When I left you yesterday morning, darlings, I boldly claimed that Eduardo Porter “acknowledges widespread higher education but can’t connect that to higher national income. Because there isn’t one.”
Shortly thereafter, about ten minutes into my commute towards our eclipsed moon, it dawned on me (you heard that right) that there was a very easy way to illustrate college graduates’ higher personal earnings without a corresponding increase in national earnings: Simply multiply the number of 25-34 year-old earners by their average earnings by education. This is done with Current Population Survey data. If the East Coast Media Elite is right, then we’ll see the cohort’s aggregate income increase and much of that will go to college-educated workers. If higher education is a positional good, we’ll see little if any increase in the aggregate income but a greater proportion of the total will go to college graduates.
On my commute home—this time toward the rising, waning gibbous moon—I found that Paul Campos had the same idea.
Ouch. It appears college degrees are pretty much interchangeable with less education. Total income for 25-34 year-olds in 2013 was identical to 1990 after adjusting for inflation, and worse, the cohort is 8 percent larger today. In 1991, one quarter of the cohort had a bachelor’s degree or more; by 2013 nearly 40 percent did. The percentage of “some college, no degree” was about the same, below 20 percent.
You can trace the CPS data back to 1974 (before 1991, the Census Bureau used different education classifications), but the proportion of college graduates was mostly constant and aggregate income was rising because the 25-34 cohort was growing rapidly. It still doesn’t support the “more education = more income” argument. Nor does it help that even if there were an independent rise in national and college graduates’ incomes, it could still be caused by other factors.
Don’t hold your breath until the next lunar eclipse for the economics reporters and bloggers to stop weeping about how we need to help the dropouts graduate or hold the bad-apple for-profits accountable. They’re both noble goals that I support, but it’s obvious that higher education increases personal income, not national income.
Postscript: I would be cheating you if I didn’t mention the Pew Charitable Trusts’ report on “Generation X’s” financial position. Xers have higher incomes than their parents’ generation(s), but they also have more debt, including an average $25,000 in student loans among four in ten of them. Their net worth is also polarized, which is bad. My favorite part is in the special panel on page 11 where the report warns that Gen X’s student loan debt can “prohibit Gen Xers from saving to send their own children to college.”
Because it’s worked out so well for them.