3rd Grade: Make it or Break it

3rd grade: a grade I briefly remember.  But some say that a kid's whole educational career depends on third grade.  (This first seemed very silly to me too).  32 states have recently adopted policies specifically targeting reading skills.  These policies have caused many third grades to be held back from going on to fourth grade.  But does this actually prove to work well? Studies show that 1 in 6 kids who couldn't read at grade level by third grade didn't finish high school by age 19.  Therefore, everyone would conclude that it's better to hold them back while they're young to help them catch up for their future.  This all sounds good...right? 

There is a very negative sanction associated with a child being held back.  Students who are held back are often bullied by their peers and have other very detrimental effects on their overall future.  Studies have shown that children who are held back have less confidence and less attachment to school, which makes them more likely to drop out. So if holding these kids back seems to help the children who don't finish high school by 19, what about the children who drop out or suffer from bullying?  These kids have probably been in the same school with the same kids all the way up to third grade.  Now all of a sudden, they are held back and lose all of their friends.  These old friends begin to make fun of them for being stupid.  This child in third grade is not likely to respond by saying that he or she will be benefited in the long run, instead they are embarrassed and begin to hate school.  This can really counter the intention of holding the child back.  So should third grade really be the make it or break it year?