Many Causes! Many Solutions!

Another round on education and inequality:

Incidentally, this isn't all an academic discussion. The question of whether inequality is a simple function of education is important. If so, then it can simply be solved by sending more people to school (though that, as Matt does point out, is very hard). If not, then it's a function of any number of forces, ranging from globalization to tax rates to corporate culture, that might require more direct government intervention This is why folks like Bush are invested in the education explanation, and say things like, "The reason [for inequality] is clear: We have an economy that increasingly rewards education and skills because of that education," and David Brooks writes columns that pin inequality entirely on "the education gap." The gap in education is a problem, to be sure, but it's been a long time since it was a plausible driver of the increase in inequality.

I think this is a little crazy. Yes, some conservatives have overstated the role of the skill premium in growing U.S. income inequality over the past 35 years. But the fact that it's not all skill premium, doesn't mean it's not partially skill premium. There are several different kinds of factors at work, but inequality has grown, in part, because the proportion of people graduating from college hasn't kept pace with the growing labor market demand for college graduates. What's the sense in denying this? Similarly, what difference does it make if the skill-related component of growing inequality happened in the 1980s? If it had happened in the 80s and then been reversed that would be a good reason to ignore this element of the picture. But it happened in the 80s and then has just stayed with us. But it should still be reversed!

Now I agree, on top of the skill premium element of inequality -- the tendency of the top 20 percent of the population to pull away from the top 80 percent -- we've also seen another phenomenon in which very tiny groups (the top 1 percent, the top 0.01 percent, etc.) pull away from the rest of the crowd. This is in many respects a troubling social phenomenon that calls for a policy response (restoring the estate tax comes to mind) but the other thing is also a troubling social phenomenon in its own right. Meanwhile, it's not at all clear to me why so many liberals have decided to agree that aspiring to increase the number of people who finish college should be coded as a "conservative" policy idea when the most promising solution is probably huge increases in public spending on early childhood education. Nothing about doing that would stop us from also making it easier to organize unions, or raising the minimum wage, or whatever else.

Comments

There are several different kinds of factors at work, but inequality has grown, in part, because the proportion of people graduating from college hasn't kept pace with the growing labor market demand for college graduates.

Might it also increase generationally? That is, one generation's skill advantage --> wage advantage --> their children's educational advantage + inheritance?

Never forget to historicize the model.
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Posted by Grand Moff Texan | May 22, 2008 11:36 AM

Again, Ezra isn't making much sense. Just sending more people to college is unlikely to close the real skills gap on its own. Rather, achieving a greater equalization of skills is going to take a lot of "government intervention" at many levels, and probably not just within the educational system itself. In that sense, if this is really a skills premium effect, the least instrusive way to deal with rising inequality is just to increase the top tax rates and effect a wealth transfer ... not exactly what Republicans typically want to conclude, although many economists are more or less fine with that.

Posted by DTM | May 22, 2008 11:46 AM

Re: This is in many respects a troubling social phenomenon that calls for a policy response (restoring the estate tax comes to mind)

By all means we need to keep the estate tax, but imheritance is not the driver of top-level inequality. Bill Gates, Warren Buffet, et al did not inherit their billions.

Posted by JonF | May 22, 2008 11:46 AM

this paper has much that is interesting about the causes of inequality and the role of education compared to other institutional changes (I originally came across it via Dani Rodriks blog)

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=984330

Posted by Andy | May 22, 2008 11:56 AM

Incidentally, worrying about the wealth of CEOs and the likes of Gates and Buffet always strikes me as kinda silly.

The basic explanation for the rising relative wealth of those people in particular is that progress in terms of things like technology, business practices (supply chain, financing, risk-management, etc.), and even world peace have made firms of a larger scale more viable, leading to consolidation within industries. Fewer but bigger firms in turn means higher ratios of compensation for the few people at the very top of the firms--basically, there are fewer CEOs around to divide up the same compensation pie than there would have been if larger scale firms had not become viable. And that is pretty much what is happening with CEO compensation--it has gone up, but roughly in proportion to the size of their firms going up as well.

So for those people in particular, I think the obvious answer is just tax them appropriately and otherwise not worry about it.

