Human Capital Investment
Investing in “human capital” is critical to all societies, as they strive to educate their children, prepare the next generation, and improve their social and economic conditions throughout society. And this investment in human development and life can start when children are still in school – helping them learn and progress. So why not give children a chance to “work” in high school, both to earn some money to help them pay for their education and to learn “work” as a life-skill?
Learning by Doing
This working-and-learning was long available in rural farm societies where children were taught to help their families and improve their skills in agriculture and animal husbandry. Often these young people arrived at school, after a morning of milking cows, feeding chickens, and minding the crops in their planting, growing, and harvesting. Once many families moved from farms to cities and factories, the children had little chance to work, and to learn the value of their efforts and their skills.
Working to Save Catholic Schools
While many Catholic schools closed, consolidated, or suffered financial hardship over the last few decades (see Cattaro & Russo, 2016; Cooper & Zhu, 2015), Cristo Rey Schools are Catholic schools that have often succeeded in many important ways. First, the growth and quality of Cristo Rey Schools is based on their business and human capital development models in which students work in jobs to earn money and learn work attitudes and skills while getting a top quality high school education.
Second, Cristo Rey schools are Catholic high schools, located in urban areas with high concentrations of economically disadvantaged minority students. Although Cristo Rey schools provide a Catholic college preparatory education for their students, students of every faith are welcome to attend Cristo Rey schools. Cristo Rey schools prepare all of their students to gain admission to college, attend college, and graduate college ready for whatever they might undertake.
The unique part of the business model is the requirement for every student to perform at a job obtained through the school’s work-study program. Students are grouped in teams of five, with each team member performing the team’s job one day per week. Students earn valuable work experience that provides a foundation for future full time employment while the school limits tuition to $2,000 annually with the average family paying about $1,350. And the students help themselves to earn their own tuition by their work, and learn a job, an attitude, and a belief about themselves as real-world producers and learners.
Each school integrates the work-study program with its on-the-job work experience with classroom academics and extracurricular activities. This combination provides students with the skills and attitudes with which to attend and graduate college, and succeed in their life pursuits. All Cristo Rey graduates are accepted to attend college, with many earning their first choice. Moreover, Cristo Rey schools help students overcome poverty and achieve the kind of lives unavailable to many other young people trapped in the poverty life cycle.
The Cristo Rey Schools’ education-business model stands in stark contrast to under-investment in human capital of the traditional public school business model, or even the traditional Catholic school model, and offers ways to address imperfections in the education market. Second, these imperfections in the education market (e.g., elements of “market failure”) exist because it is more difficult to invest in human capital than in physical capital (see Freidman, 1955; 2002). Third, it is more difficult to “calculate” ROI (Return on Investment) and the risk of investment in human capital (see Freidman, 1955; 2002).
Fourth, the lender of financial or physical capital or investor can compel security for his/her loan or investment in terms of a mortgage, physical asset or claim, or ownership stake. A mortgage has the house it finances as collateral, for example. Failure to repay the mortgage means forfeiture of the house! Fifth, however, human capital offers no such “claims” and has no such linked “collateral;” making human capital investment necessarily riskier.
The Cristo Rey Schools’ “ROI”
Thus, the value-added proposition of Cristo Rey Schools is to arbitrage the risk of investing in human capital by combining a quality high school education with real-world work experience and participation! This model solves for the lack of collateral and the high level of risk traditionally assumed for human capital investments. The Cristo Rey School education-business model succeeds by solving for the inherent risk of investing in people, students. Thus, the “ROI” of Cristo Rey Schools’ education-business model is enabling poor minority urban students to overcome poverty by attending a Catholic high school, earning their own tuition, and attaining college education. The academic, business, and quality-of-life success of its graduates demonstrates the “ROI” of the Cristo Rey School education-business model.
Cattaro, G. M., & Russo, C. J. (2016). Gravissimum Educationis: Golden Opportunities for American Catholic Education 50 Years after Vatican II. MD: Rowman & Littlefield.
Cooper, B. S., & Zhu, M. (2015). Faith-Based Schools: Ecumenical Schools and their Implications for the Future of American Catholic Education. Chapter 8 in Gravissimum Educationis: Golden Opportunities in American Catholic Education 50 Years After Vatican II. G. M. Cattaro & C. J. Russo (Eds.). (pp. 127 -145). Lanham, MD: Rowman & Littlefield.
Freidman, M. (1955). The role of government in education. In R. A. Solo, (Ed.), Economics and the public interest. (pp. 123-144). New Brunswick, NJ: Rutgers University Press.
Friedman, M. (2002). Capitalism and freedom. Chicago: University of Chicago Press.