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Wednesday, March 6, 2024

The Diploma Divide in Wages

Many posts have discussed economic and educational inequality. The effects of inequality reach many corners of American life.  There is a big divide between people with college degrees and people without.

Emily Peck at Axios:
Yes, college is still worth it: The wage gap between recent college and high school grads has been widening for decades, and grew even more last year, per new Federal Reserve data.

Why it matters: Even so, Americans are falling out of love with the idea of a four-year degree.Confidence in the value of a college education, a cornerstone of the American dream, is falling, per polling from Gallup and the Wall Street Journal.

Reality check: Economic data show clearly that a college degree gives individuals a lifetime earnings edge — and other benefits. Despite what you've heard about AI stealing our jobs, the U.S. economy needs educated workers to grow and flourish: how else would that AI get developed?

Zoom in: In 2023, recent college grads age 22-27 working full-time earned $24,000 more per year than 22-27 year olds with only a high school degree. Back in 1990 the gap was $15,000, according to the numbers tracked by the NYFed.
To put that in perspective, by their early 20s the high-school degree workers likely have many more years of work experience than the new college grads — yet they're still getting out-earned.

Yes but: That gap is just the beginning. The wage premium goes on to double over a worker's lifetime, according to research economist David Deming published last year.He was able to follow a group of college-educated workers through their working lives. At age 25 these folks had a 27% premium over high school only graduates. By age 55, that premium was 60%.
"It's malpractice to tell a young person that a college degree isn't necessary anymore," says, Deming, who is a professor at the Harvard Kennedy School.

Follow the money: A lot of research, surveys and news articles evaluate the worth of a degree for recent graduates — but the value of college education accrues over a workers' lifetime.