Latest Federal Data Confirm: College NOT Road to Prosperity

College educated people do have higher incomes and lower unemployment rates, on average, than those who have not been to college. However, the goal of achieving prosperity by obtaining a college education is becoming less attainable and secure than ever before, primarily because of staggering levels of student debt and a stagnant labor market offering mostly low wage jobs in the service sector, but also because of growing competition for limited space on college campuses.

“A college diploma no longer guarantees a direct pathway to the middle class, making it harder to justify the expense of a degree,” National Center for Education Statistics (NCES) Commissioner Jack Buckley told Diverse Education. Student loan debt is the only type of loan debt that has increased since the recession started. In 2012, total student loan debt reached $1 trillion, surpassing credit card debt, becoming the second largest source of personal debt after home mortgage debt. Consequently, even for those lucky enough to earn a college degree and find a job, high monthly loan payments can easily force them into the ranks of the working poor.  Considering that the average undergraduate owes more than $25,000, a repayment schedule of 10 years at 6.8% comes to $288 per month, which is a lot of money for someone earning only $30-40,000 per year.

Despite his dire assessment, Buckley went on to repeat the cliché that most of the “good” jobs are going to those with college degrees. Yet, he does not define “good,” which, today, generally means “a steady salary,” regardless of the amount of that salary or the working conditions. Today people are working longer hours than they did 30-40 years ago and earning less in constant dollars, even with college degrees, so a more precise statement would be that people with college degrees are more likely to have just plain jobs, not necessarily good ones. Furthermore, even those who have college degrees are finding it harder to get hired and to hold onto their jobs. What good is a “good” job if it barely pays ones living expenses and college loan debt and leaves one with no time or energy to spend with family or leisure?

College For All: A Pathway Toward Unemployment and Lower Wages

While the growing expense of college and the ensuing debt burden are certainly good reasons to question the assumption that college is a good investment, one must now consider the job prospects that are possible with a college degree, as well, since many of the jobs that require a college degree are expected to decline over the next decade. This could result in a labor surplus in those fields and drive down wages, while forcing many graduates into other fields or the ranks of the unemployed. For example, over 250,000 bachelor’s or master’s degrees in education have been awarded yearly since 2000, though there will only be 539,100 teaching jobs available through 2020, and nearly ten times more advanced degrees in psychology will be awarded than there will be jobs in this field. Ph.D. scientists are already feeling the pinch of job and grantshortages, forcing them to look for other sources of income. (Statistics from National Center for Policy Analysis) And college graduates, in general, are having a tough time finding work in their fields of expertise, with 50% of all recent college graduates currently unemployed or underemployed in low wage jobs unrelated to their training like bartending or retail, the San Jose Mercury News reported last year. Roughly 1.5 million, or 53.6%, of those under the age of 25 with bachelor's degrees were jobless or underemployed last year—the highest rate in more than a decade.

One might reasonably wonder why legislators and reformers have been pushing a school reform agenda of “college for all” when college graduates routinely cannot find work in their fields of expertise and must then accept low-wage, unskilled jobs to repay their $25,000 of student debt. College may no longer be such a good investment for young people, but it is a huge boon to the banks and lending agencies that profit from the $1 trillion in student debt (a debt that cannot be erased through bankruptcy) and to the institutions and businesses that will be able to increase their profit margins as wages decline because of the increasing competition for scarce STEM jobs and other fields requiring highly educated workers.

Get Good Grades and to College or You’ll Wind Up a Ditch Digger

It used to be (and perhaps still is?) common for teachers to chastise shirking students with the threat that they’ll wind up digging ditches if they don’t start doing their homework and paying attention in class, yet the median income for a heavy equipment operator (e.g., backhoes, tractors, bulldozers and other ditch digging machinery) is $60,483, according to salary.com. The fact is there are lots of jobs that pay relatively high wages that do not require a college education and many of these industries are projected to grow considerably over the next decade, according to the Bureau of Labor Statistics (BLS). Jobs in masonry, for example, are expected to increase by 40%. Jobs in plumbing and pipefitting are expected to grow 26%. Jobs operating construction machinery are expected to increase by 23%. (Statistics from National Center for Policy Analysis)

Go To College (If You Can)

