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.

America Has World’s 4th Highest Level of College Attainment

Proponents of free market education reforms have been claiming for years that our schools are failing. One of their most compelling arguments has been that the dismal state of our K-12 public education system is responsible for our low ranking in college attainment compared with other nations.

The problem with this argument is that it is not true. The U.S. actually ranks fourth internationally in college attainment.

The commonly cited data is that the U.S. ranks 13^th out of 34 OECD nations in terms of college attainment. However, this data only refers to the proportion of 25-34 year olds who have received a tertiary education, not the total number of people who have attained a tertiary education. When 25-64 year olds are included, the U.S. ranks fourth in the world, according to the Shanker blog. The rate of college attainment for American 25-64 year olds is 42, which is very close to Japan’s 45 (ranked 3^rd) and Israel’s 46 (ranked 2^nd). Canada is ranked #1, with a rate of 51.

However, even if we only look at college attainment rates for younger Americans, the numbers are still far better than critics claim. According to the OECD data for this age group, the U.S. ranking of 13^th is based on a college attainment rate of 42. This was only 2 points lower than the 8^th-11^th ranked nations and only 6 points behind the 4^th ranked nation. If all the nations with a college attainment rate of 42-44 are grouped together, the U.S. is tied for 8^th with 7 other nations, and if those with a rate of 42-46 are grouped together, the U.S. is tied for 6^th.

In reality, the U.S. is actually one of the most educated nations in the world and our education system should be seen as a success, not a failure.

It is true that our relative ranking has been declining, but this is because the college attainment rates in other OECD countries has been growing at a faster rate than in the U.S., according to the Shanker blog, not because American schools are getting worse.

Should we be concerned?

Of course there is always room for improvement in education. Even if we were number one, it would still be worth considering better ways to educate people. On a more urgent note, the skyrocketing cost of tuition, the stagnant wages for professors, and the declining course offerings and admission rates could all conceivably lead to declining levels of college attainment in the future. Yet teachers (indeed most American workers) have been steadily increasing their productivity in spite of declining wages. So it is entirely possible that teachers and students, alike, will simply accomplish the same with less.

That other nations have been improving their college attainment rates more quickly than us is most likely due to the fact that we already had fairly high rates of college attainment and it is much easier to make large gains when you are far behind.

Considering that many European nations offer free higher education, it is remarkable that we’ve stayed as close to the top as we have. One possible explanation for this is that Americans recognize the value of higher education and are willing to make large sacrifices and saddle themselves with tremendous debt in order to get it.

Another reason is that many European nations still have K-12 systems that track students into vocational versus university programs. In the U.S., a late bloomer who does not appear college ready by high school does not have to go directly into an apprenticeship program or blue collar trade. She could go to community college, beef up her GPA, and transfer to a four-year college later. Likewise, many students who lack the money or readiness for college at age 18-19 (e.g., young mothers) go to work right out of high school and later enroll in college. This may be why the U.S. ranks so much higher than other nations when college attainment is measured for 25-64 year olds.

Korean Education Model Worsens Unemployment—And Your Point Is?

Hordes of Job Seeking Undergrads (Flickr, Lee J Haywood)

The South Korean education system is often held up by Ed Deformers as an example of an education system that works. They have high test scores and graduation rates and a whopping 82% of their high school grads go onto college, according to Good Education.

South Korea also has a dearth of jobs requiring a college degree or that pay enough to justify getting a degree in the first place. Thus, many are investing their valuable time, energy and money into a college education only to remain unemployed and in debt long after graduation. The problem has become so bad that South Korean president Lee Myung-bak is now discouraging students from going to college.

(Image from Flickr, GDS Infographics)

Could it happen here?

Not if the status quo holds. Currently, only about 30% of American adults have degrees—not even close to Korea’s 88% —but those who do are far more likely to be employed than their peers without college degrees. At the same time, college has become so expensive here that it is out of reach to many, while growing poverty has reduced the chances that children will graduate from high school with the skills necessary to succeed in college, or get in in the first place. Unemployment is not going to skyrocket in the U.S. because of increasing college graduation rates.

Not surprisingly, American college grads believe their investment was worth it, even though they now owe more for that education than any generation before them. Until now, this investment has helped them maintain greater financial security. This may soon start to change, as even college grads are now starting to find it difficult to find work, especially work that brings in enough to support them and pay off their debts.

The Project on Student Debt at the Institute for College Access & Success just published their annual report showing that the average graduate in 2010 now owes $25,250, a 5% jump from last year. Total student debt is now close to $1 trillion. (You can click here to see a graphic showing the break down by state).

Just to pay down the principal, graduates would have to pay $1,000 per month for over two years, $500 per month for over 4 years, or $200 per month for more than ten years. Considering the poor employment prospects and the relatively low pay currently being offered for many jobs requiring only an undergraduate degree, most of today’s grads are looking at years of debt or default. After rent, food, clothing, and other necessities are factored in, even those lucky enough to find work may be unable to make regular loan payments.

Why Should We Improve K-12 Education?

“College and Career Readiness” is an extension of the American Dream mythology (see College and Career Ready Farce). It presumes that anyone who works hard and plays by the rules can become successful, possibly even a member of the 1%. According to this “logic,” success during the K-12 years leads to success in college and career, which necessarily lead to success and happiness in life.

In other words, if we take the education reform movement at face value, it is all about improving K-12 education outcomes so our children can grow into successful and happy adults. Copying the Korean or Finish model, therefore, is supposed to lead to a society in which everyone has a meaningful and rewarding vocation and all their material, social and emotional needs are met. Yet even in Korea and Finland this is not true. Nowhere is there a society completely free of poverty, privation and misery, and unhappiness is a part of life for everyone, including the 1% (they just have the ability to drown their sorrows in Dom Perignon and fois gras).

A Degree for This? (Flickr, My Cubicle, by Damek)

 However, even the more modest demand of employment for all is not such a wonderful goal. Lots of jobs are degrading, dangerous and low-paid. Some are so low-paid, in fact, that workers continue to live in poverty, despite being employed. Even a college degree does not guarantee a well-paying, meaningful career. Millions of Americans with degrees do mindless and meaningless work at low wages.

In reality, the goal of public education is to perpetuate existing social relations, not change them. School is designed to sort kids into the future leaders and financial rulers and their employees. Not everyone can become a boss, or even a scientist. The losers are the overwhelming majority of us, whose roles are to become dutiful consumers and obedient employees, with just enough skills to do the required jobs. Public education is doing a pretty good job at this, perhaps even too well, since there aren’t enough jobs for those who are graduating from the system.

A New Vision

If 82% of the population wants to go to college, then they should and society should support them, but not to get them “good” jobs or because it will help the economy. A truly “good” economic system ensures that everyone has material security and access to the good things in life anyway, regardless of their education or vocation. In such a society, education no longer needs to be a tool for enforcing class privilege, but can become a means for exploring interests, developing desired skills, or simply enjoying a love of learning.