Posted by DTM | May 22, 2008 11:56 AM

Better funding of higher education is a good thing. Probably even more important is better funding of vocational education.

(It's interesting to note that potential Republican VP nomination Charlie Crist engineered a massive state and local tax cut and budget slash in Florida. One result of this is a 10% across the board cut in higher education. Professors are already starting to leave the state. So, no a focus on higher education as a solution to our countries problems is hardly a conservative issue.)

I see a problem with Matt's model, though. The increase in inequality at the top 0.1% of incomes FAR outstrips the increase in inequality at any other place in the model. It is more than likely that the inequality at that level entirely explains the increase in inequality between the college educated and the non-college educated.

Also, I think the problem isn't so much that we need more people working at jobs that require a college degree. The real problem is that jobs that don't require a college degree should also pay well.

Posted by Rob Mac | May 22, 2008 12:01 PM

Similarly, what difference does it make if the skill-related component of growing inequality happened in the 1980s? If it had happened in the 80s and then been reversed that would be a good reason to ignore this element of the picture. But it happened in the 80s and then has just stayed with us. But it should still be reversed!

Why is inequality due to a skill premium a bad thing that should be reversed? Even in some far-distant utopia, I would like people to be rewarded for hard work, and gaining skills is hard work. The problem comes when some people face a barrier to gaining these skills and/or when there is little correlation between skills and reward; then there is true inequity.

Posted by matt | May 22, 2008 12:05 PM

Maybe the percentage of college graduates isn't increasing much because many people feel they can earn "enough" without a college degree. People are upset because incomes have been flat, because gas prices are going up, but are they upset because inequality is increasing? I wonder.

Posted by Alan Vanneman | May 22, 2008 12:07 PM

Re Matthew's comment "because the proportion of people graduating from college hasn't kept pace with the growing labor market demand for college graduates. "
-------------------
Matthew's FIRST FALLACY is that he refuses to recognize the huge opportunity costs for a college degree. Cost one being that if you go to college, you greatly REDUCE your chances of ever becoming a wealthy entrepreneur. There are reasons why Bill Gates, Paul Allen, Michael Dell, Larry Ellison, etc are college dropouts.

Look at the COST of a college degree -- 4 years unpaid labor and upto $160,000 with at least some of that in post-degree DEBT. It's not clear that the somewhat higher wages will even let you break even until years later. And THAT only applies to those who don't laid off in their 40s or 50s and suffer the impossibility of getting decent jobs due to age discrimination.

Posted by Don Williams | May 22, 2008 12:08 PM

One final thought:

The biggest single problem with Ezra's recent posts on this subject is that he is basically assuming a rise in the skills premium can only cause an immediate wealth effect, and therefore if a wealth effect is happening in a later period than a rise in the skills premium, the rise in the skills premium cannot be the cause of the ongoing wealth effect.

Of course, that is an invalid assumption. Indeed, the likely result of a one-time increase in the wage gap between two groups is an ongoing wealth effect, because the higher income group is still getting that extra income each subsequent year, which allows an ongoing buildup of relative wealth.

In that sense, Ezra is just completely off base by treating this as a situation in which a rise in relative incomes can only have a wealth effect at the time of the rise itself. Rather, the more logical assumption is that such a rise will continue to have wealth effects for a considerable period--indeed, that period should last until the entire cohort of people in the higher income class has had their entire career after the relative income increase, at which point a steady state should finally be restored.

Posted by DTM | May 22, 2008 12:09 PM

Why is inequality due to a skill premium a bad thing that should be reversed?

Uh, I think that Matt was saying that the inequality should be reversed because it's not all due to skill.

Educational attainment correlates very well with parents' income, which means we're not developing human resources according to ability, we're certifying skills according to class in a way that is self-reinforcing.
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Posted by Grand Moff Texan | May 22, 2008 12:13 PM

Matthew's FIRST FALLACY is that he refuses to recognize the huge opportunity costs for a college degree.

Another problem is that the value of both college and highschool diplomas has declined over the last several decades, due in large part to political pressure to make H.S. diplomas universal and social expectation making college education normal above a certain income line.

We now teach things in "college" that other countries teach in secondary school. Admissions has become more "selective" in states like Texas even as the quality of students has declined (if you ask their instructors). Why? Because admissions become a political football.