Another obvious problem with the College for All agenda is that it is impossible for everyone to go to college. Even before states started to slash contributions to their public universities there weren’t enough teachers and classrooms for every high school graduate. At the same time, large numbers of young people are either not graduating from high school, or graduating without the necessary skills to succeed in college. This problem has only been exacerbated by the recession and years of federal policies prior to the recession that favored the interests of older Americans at the expense of younger Americans. For example, the federal government now spends $480 billion on Medicare, but only $68 billion on education, according to Esquire. As a whole, the U.S. government spends 7 times as much on its seniors as it does on its children, per capita, according to a 2009 Brookings Institution study. Mike Males writes that younger workers are currently contributing 15% of their payroll income to pay for Social Security and Medicare payments for seniors, since Congress gutted the Social Security Trust Fund (originally designed to cover future generation’s benefits) to pay for current government needs.

As a result, the wealth gap between younger and older Americans is now the largest on record. In 1984 Americans who were sixty-five and over made ten times as much as those under the age of thirty-five. By 2008, older Americans were earning nearly forty-seven times as much as the younger age group. Older Americans suffered far less under the current recession, with the median net worth of those under 35 falling 37% between 2005 and 2010, while falling only 13% for those over the age of 65. This wealth gap is not small, either. The median net worth of households headed by someone 65 or older has increased 42% since 1984, to a comfortable $170,494, while the median net worth for younger households has declined 68% to a desperate $3,662, according to the Pew Research Center. (For more, see the following articles in Esquire and Newsweek).

The road to prosperity for young people today, if there is one at all, may be taking care of their parents in their old age and hoping they inherit whatever wealth they may have had.

California, Poorest/Richest State in the Nation

California currently has more than 600,000 millionaires and 85 billionaires in the Forbes 400 list, far more than any other state in the nation. At the same time, California is now the poorest state in the nation, with the highest percentage of residents living at or below the poverty level. According to the Census Bureau, 23.5% (8.7 million Californians) are living in poverty. Florida is number 2 at 19.5%.

These numbers reflect a revision in how the Census Bureau measures poverty. In the past, it looked solely at income versus food costs. Under this system, the poverty rate would be only 16%. Under the new system, it now considers income plus assistance programs (e.g., food stamps, welfare) versus tax rate, childcare, housing and medical costs, in addition to food expenses, providing a much more realistic (though still incomplete) picture of families’ financial challenges.

Nearly 50% of California’s children live in or “perilously close” to poverty according to the newer metric, probably the single biggest reason for the state’s low test scores. True poverty rates are further obscured by the arbitrary and absurdly low federal threshold of $23,021 for a family of four. Considering that average monthly rents are $1552 in Los Angeles, $1431 in San Diego, $1938 in San Jose and $2106 in San Francisco, families must spend between $17,172 and $25,272 per year just to place a roof over their heads.

It is not just that better methods are providing a more accurate measure of poverty. The recession has also contributed to a dramatic increase in poverty. Between 2008 and 2011, for example, poverty rose 12% in Los Angeles County to 24.3%, and rose even more in some of the state’s rural counties. Conditions have grown so bad that California has seen negative migration patterns for the past eight years, according to the WSWS. A combination of low unemployment rates in Mexico (roughly half of California’s in recent years) and increased militarization of the border and deportations (a record 400,000 in 2012) has significantly reduced migration from Mexico. This has led to labor shortages in the state’s agriculture sector, with some farmers opting to let unpicked produce rot rather than increasing wages to attract domestic employees, since the former increases sales prices and profits, while the latter only cuts into profits.

While the state’s economy “recovers,” job growth has been primarily in low-wage service jobs. Thus many formerly unemployed are now earning far less than they did prior to the recession, contributing to the ranks of the working poor. Cuts to social programs has placed further downward pressure on living standards and contributed to the growing number of poor Californians under the new measurement system.

Youth Poverty At An All-Time High

Empty Pockets (Image by barbaranixon from Flickr)

A new report from the Washington DC-based Urban Institute indicates that the overall percentage of wealth of those in their 20s and 30s has been dropping steadily and is now at its lowest level since records have been kept, the WSWS reports.

