Chamber Executive Article Archive

The Business Case for Early Childhood Investments

By John Pepper

Fall 2014


In a lifetime of presentations and articles on various issues, I believe this topic—giving children a good start in life—is of the utmost importance. My goal is to convince you of the truth of something that I and many other business leaders believe, motivate you to act on that truth in your states and communities, and tell you how my colleagues at ReadyNation can support you in those actions.

I’m sometimes asked what concerns me most about the future of our nation. Three things weigh most heavily on my mind and heart: First: nuclear proliferation; surely I am not alone here. Second: solving our debt problem in the right way. And third: the issue that truly troubles me the most, but one that can be solved by all of us working together, is ensuring that our children—tomorrow’s leaders—have access to the education and opportunities needed for them to grow up to be independent and contributing citizens. The success of our country absolutely depends on our future generations becoming productive adults.

We talk about a lot of deficits today in this country: budget deficits; trade deficits; job deficits. Make no mistake. The biggest deficit—one affecting all the others—is the deficit in the early development and education of our children under five-years-old.

You have heard the indicators of how far off track we are today in the development of our young adult population:

•   Our high school dropout rate is 20 percent, almost exactly what it was a quarter century ago, and it’s 40 percent in many major metro areas. This at a time when an estimated 70 percent of new jobs will require more than a high school education. It may not be surprising but it sure is maddening to know that in a nation with 10 million unemployed we have 4 million jobs that can’t be filled with qualified candidates.

•   The consequences of being a high school dropout are worse than ever. Unemployment rates in double digits. Income hardly supporting a family. And I cannot get out of my mind that 70 percent of the incarcerated men and women in our state prisons are high school dropouts. This is tragedy of the highest order.

•   A generation ago we led the world in the percentage of young adults who had completed college; now we have slipped to 12th.

•   On proficiency tests, U.S. students invariably place in the bottom half among all developed nations. But did you know that students from the poorest U.S. school districts score extremely low, while those from the wealthiest districts scored much higher? Here we witness one of the tragic symptoms of the plague of poverty.

It doesn’t have to be this way, and we cannot allow it to continue this way. Not if we are to be the nation we aspire to be.

Solution to the Problem

The last decade has brought us compelling evidence that quality early childhood supports for our children and their families make a lifelong difference. Neurological and educational evidence clearly shows:

•   90 percent of brain development, affecting not only cognitive skills, but also emotional health, occurs in the first five years of life. Neural connections are made at an incredible rate to form the brain’s fundamental infrastructure. These pathways for learning set the course for a lifetime. This is basic biology, pure science.

•   There is a clear and direct impact of high-quality early learning on being ready for kindergarten. Children who are ready for kindergarten are much more likely to be proficient readers in the third grade, and proficient third grade readers are more likely to graduate from high school, the basic prerequisite to a life-sustaining job.

•   A study in Cincinnati showed that 85 percent of children who tested “ready for kindergarten” were reading proficiently by the end of the third grade. This is almost twice as many as those students who were not ready for kindergarten.

Think for a moment what it feels like as a child to be in a class and not be able to read like your fellow students. You feel out of it, inferior, different. So what do you do? You struggle. You withdraw. You may act out. And finally, you may opt out. And sadly, many do. We know that students not reading proficiently are four times more likely to drop out before completing high school, and if they are poor, they are 11 times more likely to drop out.

We know that quality pre-kindergarten education can help all children be ready for kindergarten, especially those from poor and working class families. These children can be on a path to success, provided they are afforded a quality pre-K experience. Quality early childhood programs contribute to better childhood and adult health and reduce the burden of lifetime health care costs. This has enormously positive social and economic consequences for our country.

One study after another—and I have personally reviewed dozens of them—prove that the cost of quality pre-K, about $8,000 per year, pays for itself many fold, at least 2 to 1. Why? Because of the higher taxes that come from higher incomes and from the lower costs of special education, grade repetition, social welfare and incarceration, which too often follow those students who fall out of the system. In short, these investments are a financial no-brainer.

