The College-Educated Are Getting Richer

From columnist Star Parker:

According to Education and Economic Mobility (.pdf) by Brookings Institution scholar Ron Haskins, the inflation-adjusted median family income for adults ages 30-39 with a graduate degree was 80% higher in 2006 ($90,000) than in 1964 ($50,000). For those with a four-year college degree, it was almost 60% higher ($75,000 vs. $50,000). But incomes for those with a high school education or less have remained virtually unchanged over the same period (see chart above, click to enlarge).

Stated otherwise, the gap in real family income between adults with a graduate degree and those with only a high school diploma is four times as great today ($40,000 difference in median income) as 40 years ago ($10,000 difference in median income).

To the extent that there is rising income inequality, it appears that much of the inequality is due to the increasing gains to education over time. It's not the "rich are getting richer and the poor are getting poorer" as much as it's "the college-educated are getting richer in an Information Age Global Economy, and the high school-educated are staying the same."

Comments

[buyitcheap:]

What is the inflation factor used in the report? I disagree strongly with this hypothesis. Housing cost $20,000 in 1964 for a 3 bed 1.5 bath, and that same house now costs $260,000. Even on a relative basis, no wages can compete with that increase. On a real or nominal level, there is not just wage stagflation at the college educated level, but deflation as the highly educated leave the US ( as I am considering) to perceptibly stronger economies (Ireland, UK, Switzerland, etc.)

Further, medical inflation, education inflation (it cost $500 for a year of college in 1964, vs. $30,000 now) have run rampant. Taxation is substantially higher on a real and relative basis for those in that category (they pay 50% now without the benefit of the deductions that were in place in the 60s and 70s - like deducting credit card interest.)

So while the "real" income levels may be higher, even if you accept that notion, those in that category are less well off on a total cost of living basis because the inflation adjusted growth in key expenses categories: Housing, education, insurance, fuel, food (lately) taxes, are now higher than they ever were.

Brookings probably would not take note of this issue, for another reason, their entire funding source is from the government dole. (reference their 990 tax return 2005.)

2008 Mar 12 02:37 PM

[locke:]

It says right on the chart "2004 dollars" so assume official US Govt. inflation numbers.

Also note you can't compare 2008 medical care to 1964 medical care. Doing so would be like comparing a Ferrari to a horse-drawn carriage.

2008 Mar 12 05:03 PM

[User 142738:]

I don't believe this is an article about (mis)judging the source of inflation data, nor is it an article about criticizing the U.S. economy. And unless you're living in San Francisco or Miami, a 3/1.5 won't cost you $260,000. Plus, it's incredibly unfair to compare the 1964 tuition of a state college to the tuition of a private school in 2008.

I highly recommend every college student take a trip out of the country, just so they can see the skeletons in the closet that every country has. Compared to the ROW (rest of the world), the problems stateside are incredibly mundane.

2008 Mar 12 05:22 PM

[NoFate:]

I'm with locke on this.

Very interesting and supports what I have been thinking. I think this is what underlies race also ...more whites/asians have more education (on average) than blacks/latinos ...and on average make considerably more.

Class warfare and Race warfare evolves into ...knowledge warfare!

This is hard to swallow for many people because they can't blame society and have to accept it is their own fault they didn't go to college.

2008 Mar 12 05:25 PM

[whidbey:]

This is an excellent issue for review since it suggests to the roll of education in any economy. The net economic gains from education are almost identical worldwide. But the gains are not due to just education but what education attainment suggests, ambition and energy and capacity to stick to a task to complete. We really do have individual differences and they make our lives very different. You did not mention that "satisfaction" levels are not well correlated with education, but over all more education benefits income, health, sense of well being. Very nice reminder.

2008 Mar 12 05:46 PM

[NoFate:]

Another thing the chart points out though ...on average people are making less than they did in 2000.

This is probably due to off-shoring and globalization ...although this should begin to turn around. I've read places like China and India are starting to have shortages of educated workers and this is why their inflation is starting to rise.

I'm guessing more educated workers will further increase the spread over the next 10 years.

2008 Mar 12 07:53 PM

[Tony Soprano:]

All of you are nothing but educated morons. You compare yourself to high school grads or lower. That’s like comparing a mule to a donkey. Which has the harder head I don’t know.

I thought education was a life long experience. The love of knowledge and art.

A med student goes to college to become a doctor so he can benefit society. The same for a school teacher. Where is the beauty in that? The doctor goes to school so he can rip off medicare and the school teacher goes to school so he or she can have sex with their students.

The propaganda above is to sucker kids into thinking they are going to make a lot of money some day. By the time they pay for their education bill they will be upper middle class at best.

Most of our college elite should be thrown in jail for mismanaging an entire industry. If they really, and truly wanted our kids to make money they should let them sit in or even partake in the running of an endowment program.

One more thing, if the world is more and more educated why is it more and more screwed up?

2008 Mar 12 09:40 PM

[Paulo:]

What is your benchmark for screwed up?

2008 Mar 12 11:55 PM

[Tony Soprano:]

War -- Greed -- Inflation -- Pollution -- Debt -- Slave Labor -- Super Rich vs Super Poor -- Pride -- Depressed -- Privacy

The chart above in a small sense indicates greed. How do measure human values vs wealth in the context of eduction?

2008 Mar 13 07:44 AM

[easyed:]

I agree with Dr. Perry. With a Degree you are giving yourself one more weapon to be a Sucess. Not everyone needs a Degree, but it can certainly come into play. The under educated should stop asking for Govt. handouts,& stop blaming everyone & everything else for their lack of sucess.

2008 Mar 14 03:51 PM

[Tony Soprano:]

Mr easyed

Sucess or Success

Are you trying to be funny. I'm laughing so much that I can hardly type. You did it twice. So, you cannot blame it on your typing.

2008 Mar 15 12:01 PM