Study after study confirms that economic mobility—the opportunity for people to chart their own destiny based on hard work, perseverance, and the belief in a brighter future—is fading in America. A child born today into a low-income household in Canada and nearly a dozen European countries has a better chance of improving his or her economic situation than a similar child born in the United States. As one British politician said recently, “If you want the American Dream, go to Finland.”

What’s going on here? One of the most powerful factors correlated with a community’s opportunity level, as measured by the indicators in Opportunity Nation’s Opportunity Index (see here), is the number of young people aged sixteen to twenty-four in a community who are “disconnected”—both out of school and out of work. In the United States, at least 5.8 million young people fit that description. Their wasted talent is not only a tragic loss for them personally; it also damages our communities, our national economy, and our global competitiveness. All told, youth disconnection costs taxpayers $93 billion a year in lost revenues and increased social services. (See Richard Florida, “The Living-in-the-Basement Generation.”) These young people represent an opportunity for the nation to tap the talents of millions of potential leaders and productive workers at a time when America’s skills gap is significant.

While state and local leaders are already pursuing successful strategies to create more robust education and career opportunities for young adults (see Dorian Friedman, “Connecting Kids to College and Careers”), federal policy also plays a critical role. The following road map can ensure that all of America’s young adults get a fair shot at moving up the ladder and contributing to the health and vibrancy of our society.

Increase pathways to success for all youth.

Over a lifetime, the earnings difference between a high school dropout and a college graduate is more than $1 million. Yet too many young people are dropping out of high school, at a tremendous cost to themselves and the country. Although high school graduation rates have been improving over the last decade, especially for African American and Hispanic students, more than three million young people aged sixteen to twenty-four were high school dropouts in 2010—a number that is still unacceptably high.

The answer to solving this crisis is to first recognize that there is no silver bullet—students who drop out or who are at risk of dropping out face a wide range of needs and unique challenges. Many educators and schools are becoming more strategic about ensuring that all students have access to multiple resources tailored to meet this broad range of needs—an approach that requires increased support and resources. States and school districts should invest in proven strategies that increase graduation rates in high-need schools, better enable students who have left school to return, and facilitate the entry of high school graduates into post-secondary

Such a comprehensive approach might include flexible class schedules; early warning systems that identify students who are at risk of dropping out and provide them with services designed to keep them in school; and wraparound supports such as academic and career planning, mentoring, and tutoring.

High-quality work-based learning experiences can also provide students with the opportunity to earn money while gaining critical professional and academic skills. One successful model is 12 for Life, a partnership between Southwire, a major electrical wire, cord, and cable company, and Carroll County Public Schools in Georgia. Students combine their studies with practical real-world experience at a customized Southwire manufacturing facility. Since it began in 2007, 12 for Life has helped more than 630 students earn a high school diploma while gaining valuable work experience. Federal policies and resources should support investments in programs like these.

Update and reauthorize the Perkins Act.

The global economy demands that more employees have a post-secondary degree or industry-recognized credential. By 2020, roughly two-thirds of jobs will require some form of post-secondary education—a dramatic switch from the 1970s, when only 28 percent of U.S. jobs required such training. One way to meet this demand is to improve the quality of and access to career and technical education (CTE). (See Harry J. Holzer, “Not Your Father’s Shop Class.”)

CTE is a crucial component of America’s education system. It reaches 94 percent of high school students and thirteen million post-secondary students in the United States. Almost all high school students take at least one CTE course, and one in four students takes three or more courses in a single program area.

Research suggests that CTE programs can improve student education and career outcomes. More than 70 percent of CTE students go on to pursue post-secondary education soon after high school. In addition, workers with CTE-related associate’s degrees or credentials earn, on average, between $4,000 and $19,000 more per year than workers with associate’s degrees in the humanities.

Unfortunately, the Carl D. Perkins Career and Technical Education Act—last renewed in 2006 to support increased access to career and technical education—has become antiquated and is in desperate need of modernization. Creating better opportunities for college and career advancement means requiring increased collaboration and coordination between high schools and post-secondary institutions, and between CTE and the private sector. This will ensure that CTE programs align with regional and state workforce needs and expose students to career and work-based learning opportunities.