And, at the level of the ive leagues, admissions is also used for development.

So, over time and in comparison to our competitors, American educational certification is declining in any meaningful value. For this reason, it can't be used to measure "skills".
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Posted by Grand Moff Texan | May 22, 2008 12:17 PM

What about Europe Matt? Surely this is another time to talk about Europe's super-awesome rates of attending college?

Posted by David | May 22, 2008 12:18 PM

Hmmmm, two typos in a post about education. I am ashamed.
.

Posted by Grand Moff Texan | May 22, 2008 12:20 PM

Re Matthew's comment " the most promising solution is probably huge increases in public spending on early childhood education "
-------------
Hmmm. I seem to hear girlfriend Sara talking here.

So sad when you reach 27. Your hairline starts receding, you put on weight and pretty soon you're having to blog for sex.

Posted by Don Williams | May 22, 2008 12:21 PM

Matthew's Second Fallacy is that he assumes that the "labor market demand for college graduates" has some rational basis.

It doesn't really. Anyone who's worked in a corporation knows most of the jobs could be done without a college degree -- or at most with a 2 year Associates degree plus some On the Job training.

Corporations demand college degrees because they CAN. When you have million of uncounted PERMANENTLY Unemployed in this country -- and millions more unemployed at any one moment -- a corporate manager can make up any requirement he chooses.

Corporations LOVE college programs because it lets them enslave millions of young people and shove their noses to the grindstone.

You don't have to worry about Bill Gates kicking your ass if you've conned Bill Gates into wasting 4 years of hard work on getting a piece of paper that's worthless unless you say it has value.

And you say it has value only if he goes to work for you -- at a job you prescribe, with a career ladder you dangle (and which can be yanked away at any time) and at a salary you decide.
That educational debt he has to pay off helps close the deal -- and you own him.

Posted by Don Williams | May 22, 2008 12:35 PM

Inequality? It's not rocket science. Certain policies have been tried and found to work.

Repeal Taft Hartley and allow most management (except the highest levels) to belong to unions (as is the case in Europe). Allow general strikes.

Put a cap on executive salaries as a percentage of profits allowing workers to have a more equitable share (as is the case in Europe).

Single payer universal healthcare (as is the case in Europe).

Invest heavily in lower education (as is the case in Europe).

Discourage real estate speculation (as is the case in Germany, for one).

Subsidize small farmers as opposed to big farmers.

Restore graduated income tax.

Abolish military boondoggle. Let outright Federal Aid as opposed to disguised subsidies from weapons companies (like Olin) support higher education and public radio.

Posted by harold | May 22, 2008 12:40 PM

Vocational education (note: vocational education in Finland is in large part geared to the needs of adults who need or wish to enter new fields of employment, it is exclusively public not private or for profit as here):

Vocational education in Finland (from Wikipedia)

"In Finland, the vocational education belongs to the secondary education. After the nine-year comprehensive school, almost all students choose either the lukio, which is an institution preparing students for tertiary education, or a vocational school. Both forms of secondary education last three years, and give a formal qualification to enter university or ammattikorkeakoulus, i.e. Finnish polytechnics. In certain fields (e.g. the police school, air traffic control person training), the vocational schools have the completed lukio as an entrance requirement, thus causing the students to complete the secondary education twice [i.e., lukio = high school/community college, vocational school also = high school/community college, so lukio + vocational school = secondary school twice).

The education in vocational school is free, and the students from low-income families are eligible for a state student grant. The curriculum is primarily vocational, and the academic part of the curriculum is adapted to the needs of a given course. The vocational schools are mostly maintained by municipalities.

With a completed secondary education one can enter higher vocational schools (ammattikorkeakoulu, or AMK) or universities. Because the vocational school curriculum is work-oriented, its graduates often have difficulty in passing the entrance exams of the universities."

Posted by harold | May 22, 2008 1:08 PM

The premium is not, in the long term, on education. It is on the ability and willingness to do a particular job, compared to the demand for it. You don't need a college degree, for example, to become an auto mechanic. But if you have ever tried to hire one, you know they don't come cheap.

