Literacy is essential to many daily activities, and its importance to individual well-being can hardly be overstated. At a time of labor shortages, it is quickly becoming an economic imperative. The Program for the International Assessment of Adult Competencies defines five levels of proficiency. Adults who are “Below Level 1” can, at best, read brief texts on familiar topics and locate specific information, with only basic vocabulary knowledge required. Levels 3 and above allow for greater understanding and application and are generally compatible with the ability to perform some type of technical or professional work.
Currently, 28% of Texans have very limited skills (level 1 or lower) compared to 22% for the whole of the United States. Rates are significantly higher in parts of the state, with some counties having up to 70% of the adult population at Tier 1 or below. For these people, it can be difficult to navigate everyday life, let alone secure a well-paying job. .
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The proportion of literacy skills at or above Level 3 is 40% in Texas, which is significantly lower than the national rate of 48%. These skill sets are virtually non-existent in some counties, while others have over 60% of residents with literacy level 3 or higher. Simply put, 60% of adults in Texas lack the basic ability to be part of the state’s skilled workforce. Literacy rates in Texas are also well below those of many of the most competitive states for quality business locations and expansions. With the growing need for skilled labour, this deficit will become more and more detrimental in the years to come.
An insufficient number of workers with literacy level 3 can slow economic growth; the overall profit and related business activity is also reduced. We estimate that, when multiplier effects are taken into account, the total economic cost to Texas of the lack of adults with Level 3 literacy in 2020 is less than $16.4 billion in annual gross product and 186,000 fewer jobs. Without intervention, these losses are projected to reach $67.5 billion in annual gross product and about 766,000 fewer jobs by 2050.
If Texas achieved a Tier 3 concentration equivalent to the nation as a whole by 2040, the economic benefits would include $15.3 billion in annual gross product and 174,000 jobs. If results comparable to the top five states were achieved, the gains would amount to $41.1 billion in annual output and 465,800 jobs. These improvements intensify over time.
Improving literacy would improve the quality of life and opportunities for those directly affected while simultaneously increasing productivity and economic activity. Many jobs require skills, high demand is expected in the future, and improving skills in this area will better position Texas to meet growing labor needs.
Economist Ray Perryman is chairman and CEO of the Perryman Group, a Waco-based economic research and analytics firm. He is a member of the Tribune-Herald’s Board of Contributors.