduates is less than half of that for those without a college degree.  This statistic suggests that if American students were better prepared for college, they would go on to occupy professional jobs and reduce the overall unemployment rate (Farrell).  In addition to decreasing unemployment, a better education system would translate to higher paychecks for the American worker.  It is estimated that if the United States reached Canada’s level of testing achievement, wages for the average American worker would rise 20 percent (Hanushek 79).

The plight of America’s schools has an impact on the world economy as well.  Studies have confirmed that cities with a higher concentration of educated professionals tend to have higher economic health.  This is because working professionals help sustain the economic health of the city, but also because vibrant cities provide opportunities that attract educated professionals (Booth).  Much like healthy cities, thriving companies attract skilled workers.  American businesses, particularly those in Silicon Valley, are attracting skilled workers who were educated abroad (Hanushek 79).

The attraction of skilled workers to healthy cities and companies applies to skilled American workers as well.  If America’s education system continues to falter, the United States may experience a great “brain drain” as professionals leave to pursue better opportunities abroad, further weakening the American economy.  This is especially true of emerging markets, which have a high demand for skilled workers.  For example, nearly one fifth of Americans living abroad works in the IT and telecommunications sectors.  The US State Department estimates that there are currently 6.8 million Americans living and working abroad, up 0.5 million from the same time a year prior (Costanzo and von Koppenfels).  The number of Americans living and working abroad continues to rise as overseas economies develop and offer better opportunities.

In summary, there are several ways the United States’ education system affects the US economy, as well as the world economy.  Most experts agree that an excess of technology poses several risks to US students.  It is important to note that technology use is not harmful, but needs to be balanced with other forms of media, such as print, and needs to be focused on teaching and learning rather than on gaming and social media.  Skilled workers who were educated abroad have a greater understanding of how such technology works, rather than simply using it.  It is also apparent that although America’s schools have been falling behind, the United States economy has been largely shielded from adverse effects by institutions that were already put in place.  It is important to note that overall economic health is closely tied to the state of a nation’s schools, and that these protective institutions will erode if not sustained with educated professionals.  The third takeaway is that economic asymmetries, often precipitated by educational asymmetries, affect the flow of skilled workers to and from different nations.  In an increasingly globalized world, skilled workers will continue to flock to healthy companies and economies, wherever they may be located.  The deficiencies in the American education system will continue to shape the United States and world economies as other nations excel academically.


Booth, Robert. “Education and Skills Have Long-term Effect on Cities’ Economic Well Being.” Guardian News and Media, 12 July 2012. Web. 23 June 2014.

Costanzo, Joe, and Amanda Von Koppenfels. “Counting the Uncountable: Overseas Americans.” Migration Policy Institute, 17 May 2013. Web. 23 June 2014.

Dimick, Luke. “Study Shows Online Networking Could Hurt Social Skills.”Central Michigan Life. Central Michigan University, 13 Nov. 2009. Web. 22 June 2014.

Drussell, John, “Social Networking and Interpersonal Communication and Conflict Resolution Skills among College Freshmen” (2012).Master of Social Work Clinical Research Papers. Paper 21.

Farrell, Chris. “Failing U.S. Education Will Dumb Down Economic Growth.”Bloomberg Business Week. Bloomberg, 24 June 2010. Web. 23 June 2014.

Hanushek, Eric A. “Test Scores Do Matter.” Hoover Institution. Stanford University, 21 Apr. 2014. Web. 22 June 2014.

Wolpert, Stuart. “Is technology producing a decline in Critical Thinking And analysis?” Newsroom. University of California Los Angeles, 27 Jan. 2009. Web. 22 June 2014.

Zaki, Jamil. “What, Me Care? Young Are Less Empathetic.” Scientific American Global RSS. N.p., 23 Dec. 2010. Web. 22 June 2014.

By Jacob Shimota

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