Encourage partnerships with employers.

Employers in all sectors can connect young adults to meaningful employment, mentoring, education, internships, and training opportunities, particularly in partnership with educational institutions and nonprofits. Successful partnerships are currently happening in communities across the country. For example, Chattanooga State Community College and the Chattanooga Operations of the Volkswagen Group of America have developed training programs designed for individuals interested in working in the automotive industry. These three-year programs offer students a unique blend of classroom and laboratory instruction with paid, on-the-job training experience in the Volkswagen plant.

At the federal level, the Community College to Career Fund Act, introduced by Minnesota Democratic Senator Al Franken and California Democratic Representative George Miller, encourages such collaborations and other job training efforts. These include registered apprenticeships and paid internships for low-income students that allow them to simultaneously earn credit for work-based learning in a high-skill field.

Pair college planning support with savings plans for low-income youth.

While it’s increasingly clear that post-secondary education is critical to a young person’s economic security and mobility, the escalating cost of higher education is putting the dream of college success further out of reach. The real cost of the tuition and fees of a four-year degree at a public institution has more than doubled in the last twenty years, skyrocketing from $3,810 in 1992 to $8,660 in 2012. Families and students are borrowing more money to cover the costs. In 2011, nearly two-thirds of college graduates had student loan debt, with an average of $26,600. Barriers to college access and affordability disproportionately affect lower-income students. In 2009, just 8.3 percent of students from the bottom quartile of family income earned a four-year degree, compared to more than 82 percent of students from the top income quartile.

As the burden to pay for college shifts more to students and their families, college savings plans, particularly for low-income children, are a potentially important strategy for helping students afford college. At least one study shows that students with a dedicated college savings account in their own name are six times more likely to go to college than their peers without such
an account.

One promising model is San Francisco’s Kindergarten to College Program, or K2C, which launched in 2010 and now reaches more than 7,500 students. The program provides every kindergarten student with up to $100 in an individual college savings account that is eligible for matching grants and to which parents, friends, and family can contribute. These accounts are coupled with financial education in the classroom aimed at encouraging students to save and effectively manage their accounts.

At the federal level, Delaware Democrat Chris Coons and Florida Republican Marc Rubio in the Senate have proposed the American Dream Accounts Act, which would authorize the creation of online college savings accounts combined with resources and support aimed at encouraging college savings and preparing students for college.

Invest in programs that work.

Historically, the federal government has sometimes supported programs regardless of whether they actually achieve results. Funding programs that don’t work wastes valuable taxpayer money and fails to help the people at whom the programs are aimed.

Pay-for-performance initiatives included in the reauthorization of the Workforce Investment Act, the Higher Education Act, the Elementary and Secondary Education Act, and other federal education initiatives have the potential to change the status quo by ensuring that federal funding is linked to results and outcomes. Providers get paid only when they achieve the intended results for the people they serve and only to the extent to which they meet performance measures. In return, programs enjoy flexibility, which encourages innovation. One bipartisan example is the Careers Through Responsive, Efficient and Effective Retraining (CAREER) Act, introduced by Ohio Republican Senator Rob Portman and Colorado Democratic Senator Michael Bennet, which would implement a pay-for-performance model for job training programs.

Another promising idea is to create an Enterprising Pathways Innovation Fund. This fund would reward and replicate successful approaches, leverage support from the private sector, and ensure effectiveness by strengthening performance measurement and accountability for results.

Initiatives like these can help guarantee that every taxpayer dollar invested in the future of America’s young people is going toward a program that can truly help them succeed.

We know that in a free society, some inequality is unavoidable, and that people will always differ in skills and ambition. But inequality without the chance for mobility is inefficient and unjust. One’s zip code should not condemn anyone to an inescapable fate. When the American Dream is at risk for some, we all suffer.

Strong federal policies aimed at opening the doors of opportunity will help move the needle for millions of Americans. They are important tools to jump-start the American Dream for the next generation, and make sure our young people have a fair shot at a meaningful life and career in the twenty-first century.

To read more from our November/December 2013 cover package on opportunity in America, click here.

Mark Edwards

Mark Edwards is the executive director of Opportunity Nation, a nonprofit based in Boston, Massachusetts.