Income Gap of College Graduates over Others Reaches Record High

Wednesday, May 28, 2014
(photo: Butch Dill, AP)

Parents have been telling their children for decades that a college education will yield financial benefits and professional opportunities that won’t be there for those who quit after high school.


The numbers continue to show that mom and dad are telling the truth.


Last year, Americans holding a college degree made on average 98% more per hour than those who skipped post-secondary education, according to the Economic Policy Institute (EPI) in Washington. That gap was the largest ever recorded.


But the difference between the college grads and the high school grads has been significant for some time. In the 1980s, it was 64%. By the 1990s, it was up to 85%. And by last decade it had reached 89%.


Another way of looking at the college haves and the non-college have-nots comes from MIT economist David Autor, who argues that the gap between these two groups is even more significant than the one separating the 1% from the 99% of society.


Here’s how Jim Tankersley at The Washington Post described Autor’s findings:


“By Autor’s calculations, if you'd taken all the income gains that flowed to the 1 percent over the last 35 years and redistributed them evenly to everyone else in the economy, that would have delivered an extra $7,100 a year to every household in the bottom 99 percent. That's a lot of money. But it's not as much as the growing pay differential between workers who went to college and those who didn't.”


In the last 35 years, he calculates, the so-called college premium—the boost in your paycheck from earning a diploma—increased by $28,000, adjusted for inflation. So if you took that entire increase and redistributed it to non-college workers, you'd be giving them a raise four times the size of the 1 percent redistribution.”


The EPI’s findings are based on its analysis of statistics from the U.S. Department of Labor.

-Noel Brinkerhoff


To Learn More:

The ’1 Percent’ Isn’t America’s Biggest Source of Inequality. College Is. (by Jim Tankersley, Washington Post)

Is College Worth It? Clearly, New Data Say (by David Leonhardt, New York Times)

As College Grads Drop Down the Job Market, Non-Grads are Bumped Off (by Noel Brinkerhoff, AllGov)

College Graduate Unemployment Depends on Your Major (by Noel Brinkerhoff, AllGov)


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