Granted, at the moment a college degree (at least in some fields) can get you big bucks. But to assume that it will therefore be so forever is really silly. I realize that supply and demand is not a preferred explanation in some quarters. But it really is what drives income differentials. Which, for the most part, is what drives economic inequality.

Posted by wj | May 22, 2008 1:18 PM

Don,

If companies didn't use a diploma as a sorting mechanism, what method do you think they should use? Some sort of National Civil Service Exam for private industry that would allow for the matching of people to jobs that are suitable to their intellectual capacity?

Posted by Jmo | May 22, 2008 1:19 PM

"Another problem is that the value of both college and highschool diplomas has declined over the last several decades . . . ."

If you mean economic value, I have to point out that the starting point of this discussion is the well-documented fact that the income premium of a college degree over a high-school diploma or less has sharply increased over the last generation. If Don Williams, e.g., is correct that there's such an oversupply of the college-educated that employers can name their price, why is it that the price is so relatively high? If college is the new high school, shouldn't college graduates be paid accordingly, and the skill premium get driven down? It ain't happening, and economists are finding this a real puzzle.

Posted by David in Nashville | May 22, 2008 1:27 PM

Don,

If companies didn't use a diploma as a sorting mechanism, what method do you think they should use? Some sort of National Civil Service Exam for private industry that would allow for the matching of people to jobs that are suitable to their intellectual capacity?

Posted by Jmo | May 22, 2008 1:27 PM

Vocational education (note: vocational education in Finland is in large part geared to the needs of adults who need or wish to enter new fields of employment, it is exclusively public not private or for profit as here):

Vocational education in Finland (from Wikipedia)

"In Finland, the vocational education belongs to the secondary education. After the nine-year comprehensive school, almost all students choose either the lukio, which is an institution preparing students for tertiary education, or a vocational school. Both forms of secondary education last three years, and give a formal qualification to enter university or ammattikorkeakoulus, i.e. Finnish polytechnics. In certain fields (e.g. the police school, air traffic control person training), the vocational schools have the completed lukio as an entrance requirement, thus causing the students to complete the secondary education twice [i.e., lukio = high school/community college, vocational school also = high school/community college, so lukio + vocational school = secondary school twice).

The education in vocational school is free, and the students from low-income families are eligible for a state student grant. The curriculum is primarily vocational, and the academic part of the curriculum is adapted to the needs of a given course. The vocational schools are mostly maintained by municipalities.

With a completed secondary education one can enter higher vocational schools (ammattikorkeakoulu, or AMK) or universities. Because the vocational school curriculum is work-oriented, its graduates often have difficulty in passing the entrance exams of the universities."

Posted by harold | May 22, 2008 1:30 PM

If you mean economic value, I have to point out that the starting point of this discussion is the well-documented fact that the income premium of a college degree over a high-school diploma or less has sharply increased over the last generation.

Sorry, David, I was unclear. I was talking about the significance of the certification. College instructors can expect each new generation of students to have less and less general knowledge and poorer basic skills. The pressure is on secondary education to produce "objective" numbers so that politicians can beat their chests. The extra money pumped into public education over the last thirty years has been consumed by a new class of consultants, who contribute nothing to actual education. Verification (or, in education parlance, "accountability") sucks up additional funds just measuring the "objective" numbers that measure the crap teachers have to do instead of teaching.

So, having a highschool diploma no longer means much of anything. I cannot assume that someone with one will have skill A, B, and C, or general knowledge about X, Y, or Z.
.

Posted by Grand Moff Texan | May 22, 2008 1:47 PM

. College instructors can expect each new generation of students to have less and less general knowledge and poorer basic skills. The pressure is on secondary education to produce "objective" numbers so that politicians can beat their chests

If you look at this graph you'll see that the high school drop out rate for all races declined by about 25% from 1970 to 2006. http://www.childtrendsdatabank.org/figures/1-figure-1.gif

Now, discounting the Flynn Effect, I don't think the median intellectual ability of all US 18 year olds has declined since 1970. I would argue that the very act of pushing more people to graduate, by its very nature, drives down the median ability of those that do.

For example, in 1920 when 80% of people didn't graduate from High School and maybe only 5% went to college a High School diploma signaled that you were in the top 20% of abilty. Today, having a High School diploma only indicates that you are in the top 80 or 90%.

