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How Literacy Impacts the Economy Thumbnail

How Literacy Impacts the Economy


September 8 is International Literacy Day, a day to celebrate and demonstrate the importance of education and literacy across the world.1 After a year of challenges, loss and adaptation brought on by COVID-19, the importance of literacy and education cannot be understated. 

In this article, we will examine how literacy affects our local and national economies. 

Literacy & the Economy

In the context of this article, literacy is the ability to comprehend written and spoken language. It affects our interactions with the world around us, from casual conversations to financial decisions. For this reason, we can see how literacy and the economy become intertwined. Here are some ways that literacy influences the economy.

Income Levels

According to a study conducted by Gallup on behalf of the Barbara Bush Foundation for Family Literacy, there is a significant connection between literacy and income. The study compared average yearly income to average reading levels, finding the following connections:2

  • Reading level zero to one: $34,127
  • Reading level two: $47,596
  • Reading level three: $62,997
  • Reading level four to five: $73,284

As of 2017, 52 percent of the U.S. population has a reading level under three.3 Given this stat, and the study above, increasing literacy levels could have drastic impacts on national and local economies. Furthermore, the same Gallup study estimates that $2.2 trillion of additional income could be generated if all adults reached a reading level of three or higher.2

Employment Rates

Just as income is affected by literacy levels, so too is employment; 54 percent of employed individuals have a reading level of three or higher, while 64 percent of unemployed individuals have a reading level of two or lower.4 

Of course, there are a multitude of factors that influence employment, such as economic conditions. But, an increase in overall literacy could affect employment rates, as indicated by these stats. 

Incarceration

According to the U.S. Department of Justice, 75 percent of adult inmates in U.S. prisons are illiterate.5 This is most likely related to the other factors on this list as crime, employment and opportunities are often intertwined.

Furthermore, the Department of Corrections places the daily cost of incarceration at $112.96 per inmate a day.6 This cost, alongside the economic loss resulting from incarceration, demonstrates the powerful connection between literacy, the economy and imprisonment. 

Healthcare

Literacy also affects our ability to understand, process and follow medical recommendations. And in terms of the economy, U.S. health literacy has shown to result in economic inefficiencies of $106 billion to $238 billion annually.7

More importantly, low health literacy not only affects our economy but the livelihood of every individual. Literacy therefore not only impacts our healthcare expenses but our quality of life. 

Improving Literacy in the U.S.

According to the National Institutes of Health, a mother’s reading level is the greatest indicator of literary and academic success for children.8 One potential way to improve U.S. literacy could be to provide literary resources to parents. Investing in such programs would not only provide benefits to current generations, but generations to come.

It may be surprising to see how much literacy and the economy are intertwined. By implementing solutions to improve literacy, we could see drastic changes in healthcare, incarceration, average income, employment and more.

  1. https://www.un.org/en/observances/literacy-day
  2. https://www.barbarabush.org/wp-content/uploads/2020/09/BBFoundation_GainsFromEradicatingIlliteracy_9_8.pdf
  3. https://nces.ed.gov/fastfacts/display.asp?id=69
  4. https://www.libraryjournal.com/?detailStory=How-Serious-Is-Americas-Literacy-Problem
  5. https://www.ojp.gov/ncjrs/virtual-library/abstracts/prison-literacy-connection
  6. https://www.doc.wa.gov/docs/publications/reports/200-AR001.pdf
  7. https://hsrc.himmelfarb.gwu.edu/sphhs_policy_facpubs/172/
  8. https://www.nih.gov/news-events/news-releases/improving-mothers-literacy-skills-may-be-best-way-boost-childrens-achievement

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.