The study, “Lost Generation? Wealth Building Among Young Americans,” found that young people aged 29-37 saw a 21% decline in their accrued wealth over the past few decades, while those who are 74 and older saw their wealth increase by 150%. One explanation is that older Americans are more likely to have defined-benefit pensions, which have become increasingly rare for younger workers. Younger workers are also saddled withthe highest amount of student debt ever, with the average 25-year-old owing$25,000. Young people have also been particularly hard hit by the housing crisis and unemployment. The majority of new jobs created since the “recovery” started pay less than $15 per hour. Meanwhile, the number of mortgages held by 25-30 year-olds has dropped from 9% to 4% of all mortgages.

Today in Labor History—December 31

December 31, 1890 - Ellis Island opened on this date in New York City, where millions of immigrants to the United States first set foot in the land of the free. (From Workday Minnesota)

December 31, 1931 – 60,000 unemployed workers rallied at Pitt Stadium in Pittsburgh, near Father Cox's Shantytown. The shantytown lasted from 1929 to 1932 and was the staging base for the Reverend James Cox's unemployed army. (From the Daily Bleed)

December 31, 1982--Martial law was declared in Poland in 1981 in an attempt to suppress the anti-communist Solidarnosc labor movement. It was suspended on this date in 1982 and officially ended July 22, 1983.

Exchange Students Win $200K Settlement for Exploitation at Hershey Plant

Last year there was strike at Hershey Chocolate by 300 foreign students living here on J-1 work-study visas. According to Democracy Now, it was the first time that foreign students had engaged in a strike against their employer.

Their actions are now starting to pay off. Over 1,000 students from Eastern Europe and Asia recently won more than $200,000 in back wages for their work at Hershey in a settlement with the U.S. Labor Department, according to the Huffington Post. The feds have also imposed fines on three groups involved in staffing for minimum wage, overtime and safety violations: SHS Group, a temporary workers firm; Exel, Inc, the company that oversaw the plant; and the Council for Educational Travel-USA, a nonprofit that imports foreign students on J-1 travel visas.

Hershey, however, has so far gotten off without consequences, even though they benefited financially from the exploitation of the students.

The students had to pay between $3,000 and $6,000 to participate in the “cultural exchange program,” a modern day form of job sharking run by the U.S. government. In reality, many were forced to do heavy lifting from 11:00 pm until 7:00 am and toil under sweat shop conditions, when they were supposed to be sleeping and studying for their day classes. They were also forced to live in company housing with rents far above market value, similar to the company towns of the early 20^th century, where workers were paid in scrip.

Interestingly, they did learn a lot about American culture, just not the white-washed American Dream fantasy that the program had hoped for. They not only learned that American capitalism will take advantage of every opportunity to abuse people for private gain, but they also learned that Americans themselves are hungry, homeless, unemployed and desperate for a stable income. (The student workers were given jobs at minimum and sub-minimum wage, while local residents were suffering high rates of unemployment and poverty).

The Inconvenient Truth About Wages: They’ve Dropped 19% Since 1970 For Men and 6% for Women Since 2000

Huck/Konopacki Labor Cartoons

I have written repeatedly in this blog about the declining wages and living standards for American workers over the past 30-40 years (see here, here, here and here). A new report out by Michael Greenstone and Adam Looney (both fellows at the Brookings Institution) adds some more data to support this conclusion (the report was summarized in the New York Times).

According to their report, the earnings for male workers age 25-64 have declined by 4% since 1970 after adjusting for inflation, despite the fact that worker productivity has dramatically increased during this same time period. However, in 1970, 94% of men in this age group had employment, whereas by 2010 the number had fallen to only 81%. So not only have wages gone down for those who have jobs, there has also been a drop in the number of people who earn wages at all. Thus, when all working-age men are figured into the data, the median earnings of male workers have actually declined by 19% since 1970. However, for those who lack a high school diploma, wages dropped by a staggering 41% since 1970.

The authors note that this decline in employment is due in part to the recession and the currently high unemployment rate, as well as the large numbers of people who have given up looking for work. However, it is also the product have much higher rates of incarceration and higher enrollment in the Social Security Disability program. Furthermore, those who are incarcerated for the most part have employment within the prison system, but they can be forced to work for free or for much less than the minimum wage, making them de facto slaves.

Women, in contrast, have done much better over the past 40 years. Since 1970, the median female worker has seen her earnings increase by 71%, while the percentage of women in the workforce has increased from 54% to 71%. Yet even with these gains, women have seen their earnings drop by 6% since 2000.

