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How Literacy Impacts the Economy

It is important to celebrate and demonstrate the importance of education and literacy across the world.1 In this article, we will examine how literacy affects our local and national economies. 

Literacy & the Economy

In the context of this article, literacy is the ability to comprehend written and spoken language. It affects our interactions with the world around us, from casual conversations to financial decisions. For this reason, we can see how literacy and the economy become intertwined. Here are some ways that literacy influences the economy.

Income Levels

According to a study conducted by Gallup on behalf of the Barbara Bush Foundation for Family Literacy, there is a significant connection between literacy and income. The study compared average yearly income to average reading levels, finding the following connections:2

  • Reading level zero to one: $34,127
  • Reading level two: $47,596
  • Reading level three: $62,997
  • Reading level four to five: $73,284

The same study found that 54 percent of Americans aged 16-74 lack literacy proficiency. Furthermore, the same Gallup study estimates that $2.2 trillion of additional income could be generated if all adults reached a reading level of three or higher.2

Employment Rates

Just as income is affected by literacy levels, so too is employment; 54 percent of employed individuals have a reading level of three or higher, while 64 percent of unemployed individuals have a reading level of two or lower.3 

Of course, there is a multitude of factors that influence employment, such as economic conditions. However, an increase in overall literacy could affect employment rates, as indicated by these statistics. 


An estimated 70 percent of incarcerated people in the U.S. cannot read at the fourth-grade level.4 This is most likely related to the other factors on this list as crime, employment and opportunities are often intertwined.

Furthermore, the Department of Corrections places the daily cost of incarceration at $112.96 per inmate a day.5 This cost, alongside the economic loss resulting from incarceration, demonstrates the powerful connection between literacy, the economy and imprisonment. 


Literacy also affects our ability to understand, process and follow medical recommendations. And in terms of the economy, U.S. health literacy has shown to result in economic inefficiencies of $106 billion to $238 billion annually.6

More importantly, low health literacy not only affects our economy but the livelihood of every individual. Literacy, therefore, impacts our healthcare expenses as well as our quality of life. 

Improving Literacy in the U.S.

One potential way to improve U.S. literacy could be to provide literary resources to parents. Investing in such programs would not only provide benefits to current generations but also to generations to come.

It may be surprising to see how much literacy and the economy are intertwined. By implementing solutions to improve literacy, we could see drastic changes in healthcare, incarceration, average income, employment and more.

  1. https://www.un.org/en/yearbook/celebrate-literacy-and-multilingualism
  2. https://www.barbarabush.org/wp-content/uploads/2020/09/BBFoundation_GainsFromEradicatingIlliteracy_9_8.pdf
  3. https://www.libraryjournal.com/?detailStory=How-Serious-Is-Americas-Literacy-Problem
  4. https://www.degreechoices.com/blog/prison-education-usa/
  5. https://www.doc.wa.gov/docs/publications/reports/200-AR001.pdf
  6. https://hsrc.himmelfarb.gwu.edu/sphhs_policy_facpubs/172/

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.