Pay gap between college grads and everyone else at a record

(AP)
(AP)

WASHINGTON (AP) — Americans with no more than a high school diploma have fallen so far behind college graduates in their economic lives that the earnings gap between college grads and everyone else has reached its widest point on record.

College graduates, on average, earned 56 percent more than high school grads in 2015, according to data compiled by the Economic Policy Institute. That was up from 51 percent in 1999 and is the largest such gap in EPI’s figures dating to 1973.

Since the Great Recession ended in 2009, college-educated workers have captured most of the new jobs and enjoyed pay gains. Non-college grads, by contrast, have faced dwindling job opportunities and an overall 3 percent decline in income, EPI’s data shows.

“The post-Great Recession economy has divided the country along a fault line demarcated by college education,” Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce, said in a report last year.

College grads have long enjoyed economic advantages over Americans with less education. But as the disparity widens, it is doing so in ways that go beyond income, from homeownership to marriage to retirement. Education has become a dividing line that affects how Americans vote, the likelihood that they will own a home and their geographic mobility.

Yet few experts think the solution is simply to send more students to four-year colleges. Many young people either don’t want to spend more years in school or aren’t prepared to do so. Already, four in every 10 college students drop out before graduating — often with debt loads they will struggle to repay without a degree.

Rather, labor economists say, many high school grads would benefit from a more comprehensive approach to obtaining skills, especially involving technology, that are increasingly in demand.

“If the only path you offer them is a traditional college path, they’re not going to be successful,” says Harry Holzer, an economist at Georgetown University.

Helping lift high school graduates’ skill levels is critical, given the many ways they are lagging behind their college-educated peers:

— They’re less likely to have a job. Just two-thirds of high school-only grads ages 25 through 64 were employed in 2015, down sharply from 73 percent in 2007. For college graduates in the same age group, employment dipped only slightly from 84 percent to 83 percent.

— They are less likely to be married. In 2008, marriage rates for college-educated 30-year olds surpassed those of high-school-only grads for the first time.

— High school-only grads are less likely to own homes. Sixty-four percent are current homeowners, down from 70 percent in 2000. By contrast, three-quarters of bachelor’s degree holders are homeowners, down slightly from 77 percent in 2000, according to real estate data firm Zillow.

— College grads are more likely than high school-only graduates to contribute to a 401(k)-style retirement plan, according to research by Christopher Tamborini of the Social Security Administration and Changhwan Kim, a sociology professor at the University of Kansas. College grads contributed 26 percent more even when members of both groups had similar incomes and access to such plans, their research found.

Participation in 401(k)-style plans requires decisions — whether and how much to contribute and how to invest — that can become barriers for the less educated.

All of this contributed to a sharp political split in the presidential election. College graduates favored Hillary Clinton by 9 percentage points. Non-college grads chose Donald Trump by 8 points, according to exit polls. That was the largest disparity between the two groups on record since 1980, according to the Pew Research Center.

Some of these trends might eventually reverse themselves if more high school grads acquire the skills needed for higher-paying work. Though many middle-income jobs don’t require college, nearly all require some post-high school education or training.

What Holzer calls the “new middle” includes such health care jobs as X-ray technicians and phlebotomists, as well as computer-controlled manufacturing and some office occupations, like paralegals.

And these “new middle” positions are typically the same jobs for which employers have complained that they can’t find enough qualified people to fill. Labor experts say the U.S. educational system is failing to help young people acquire such skills.

Still, some are making progress. Asia Howard, 26, of Jacksonville, Florida, was stuck in mostly retail and fast-food jobs after graduating high school, unable to get a job in banking, a profession she prized for its steady hours. A friend told her about a nonprofit called Year Up, which teaches such career skills as resume writing, interview techniques and time management.

Year Up participants also typically receive internships, which Howard spent at Everbank. Early last year, she began a job in mortgage lending at PNC Financial that pays nearly twice what she earned in previous jobs.

She saw many people lose homes during the financial crisis. Now, she helps people buy them.

“It gives me a chance to see what that side of life is like,” Howard said. And unlike in her previous jobs, “I can see a lot of room to grow.”

 

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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