Why We Should Act Decisively

There is another reason we business folks care a lot about this issue. We’re competitive! We become obsessed when we see someone else doing something better than we are, something we know matters to our long-term success. That’s exactly what we see happening now on pre-K education.

Other developed countries provide 90 percent of their 4-yearolds with quality pre-K while we cover less than half. China has committed to giving 70 percent of its children three years of pre-K by the year 2020. Other countries get it, and we had better get it, too.

The sad fact is that most families in the U.S. cannot afford quality pre-K for their children. The cost, about $8,000 per child, represents more than 25 percent of the average family’s income. It’s unaffordable for way too many people.

Ladies and gentlemen, our situation is morally and ethically wrong. It is unfair for children’s futures to be so influenced by their family income, or by the zip code in which they are born.


This evidence is the reason why I and 1,000 other business leaders, including executives from ACCE and dozens of state, metro and local chambers of commerce, have joined ReadyNation (www.readynation. org). ReadyNation is a business membership organization that supports executives to speak to policymakers and the media about improving the economy through effective investments in children and youth. In fact, a report by ReadyNation showed that in 49 states, a chamber or business roundtable has formally endorsed early childhood education as a public policy issue. Recently, chambers in Denver, Seattle and Indianapolis, among other cities, have spoken out in support of early education initiatives in their states.

We cherish the idea of the American Dream—that if you work hard, you will succeed. But the facts show that our dream is an illusion for too many kids. Only nine percent of children born into the bottom income quintile will graduate with a post-high school degree, and the probability that those children will reach the top quintile is also a meager nine percent.

We hear a lot today about the lack of upward mobility. Views on this may differ, but there is one thing we should all be able to agree on: every child should have a fair chance to make the most of his or her life by having a good start.

The great news is that the American public is getting it. In recent polling, a remarkable 70 percent of all voters (and a majority of every party) said they would vote to support a federal plan to help states and local communities provide better childhood education. As is often the case, the public is ahead of our lawmakers. And business leadership groups like chambers and ReadyNation have been helping to mobilize public opinion and legislative support for these smart investments that pay huge dividends to our society and our economy.

Experts agree that this impact of quality pre-K on social and emotional development, in addition to cognitive learning, explains why studies conducted over 20+ years show that quality pre-K makes life-long differences in employment, income level, family formation and health.

Is quality pre-K a magic bullet? No. While it is not a total or universal cure, it does makes a life-changing difference for a significant number of children. And the cost of this investment is paid back many times. Yet, despite these facts, we are unconscionably failing to provide this opportunity to over half of our children while other countries are doing far more. This is crazy. We are committing a terrible mistake. We say it all the time: our future strength lies in the strength of our children. Yet we are failing to act on that truth.

Expanding quality early childhood education will require more money. But please never forget this investment will come back to us financially many-fold; we should keep the cost in perspective. Funding quality pre-K for all four-year-olds would represent little more than one percent of what we are spending in our defense budget every year.

So I ask of you three things:

•   Make early childhood education a foundational part of your workforce development plan in your community. Some of you already have. I hope all of you will. Learn enough about early childhood development so you can become an advocate for its expansion within your communities and states. ReadyNation can be of major assistance with research, information, and successful models from various states and communities. Please become a member (at no cost) and contact our staff; they are active across the country and they can support your efforts to become a champion for early childhood investments in your state.

•   Educate every government leader you can reach about the importance of quality early childhood development programs in your community. Tell them we need to provide children a good start now. Tell them that if we don’t do this we won’t have the nation and the future we need and to which we aspire. That is the plain and simple truth. This will only happen with business advocacy at the local, state and federal levels.

•   I urge you to make it happen in your community. If not us, who? If not now, when? The future of our children and the health and prosperity of our nation depend on it.

John Pepper is a former chairman and CEO of Procter & Gamble, headquartered in Cincinnati. He spoke about the issues discussed in this article at ACCE’s 100th convention in Cincinnati.


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