While a college educated workers have higher employment rates and earn higher salaries on average, the percentage of men completing college has stagnated over the past 30 years. The percentage of women completing college has been steadily increasing. Yet with tuition rising significantly faster than inflation over the past decade, combined with state budget cuts, stagnating wages for professors, declining course offerings, furloughs and admissions moratorium, college is becoming a much less tenable road to material security.

The average student is now graduating with a debt of $24,000 or more. With slim job prospects and anemic entry level salaries, many graduates, even if they can find work, will retain large college debts for years, or even decades. Consequently, even with a “good” job, many college graduates will still have living standards far below those of their parents’ or grandparents’ generations.

In addition to declining wages, American workers are working longer hours and they are working harder and faster (one of the main reasons for their increased productivity). If anything, salaries should be significantly higher now than in the 1970s, even when adjusted for inflation, since American workers are doing such a better job at enriching their bosses. Even with higher wages, corporate profits are so high that the bosses would still end up richer than ever and the wealth gap would continue to grow.

Breaking News: American Dream is a Myth

American Dream? (Image from Flickr, by OakleyOriginals)

Nobel Prize-winning economist Joseph Stiglitz was recently on The Daily Show to promote his new book The Price of Inequality. In the interview, he told Jon Stewart that the life opportunities for an American youth are "more dependent on the income and education of his parents" than in any other wealthy country.

According to Good Education, Stiglitz’s observation is an indication that the American Dream “has become a myth.”

Good Education is wrong in a significant way: The American Dream has always been a myth. Sure, some people have transcended the backgrounds of their parents, moving into the middle class from humble working class or immigrant backgrounds. However, extremely few have ever gone on to become wealthy members of the ruling elite.

It is also true that middle class wealth has been shrinking dramatically since the economic meltdown a few years ago, making it much more difficult to enter into and remain in the middle class. However, wages and living standards for the middle and working classes have been sliding steadily since the 1970s and would likely be continuing to do so even without the economic crisis as a result of the capitalist class’ long-running assault on wages, union power and New Deal and Great Society entitlements.

Good asks why we accept an “institutionally driven system that lets people who have wealth play by and create a different set of rules.” Implicit in this question are the assumptions that the system could be otherwise and that it is acceptable for there to be a wealthy class in the first place.

The problem is that as long as there are class distinctions in society, especially ones as dramatic as those in wealthy capitalist countries, those with the wealth will necessarily have a monopoly on political and social power. In other words, it is not possible for the rest of us to have equal political or social power so long as a wealthy class persists. Indeed, both the political and economic systems exist precisely to facilitate their acquisition of wealth—hence different rules for them and us.

If the dream is to simply own one’s own home, eat at restaurants and take an annual vacation to Palm Beach, then the dream is still alive. One should remember, though, that this dream has always depended on the good will of the bosses to provide a job, a dependency that makes us all vulnerable and at risk of suddenly becoming poor—a rather unpleasant dream, when you really think about it. It forces us to make disagreeable compromises and sacrifices in order to keep those jobs and keep our bosses happy so they won’t lay us off or, if they do, so they will still write us nice letters of recommendation.

Furthermore, by accepting these jobs we also tacitly accept and promote capitalist class hegemony since our labor is the source of their wealth. Even those with “good jobs” are in this bind. Consider professional athletes (and the overwhelming public disgust they garner when they go on strike). Despite the millions that the highest paid athletes earn, they are still employees and, like us, potentially only an injury away from the unemployment line. Thus, they, too, are dependent on the good graces of their bosses.

The American Dream is (and always was) a clever piece of propaganda that promoted hard work and obedience in the present, by tantalizing workers with the hope of reaching easy street in the future.

300,000 Teaching Jobs Lost Since 2008

Over 100,000 teaching jobs were lost in the past year, while more than 300,000 have been lost since 2008, according to a recent article in Fire Dog Lake. Most of these losses were due to state budget cuts. However, there has been very little federal relief since 2010.

One obvious repercussion has been increased class sizes and decreased course offerings. However, there are other less obvious implications, like the fact that the majority of teachers are women and that job losses in the education sector have had significant impact on the national unemployment rate for women. Another less obvious consequence has been teachers’ unions increasing willingness to voluntarily forgo raises and accept employer take-backs like furloughs, decreased contributions to health and pension plans, and increased workloads, in hopes that these concessions will stem the layoffs. Many of these concessions will likely become permanent, while going years without a raise can significantly reduce teachers’ retirement savings.