So, while I agree with you Grand Moff, that the median abilty of a US High School graduate has declined since 1970, would you also argue that the median ability of all US 18 year olds' has declined?

Posted by jmo | May 22, 2008 2:12 PM

"4 years unpaid labor and upto $160,000 with at least some of that in post-degree DEBT."

It's only that expensive if you choose to go to a private college and also choose not to work while in college. Many private colleges cost less than $160,000 for four years even with room/board included If you go to a public college and work 20-30 hours a week the cost of college goes down dramatically.

Posted by JordanT | May 22, 2008 2:15 PM

. College instructors can expect each new generation of students to have less and less general knowledge and poorer basic skills. The pressure is on secondary education to produce "objective" numbers so that politicians can beat their chests

If you look at this graph you'll see that the high school drop out rate for all races declined by about 25% from 1970 to 2006. http://www.childtrendsdatabank.org/figures/1-figure-1.gif

Now, discounting the Flynn Effect, I don't think the median intellectual ability of all US 18 year olds has declined since 1970. I would argue that the very act of pushing more people to graduate, by its very nature, drives down the median ability of those that do.

For example, in 1920 when 80% of people didn't graduate from High School and maybe only 5% went to college a High School diploma signaled that you were in the top 20% of abilty. Today, having a High School diploma only indicates that you are in the top 80 or 90%.

So, while I agree with you Grand Moff, that the median abilty of a US High School graduate has declined since 1970, would you also argue that the median ability of all US 18 year olds' has declined?

Posted by jmo | May 22, 2008 2:15 PM

"Matthew's FIRST FALLACY is that he refuses to recognize the huge opportunity costs for a college degree. Cost one being that if you go to college, you greatly REDUCE your chances of ever becoming a wealthy entrepreneur. There are reasons why Bill Gates, Paul Allen, Michael Dell, Larry Ellison, etc are college dropouts."

With respect Mr. Williams, this is silly beyond any reasoning. The average person is not Bill Gates or any of the other people you throw out here. The average person is not some technological or business genius. And for every Bill Gates you want to bring up, I can mention a Donald Trump. The average Joe busting his @ss at some crappy manual labor job for his entire life until he dies prematurely of a heat attack or something equally preventable, he would have looked upon a chance at a college education as a gift from God. To be honest, I have found the average person who dismisses the value of a college education is usually someone who had the privilege of obtaining one.

Incidentally, I am the grandson of four dirt-poor immigrants. They worked themselves to the bone so their kids could have a better life. Amazingly all eight would eventually end up graduating from college someday and all eight had more prosperous lives than their parents.

Look at the COST of a college degree -- 4 years unpaid labor and upto $160,000 with at least some of that in post-degree DEBT. It's not clear that the somewhat higher wages will even let you break even until years later.

More silliness! Up to is a very sloppy way of putting it. Four year degrees from state school don’t cost $160,000, and there are non-Ivy League schools out there that do a half-decent job.

And THAT only applies to those who don't laid off in their 40s or 50s and suffer the impossibility of getting decent jobs due to age discrimination.

And HS drop-outs don’t have to worry about age discrimination?

Posted by Raindog | May 22, 2008 2:22 PM

"Matthew's FIRST FALLACY is that he refuses to recognize the huge opportunity costs for a college degree. Cost one being that if you go to college, you greatly REDUCE your chances of ever becoming a wealthy entrepreneur. There are reasons why Bill Gates, Paul Allen, Michael Dell, Larry Ellison, etc are college dropouts."

With respect Mr. Williams, this is silly beyond any reasoning. The average person is not Bill Gates or any of the other people you throw out here. The average person is not some technological or business genius. And for every Bill Gates you want to bring up, I can mention a Donald Trump. The average Joe busting his @ss at some crappy manual labor job for his entire life until he dies prematurely of a heat attack or something equally preventable, he would have looked upon a chance at a college education as a gift from God. To be honest, I have found the average person who dismisses the value of a college education is usually someone who had the privilege of obtaining one.

Incidentally, I am the grandson of four dirt-poor immigrants. They worked themselves to the bone so their kids could have a better life. Amazingly all eight would eventually end up graduating from college someday and all eight had more prosperous lives than their parents.

