One way to calculate the economic cost of students leaving high school without having acquired basic skills is to identify the direct expenditures made by employers and institutions of higher learning to remediate those students' lack of basic skills.

In Strategy 1, we calculate the direct expenditures by community colleges, four-year colleges, and employers in Michigan to address the lack of basic skills among people no longer in high school. We obtained information from all community colleges, a randomly selected sample of 10 publicly operated colleges and 10 privately operated colleges, and a randomly selected sample of 113 Michigan businesses.2

Community colleges tend to offer the most extensive remedial (or "developmental," as it is now called) education services. At several of the community colleges in Michigan where we interviewed, more than half of the students require some amount of remedial education.3The range of remedial education services at four-year institutions is more limited, while employers offer even fewer opportunities for obtaining basic skills, although some businesses do teach their employees how to read, write, and perform basic math operations. The more common expenditure by employers is for technology that substitutes for this lack of skills.

Below we examine in more detail the remedial education expenditures made by community colleges, four-year institutions, and employers to bring the skills of students and workers up to speed.