Efraim Berkovich from the Penn Wharton Budget Model talks with Wharton Business Daily on Sirius XM about the impact of virtual schooling on students’ lifetime earnings.

Lower education is correlated with lower labor income, so children in grades K-12 who have been in virtual schooling over the past year are likely to suffer permanent reductions in lifetime income, according to a new study by the Penn Wharton Budget Model (PWBM) titled “COVID-19: Cost of Virtual Schooling by Race and Income.”

Those scars will begin hurting years later when Black and poor students enter the job market. “If in the future, the world and the U.S. economy are going to be creating more technical and knowledge-based jobs, then these kids that are missing out on their education will lose out on being able to get those higher paying jobs,” said Efraim Berkovich, PWBM’s director of computational dynamics, in an interview on the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast above.) Berkovich directed the PWBM study with research associates Maddison Erbabian and Youran Wu.

PWBM analyzed data on the school districts of Philadelphia and 63 surrounding suburbs to make its case that schools in its dataset with more Black students are less likely to reopen with in-person instruction relative to schools with more white students. The divergences PWBM projected in income losses are pronounced along both and income and racial lines.

According to the study, by March 2021, Black students in grades K-5 would have incurred a 11.9% loss in lifetime income from school closures, compared to a loss of 10.4% for white students. Students from poor families also get the worst outcomes. K-5 students in the lowest family income quintile would have lost about 11.3% of lifetime income compared to a 10.7% loss for those in the highest income quintile, the study stated. A 10% loss in lifetime income translates into about $120,000 in present-value terms, said Berkovich. “That’s a large amount of future pain that we’re imposing on our children and on our economy as well, because these kids are not going to be as productive.”

“The ones that really need the in-person time are the ones who are not getting it.” –Efraim Berkovich

Studies have shown that “virtual learning is just not as effective as in-person learning, … and gives you almost no improvement in math skills,” Berkovich said. The PWBM brief cited a Stanford University study on the effectiveness of online K-12 charter schools, which found complete learning loss in math, but only partial learning loss in reading when instruction is fully online. It also cited an OECD study published in fall 2020 that estimated that current students in 18 states and Washington, D.C., have lost between 6% to 9% of future lifetime labor income from the school shutdowns.

Berkovich noted that Philadelphia schools have been mostly closed to in-person learning over the past year, whereas the suburban schools have opened up to a small extent. By looking at the demographic composition of each school district, PWBM was able to calculate the amount of in-person learning that school children of different groups effectively receives, he said.

In the school districts PWBM studies, it found that those in Philadelphia’s suburbs “show very little difference in terms of openness across both different economic groups and different racial groups,” said Berkovich. By contrast, urban school districts “have been substantially more closed,” he added.

“The home environment makes a huge difference and that will have a differential impact on who is being harmed by these school closure policies,” said Berkovich. “Higher income students and higher performing students aren’t hurt very much.” He pointed to those outcomes in a study covering the school system in Fairfax, Va., noting the county’s wealth. With distance learning, low-performing students stopped being engaged and dropped out, and that showed in their lower grades, he said. “So, the ones that really need the in-person time are the ones who are not getting it.”

Guideposts for Policymakers

The study is the latest of PWBM’s efforts to determine “how to make a good policy decision about reopening schools,” said Berkovich. It allowed PWBM to “calculate as best we can the cost that we think is imposed on students,” he added. “It gives policymakers a way to try to balance the cost of new COVID infections versus the cost that we’re imposing on our children.”

PWBM’s newest estimates peg the average cost of a new infection at $41,180 through January 2021 — roughly 8 times the average estimated $4,972 cost of an influenza infection. That cost estimate included the “total value-of-life, medical, and productivity costs.” It is far lower than estimates of $300,000 in the early phase of the pandemic last spring, after which treatment outcomes have gotten better and mortality rates have fallen, Berkovich noted.

Berkovich explained how one year of lost learning with virtual schooling would have lifetime impacts. “If you missed out on algebra when it was taught in seventh grade, then you’re going to be struggling [with it] in eighth grade and in ninth grade; that’s going to be with you through college,” he said. “These losses are very difficult to make up without some massive policy intervention right now. The longer we wait, the more these kids are going to fall behind. It’s going to be very difficult to catch somebody up when they’ve been behind for years.”

“These losses are very difficult to make up without some massive policy intervention right now. The longer we wait, the more these kids are going to fall behind.” –Efraim Berkovich

For sure, school students may make up some of that lost education in later years. “[But] the question is, how much, and what is being done or discussed in policy circles to try to address some of those things,” said Berkovich. “I don’t know if that means that we should be talking about a longer school year or summer school or other policy elements that can be [considered] to try to make up some of this learning loss. But ignoring it is potentially problematic for the children and for the economy.”

Berkovich pointed out that, as a rule, PWBM steers clear of making policy recommendations. “I’m merely saying that we are looking at a hole that that has been dug and we need to think about how to address it,” he said. Funding, for instance, will be an important part of any mix of solutions. “We’re spending a lot of money on COVID-19 stimulus. Are we spending enough on education measures? If we are going to expand the school year or expand summer school for almost everyone, that is going to come with significant cost. I don’t have answers or policy proposals, but these are things that need to be thought about.”

In future studies, PWBM plans to use its models to assess the long-run economic impacts of virtual learning for the country, including GDP growth and productivity.