Look at the COST of a college degree -- 4 years unpaid labor and upto $160,000 with at least some of that in post-degree DEBT. It's not clear that the somewhat higher wages will even let you break even until years later.

More silliness! Up to is a very sloppy way of putting it. Four year degrees from state school don’t cost $160,000, and there are non-Ivy League schools out there that do a half-decent job.

And THAT only applies to those who don't laid off in their 40s or 50s and suffer the impossibility of getting decent jobs due to age discrimination.

And HS drop-outs don’t have to worry about age discrimination?

Posted by Raindog | May 22, 2008 2:30 PM

Again, you guys don't get it.

WHO decides the content of the college curriculum? Of the K12 curriculum? What is their basis for doing so? Who updates the curriculum and when? Is it relevent to today -- the best preparation for the future?
HOW should it be changed -- and why isn't that happening?

WHO decides the college degree has value? WHY?
Which degrees have value? Will that be true in the
future?

WHO is the educational system supposed to serve?
WHO decides how that service will be evaluated?
WHY?
HOW well is the system doing? WHO says? -- talked to its graduates?

Are there better ways of serving the same customers? HOW? Why isn't there more competition -- more diversity?

Is US News and World Report full of shit?

Posted by Don Williams | May 22, 2008 2:46 PM

1) Ah, yes. I forgot the final question.

WHY do Americans have to spend so much of their time in meeting the DEMANDS of the educational system -- but have so LITTLE SAY into whether those demands are reasonable?

I referring both to the 16 years of their lives they waste in the educational system as well as the huge taxes they pay later to support that system -- plus college costs for their kids.

2) Why is all of the public debate about whether we should WORK HARDER to meet the demands of the educational system -- with no discussion of other those demands are fucking stupid to begin with?

3) After all, this is a Democracy. Right?

Or is the REQUIRED course in High School Civics a crock of shit?

Posted by Don Williams | May 22, 2008 2:56 PM

Oh, a final question. Why is it that our $1 Trillion/year plus educational system creates some of the most stupid AND ignorant people on the planet?

A people who elected George W Bush to TWO terms as President. Because they believed that 19 Saudis committed suicide on Sept 11 because "they hate out Freedom".

Isn't that pretty damming indictment of our educational system?

Posted by Don Williams | May 22, 2008 3:02 PM

Human capital in the United States has _not_ been improving in bottom third to half of the population. This explains a lot of things that puzzle Matt.

According to Nobel Laureate James Heckman's comprehensive study, the high school graduation rate peaked at 80% in about 1970 and since has fallen to about 75%. (This is not counting recent immmigrants who didn't grow up in this country). The graduation rate fell slightly for whites, Hispanics. And and the growing fraction of the total of young people who were black or (especially) Hispanic also contributed to the overall decline.

Posted by Steve Sailer | May 22, 2008 5:34 PM

According to a census report from 2004

http://www.census.gov/Press-Release/www/releases/archives/education/001863.html

Last year, 85 percent of adults age 25 and over had completed at least high school, an all-time high, the U.S. Census Bureau reported today. Also in 2003, 27 percent of adults age 25 and over had a college degree, another record.

The percentage of non-Hispanic whites (89 percent) and blacks (80 percent) who had a high school diploma or higher marked new highs. The proportion of blacks rose by 10 percentage points from 1993 to 2003, while non-Hispanic whites saw an increase of 5 percentage points in this category.

The report, Educational Attainment in the United States: 2003, [PDF] said women made large gains in earning college degrees. Over the past decade, women with a bachelor’s degree or higher jumped nearly 7 percentage points, from 19 percent to 26 percent. During the same time, men had a 4-percentage-point increase going from 25 percent to 29 percent.

For the second year in a row, women had a slightly higher proportion of high school graduates (85 percent) than men (84 percent).

Other highlights for 2003:

* The states with the highest high school graduation rates were New Hampshire, Minnesota and Wyoming, all around 92 percent.

* In Washington, D.C., about 46 percent of people 25 and over had at least a bachelor’s degree, higher than any state. Massachusetts, Maryland and Colorado led all states at about 38 percent.

