Income Trends 5: Impact of Education and Other Facts

This continues our series reviewing the findings of research on income inequality

In this post we will discuss the correlation between incomes and educational levels. We will also share additional facts found in the studies. The studies highlight so many statistics that you could easily miss their significance. So, let me summarize America is dividing itself from a middle-class based society into one where the richest 5% significantly out earn 80% of all other Americans.

 

Impact of Education on Income Equality

Pulling Apart a State-by-State Analysis of Income Trends says “Several factors contributed to increasing wage inequality, including long periods of high unemployment, globalization, the shrinkage of manufacturing jobs and the expansion of low-wage service jobs and immigration, as well as the lower real value of the minimum wage and fewer and weaker unions.

• Wages plummeted for workers with less than a college education, (lowest-earning 70% of the workforce) .
• More recently, even those with a college education experienced real wage declines”

Pulling Apart continues “fundamental changes in the United States economy contributed to disparities in low- and middle-income workers relative to highly skilled, highly paid workers.

• The shift from manufacturing to services led to an increase in the number of low-paying jobs and a decline in higher-paying jobs for workers with less than a college education.
• 1979-2003 manufacturing  jobs fell 25% and service jobs rose 115% in service industries (46% in retail alone).
  • Services/retail trade industries accounted for 79% of net job growth 1979-2000.
  • In 2002, the retail trades paid just 55% of manufacturing jobs.”

Other Statistics Shared by the Studies

• The U.S. currently has more income inequality than Pakistan or the Ivory Coast
• Emmanuel Saez found the top 1% captured 93% of growth in income during the first year after the recovery
• The bottom 20% lost 6% of real income in 10 years while the highest 5%r increased by 8.6%
• In the late 1970s the top 5% earned 11.7 times what the bottom fifth earned and grew to 14.1 by the mid-2000s

Friday we discuss the ability of low-income families to move quickly up the economic ladder