Education and Income

Kevin Drum has a great post about the phenomenon of college educations being worth more, but less people taking advantage of them. I usually like when numbers help tell a story, and in this one there are these figures:

Right. And maybe that's the problem. When I say that the premium for getting a college degree used to be 30% and now it's 90%, what do I mean? One possibility is something like this:

1973: high school grad makes $42K, college grad makes $55K.

2006: high school grad makes $42K, college grad makes $80K.

This probably would motivate more kids to get college degrees. But that's not what actually happened. Here's what actually happened for male workers (all figures adjusted for inflation):

1973: high school grad makes $42K, college grad makes $55K.

2006: high school grad makes $31K, college grad makes $61K.

The skill premium hasn't gone up because a college degree is way more lucrative than in the past. In fact, it's only slightly more lucrative over the long term and completely stagnant among recent grads. Rather, the skill premium has gone up because the value of a high school degree has cratered.

This is pretty striking stuff. High school grads earn about 1/4 of what they did in 1973. College grads have made very modest gains. I suspect if you factored in the rising cost of college educations, the gains by the college educated look even weaker.

The question for every public candidate should be, "What will you do to help ensure a growing economy does, in fact, improve the lives of everyone?" If they don't (at the very least) take the question seriously, they don't deserve to be in a race.