* Among races, Asians had the highest proportion of college graduates at 50 percent. About 30 percent of non-Hispanic whites and 17 percent of blacks had a least a bachelor’s degree. In 1993, 24 percent of non-Hispanic whites and 12 percent of blacks were college graduates.

* Hispanics with high school diplomas rose from 53 percent in 1993 to 57 percent. About 11 percent had bachelor’s degrees, up from 9 percent.

* The proportion of foreign-born people with a high school diploma was 67 percent. For natives, it was 88 percent. However, the proportion with a bachelor’s degree was about 27 percent for the two groups.

* In 2002, average earnings by highest level of education were: for those with advanced degrees, $72,824; for bachelor’s degree-holders, $51,194; for high school graduates, $27,280; and for nongraduates, $18,826.

The data are from the Annual Social and Economic Supplement to the 2003 Current Population Survey. For further information on the source of the data and accuracy of the estimates, including standard errors and confidence intervals, go to Appendix G of .

-X-

Posted by harold | May 22, 2008 8:42 PM

Harold, the Current Population Survey includes GED recipients in the hs graduate category. If you just look at people who receive a diploma on graduation day, the numbers are falling and peaked in 1969.

http://www.hoover.org/publications/ednext/3365101.html

1969 would prove to be the zenith of mortar boards and graduation gowns. After that, the degree ratio began slipping, to 0.74 by 1990, and continuing through the '90s, dropping to 0.70 in 2000.
The evidence of a falling graduation rate since 1969 would have become a national scandal by now had it not been disguised by the fact that the degree ratio is not the yardstick of choice.

Posted by bjk | May 22, 2008 9:08 PM

It certainly says something about our schools that graduation rates are falling. On the other hand getting a second chance is not a bad thing. I personally know several young people who got GED's and I don't think less of them for it.

It would be better if a high school degree were actually reliably meaningful, of course.

Posted by harold | May 23, 2008 1:33 AM

Income equality requires education, social protections and new labor market institutions. With ever rising healthcare costs and pensions withering, conservatives will find it exceedingly difficult to demonstrate otherwise. Afterall, there are income differentials among people with the same level of education for all sorts of reasons, career choice, labor market conditions, etc..

I know few people with a Bachelor's degree who believe that the way they plan their career, savings, and other life choices have no bearing on their income.

Regarding education, however, our current public policy conversation on the topics of skills and income premium make direct connections between what people earn and the credential they have. Partly, this is because of the limits of date we have and partly because of how we choose to use it.

As business models have become more complex, especially at the top end of skills, the mix of skills necessary (and that would need to be embodied in a BA) has become more nuanced cross-discipline knowledge, business acumen and interpersonal skills. Those with a solid mix are still earning a significant premium. There is afterall a disparity among the wages of people who hold Bachelor's degrees in the same field and with similar experience.

The labor market hasn't provided much new information, as embodied in credentials, to meet this more complex situation in the hiring process. Hence the explosion of the guided interview business in the last twenty years. Companies are using web-based tests and structure interviews, in particular, to get at the skills mix they need.

An example of this information gap is the current boom in MBA/MFA double degrees. The design craze in every marketplace has made thousands of MBAs think about going back to school to get an MFA, to earn even bigger premiums. But do we believe that both degrees with all the course work is the only practicum that will deliver a business person with design savvy? We simply have no other way of thinking about the challenge so we use degrees as a benchmark.

Further, the education sector writ large hasn't really figured out how to produce people with these skills. Given that these blended skills are learned more through experience it may that education is not the best place for them to acquire them. This is a really interesting question for public policy. If colleges and universities are suited for providing technical knowledge in a certain field then what social institution can better link this content knowledge to practical skills.

Businesses, social constructs that society uses for production, may in fact be a better place for this learning to happen. There is precedent for this line of thinking, when Peter Senge and others talked about the learning organization there view was always more expansive than the what corporations have adopted in practice.

In the knowledge economy, learning and work have become the same, so formal institutions, at least for adults or transitioning college students, might not be the best place to learn.

We may need a different conception of the workplace to manage this challenge. A workplace development policy rather than only a workforce development policy.

Posted by Lou | May 23, 2008 10:06 AM