Income gap can't be solved with taxes or free college, but this: Advocate

Education reform, a traditionally contentious policy issues in America, is one that has gotten short shrift in the current race for the White House.

A 2016 campaign largely defined by economic anxiety, immigration and fears of terrorism has devoted little illumination to the state of public education, which by many indications could use the attention. Just this week, the National Assessment of Educational Progress issued a dismal report that showed most U.S. high school seniors aren't prepared for college or a career.

This lamentable state of affairs is one that animates the schools choice movement, and charter school advocates such as Shavar Jeffries. The Newark native, Columbia-trained civil rights lawyer and a self-described progressive is one of a small and rare cadre of Democrats tilting against party orthodoxy by pushing to develop charter schools. These are free public schools that are run independently, set their own performance goals and methods, but do so without union-organized teachers and administrators.

In a recent interview with CNBC, Jeffries expressed frustration over the "muted" political conversation about deteriorating primary and secondary education quality. He argued increasing school choice was crucial to solving the seemingly intractable income gap problem, particularly among black and Latino students trapped in failing public schools.

"It's not just a winning policy issue, it's a winning political issue," said Jeffries, who lost a campaign for mayor of Newark in 2014 and who now heads the charter advocacy organization called Democrats for Education Reform (DFER), an advocacy group that lobbies other Democrats for educational reform.

The group's budget, which Jeffries pegged at $12-15 million per year, is supported through private contributions. That sum, however, is dwarfed by the resources of largest U.S. teachers unions, whose annual budgets run in the hundreds of millions and are supported by member dues. Jeffries told CNBC that most charters were publicly funded, though some have obtained support from Wall Street, hedge funds and technology companies.

Citing broad support among black and Latino students, Jeffries said school choice would "help ensure children are ready for the 21st century economy" with better educational and employment opportunities. He added that those concerned about growing inequality should pay more attention to K-12 schooling.

"I don't know how we're talking about income inequality and not talking about education," DFER's Jeffries said. "Fundamentally, for workers to get a higher share of wages, we have to increase their skill level."

Data shows that students at these institutions tend to perform better than students in traditional public schools and graduate at higher rates. A study published in the Journal of Policy Analysis and Management this year found that students who attended charter high schools are more likely to persist in college and to have higher earnings in their mid-20s.

The debate over public education comes as the gap between the rich and poor becomes a chasm, prompting academics to closely examine the link between schooling and income.

Jonathan Rothwell, a fellow at the Brookings Institution, a think tank, noted in a recent analysis that full-time workers between the ages of 25 and 64 with at least a bachelor's degree earn double what a high school graduate makes. Meanwhile, research from Harvard economists Claudia Goldin and Lawrence Katz suggests earnings disparities between college and high school graduates accounted for at least 60 percent of the rise in wage inequality between 1980 and 2005.

In Jeffries' eyes, evidence like that suggests that improving education via school reform is key to narrowing the economic gulf between the wealthy and the poor.

"Education levels are so directly linked to economic opportunity and wealth creation," he said. "There's no credible way of addressing the income inequality gap without increasing [black and Hispanic] levels of education."

Still, they are fiercely opposed by most prominent Democrats—many of whom rail against income inequality—and powerful teachers unions who argue charter schools deprive traditional schools of needed public funding. Charter school proponents argue that evidence proves the model's efficacy, but opponents have countered the data are inconclusive at best.

The United Federation of Teachers, a New York teachers' union, noted in a 2015 report that charter schools don't enroll or retain the same percentages of high-needs students, and neighborhood public schools that lose students to charter schools can sometimes fail to fill vacated seats. Meanwhile, studies from institutions like the Rand Corporation suggest charter school's impact on test scores, grades and graduation is mixed at best.

DFER's Jeffries acknowledged that "it's true that if a traditional school loses kids, that can bring some economic costs [to a school], but that's a reflection of the fact the family doesn't want the child there," he said. He chastised the idea of 'locking those kids into failing schools...even though they are not being prepared for the global economy."

The world's largest economy spends at least $600 billion nationwide on public education, a sum that has steadily increased every year for decades, according to the National Center for Education Statistics.

In fact, the U.S. spends more money on primary and secondary education that the majority of OECD countries. Yet American students rank consistently below average than many of their counterparts in other countries, a dynamic that exacerbates the income gap and cries out for school reform, some argue.

The sense of urgency has led wealthy individuals to commit vast resources to the problem. Recently, the Walton Family, which founded Walmart, committed $1 billion to charter schools, following Facebook founder Mark Zuckerberg's widely publicized $100 million gift to Newark public schools. Part of that money was earmarked for charter schools.

And since the year 2000, the foundation established by Microsoft founder Bill Gates has infused more than $600 million into charter schools, data provided to CNBC by a Gates Foundation spokeswoman showed.

Although achievement gaps between white students and Hispanic and black students have narrowed significantly over the past 40 years, the gaps remain large, albeit with significant variations depending on the state, Stanford University's Center for Education Policy Analysis has said, citing data up until 2013 from math and reading tests as part of the National Assessment of Educational Progress.

For that reason, Jeffries said that solutions such as free college offered by Democratic presidential contender Bernie Sanders are cold comfort to needy students ill-prepared for the rigors of college.

"You can increase taxes and break up the banks all you want, but what's that going to do for the Newark kid who dropped out of college," Jeffries asked. "Even with a [high school] diploma, they need remediation."

More From CNBC

• Top News and Analysis
  

• Latest News Video
  

• Personal Finance