Some commentators are under the false impression that wage inequality is a simple consequence of employers’ demand for increased skills and education—often thought to be driven by advances in technology. According to this myth, because there is a shortage of skilled or college-educated workers, the wage gap between workers with and without a college degree is widening. This is sometimes referred to as a “skill-biased technological change” explanation of wage inequality (since it is based on the notion that advances in technology lead to the need for more skills). But new data from 2014 shows that even college educated workers and workers with advanced degrees are not in demand enough to see their wages rise.
The figure below shows the most recent data on average hourly wages by education. Here we find reinforcing evidence that there is no sign of a technologically related demand for more-credentialed workers. The workers with the credential that should be in high demand—four-year college graduates—have not done that well, especially in the last year. In fact, among education categories, the greatest real wage losses between 2013 and 2014 were among those with a college or advanced degree. Workers with a four-year college degree saw their hourly wages fall 1.3 percent from 2013 to 2014, while those with an advanced degree saw an hourly wage decline of 2.2 percent. If demand for high-skilled workers were driving wage inequality, we would expect to see these workers’ wages increasing, or at the very least, falling less than their low-skilled counterparts.
H/T to the Commish.
1 comment:
Remember the Ross Perot and his NAFTA line about hearing "a big suck sound of jobs leaving America"? Not sure if that really applies here but I think it has influenced our economy to a degree. My father and father-in-law both supported their families comfortably working in the same factory w/o college degrees.
Like coal minining in KY, those production jobs just aren't there anymore and we have sold kids on the idea that a college education is going to get them a job will give them a better live than their parents... well hopefully at least equal.
I honestly believe that post secondary has become an overpriced, out-of-touch dinosaur that neither prepares most students for real world work nor guarantees them anything other than a big student loan debt that will reduce their spending power at a time when they need the most to establish a home and family.
Folks I see doing well now are not necessarily the most educated but the ones who have strong work ethic and either vocational skills or creatively and initiative to take a chance (entrepreneurial).
Post secondary has got to retool to fit the market needs and do so not in isolation but in tandem with workplace. Hey an unemployed high school graduate gets the same government check as a college graduate and the same is true for waiting tables.
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