are being reduced or even eliminated (Chart 13). Nearly all whites and nonwhites now complete elementary school, but the gap in high school completion rates remains large even among the 20-24 year old group. Moreover, nonwhites often receive not only less, but also poorer, formal education. Also, education acquired in pre-school years and outside the school is impaired when parents and companions suffer from educational gaps. Hence, far larger efforts for the educationally disadvantaged are necessary to bring about true equality of educational opportunity. It was in recognition of the national importance of education that the Federal Government undertook a major new initiative with the Elementary and Secondary Education Act of 1965, which provides financial help on the basis of the number of children from low-income families. Under this Act, the Federal Government is spending $1.2 billion in support of elementary and secondary education in the current fiscal year, tripling the support it provided only 2 years ago. The "Head Start" program has demonstrated great capacity for benefiting disadvantaged, pre-school children. The Administration is therefore proposing that the benefits of this program be extended by providing a follow-up program in the early elementary grades. TRENDS IN DEMAND AND COSTS Between 1956 and 1966, enrollment in full-time elementary and secondary day schools in the United States increased by 33 percent, from 37.2 million to 49.7 million. This sharp increase is attributable to the postwar spurt in birth rates and to greater school attendance by teenagers. Because roughly half of high school graduates continued on to college while the number of students graduating from high school rose sharply, college and university enrollment doubled from 2.9 million in 1956 to 6.0 million in 1966. In the next decade, elementary and secondary school enrollments will increase only about one-fourth as much as in the past decade. Demand for college education, on the other hand, is expected to continue increasing rapidly, as the proportion of youths completing high school rises and as somewhat more than half of high school graduates go to college. Projections for the future also point to a continued very rapid rise in the fraction of labor force entrants with a college education, which could reduce the returns from higher education. Outlays per student-year of formal education at all levels have risen by nearly 90 percent during the past decade. The increase may reflect, in part, improvements in the quality of education, but it also reflects higher costs of education. A major factor in the increase in costs has been the dramatic rise in professional salaries at all levels, as increased demand for teachers outran the growth of supply, especially since entry requirements for teachers were raised in many areas. Salaries rose substantially faster than wages generally, and, in response, an unusually large number of former elementary and secondary teachers returned to the classroom. Enrollments are expected to rise less rapidly over the next decade than the number of college graduates available to teach in elementary and secondary schools or than the number with advanced degrees available to teach in colleges and universities. However, it may take special efforts to meet acute present shortages of teachers with specialized skills, such as nursery school instructors, teachers of remedial reading, and teachers of the emotionally handicapped. In the recently initiated Teacher Corps, the Federal Government helps to support teams of specialized teachers who work in slum areas at the request of the city. The expansion of special programs for the disadvantaged will require a major increase in the supply of teachers in these specialties. New Methods Learning can be improved and the costs of education lowered by a variety of changes in techniques and technology: new curricula and methods of instruction including team teaching, more job specific and employment oriented curricula; upgraded and more flexible school systems; greater application of learning theory; incentive pay systems; full utilization of physical plant, especially during nights and summers; and use of subprofessional aides to economize on professional time. The Joint Economic Committee last year surveyed professional opinion on these and other technological developments. Educational television, teaching machines, computerized education, and programmed learning promise future educational breakthroughs-perhaps more quality improvement than cost reduction for some time. Many of the newer techniques remain to be tested in practice, and further research is required. Forgone Earnings as a Cost From the private point of view, forgone earnings (the sacrifice of opportunity to work full-time) are a significant part of the costs of secondary and, particularly, of higher education. Many potential students forgo education because they are unwilling or unable to defer careers, marriage, and present earnings. But society can afford to wait for the returns more patiently than many of the young, especially the poor. Thus, the private costs of forgone earnings may exceed the social costs, thereby creating a deficiency of demand from a social point of view. College students could afford to wait more readily for future earnings if investment in human capital could be financed as other forms of investment are financed, by borrowing against future earnings. In particular, students encounter problems of raising sufficient funds without collateral. To fill gaps in private financial markets, a number of Federal and State student loan pro grams have been initiated since 1958. A guaranteed student loan program relying on private bank participation was provided in the Higher Education Act of 1965, but its launching was slow, partly because of the tight money conditions of 1966. Additional steps are underway to strengthen and expand this program. However, proposals for new financing techniques over the longer run need and deserve careful exploration. Some interesting proposals would provide for student loans with repayment scaled to the borrower's earnings after graduation. Over the next decade education will claim an increasing share of our growing incomes in a number of ways. First, throughout the society, average educational attainment is likely to increase. Second, significant efforts will be made to improve the content and quality of education. Finally, society will endeavor to assure that those disadvantaged groups now receiving education of below average quality and quantity should have full access to educational opportunities. The distribution of responsibility between the public and private sectors varies among these areas. Private choices will largely determine the increases in average educational attainment, mainly through greater enrollments in colleges. Both private and public efforts will be required to improve quality. The achievement of equality in educational opportunity will be a top priority public responsibility. HEALTH CARE Americans are demanding, receiving, and paying for more and better medical care every year, both as consumers and as taxpayers. Despite rising costs, the Nation is demanding for everyone-whether he can personally afford the costs or not-medical services which a few decades ago were available only for the well-to-do. Health care has become one of the largest industries in the United States. It employs over 3 million people, more than do the steel, automobile, and aircraft manufacturing industries combined. In 1965, total expenditures for health services, medical research, and new facilities totaled $40.8 billion, about 6 percent of GNP (Table 23). Public expenditures account for oneTABLE 23.-The Nation's health budget, 1965 Direct outlays for health care, including net cost of medical insurance. Excludes indirect costs of illness, such as income lost through illness. Less than $50 million. NOTE.-Detail will not necessarily add to totals because of rounding. Source: Department of Health, Education, and Welfare. fourth of the total health budget of the Nation, just the reverse of the situation in education. The methods by which health care is produced, distributed, and financed have been changing rapidly. Home visits by physicians have become unusual. The total number of doctors has changed little, but the number of specialists is increasing while that of general practitioners is falling. More services are being dispensed through hospitals, where specialists are aided by elaborate equipment and auxiliary health technicians. Group practice is becoming more common and medical insurance more important. These changes will continue and will influence the quality and cost of medical care in the coming decade. DEMAND FOR MEDICAL CARE Health research and the control of contagious disease are prime examples of public goods which would not be produced in adequate amounts without Government subsidy. Health care outlays which increase the Nation's productivity are investments in human capital-like outlays for education. But the major part of health care is a consumption item, reflecting the value NOTE.-AGE ADJUSTED DEATH RATES ARE RATES BY AGE, WEIGHTED BY THE 1940 AGE DISTRIBUTION SOURCE: DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE. |