Premium on Education Shifts the Middle Class Starting Line

Small Type
Gone are the days when a high school diploma served as a surefire ticket to a middle-class career.
The rise of technology in the workplace and the globalization of the economy have hollowed out the marketplace, widening the gap between more- and less-educated workers.
Many of the routine, middle-skills jobs that once provided a middle-class existence have been replaced by technology or pushed to cheaper markets overseas. And for a large share of the well-paying occupations that remain, skill requirements have soared.
Workers who have taken at least some college courses accounted for just 28 percent of the workforce in 1973, according to the Pathways to Prosperity Project at Harvard University's Graduate School of Education. Today, that ratio has shot up to 59 percent.
The recession and lingering high unemployment have exacerbated the education premium. When broken out by education levels, the only group of workers to gain jobs since the start of the recession were those with at least a bachelor's degree, according to study released last month by Georgetown University's Center on Education and the Workforce.
For those who had jobs, compensation levels predictably rose with education level. According to U.S. Census Bureau data issued in 2011, the median earnings for someone with a high school diploma were $21,569 a year in 2008. That jumped more than 50 percent for someone with an associate's degree. It doubled, to $42,783 a year, for someone with a bachelor's degree.
Simply put, the premium today's employers put on education has shifted the starting line for a middle-class life.
To account for that, Austin Community College and other groups have sought to accelerate education and skills-training programs in high school. With programs such as its Early College Start, Early College High School and ACC Tech, the college is pushing more-advanced education earlier.
The idea, says Mike Midgley, ACC's vice president of instruction, is to give students more proficient sets of skills by the end of those four "high school" years, perhaps leaving with a certificate or even an associate's degree. Essentially, Midgley and his colleagues want to get students closer to the middle-class starting line in the same amount of time it traditionally took to just get a high school diploma.
In similar college-focused programs around the country, he said, some students have completed two years of college before leaving high school. But even getting a start helps.
"What we have seen is students who complete (an ACC) course while in high school are significantly more likely to continue on at a college after high school, because they've already begun that process," Midgley said.
Even for those who don't move on to a bachelor's degree program, more education typically means more income. Generally speaking, ACC has found that the single largest earnings jump comes between those with just a high school diploma and those students who have completed a single year of further study, Midgley said.
"The biggest bump is that one year of college, and we think it correlates with a solid technical knowledge base in one area," such as automotive or networking skills, he said.
From a community-wide perspective, higher education levels correlate strongly with lower unemployment, according to an Aug. 29 report from the Brookings Institution's Metropolitan Policy Program. The report compared the education requirements of online job postings with an area's education levels, producing an "education gap index" for the country's 100 largest metro areas.
In Austin, where the education gap index was 1.08, the unemployment rate for May 2012 was 5.8 percent, according to the study. In McAllen, where the education gap index was a wider 1.14, the unemployment rate was 10.8 percent.
The same correlations held true even after accounting for the current tight labor market, which leaves many educated workers stuck in jobs for which they're overqualified, according to Jonathan Rothwell, the study's author and a senior research analyst at Brookings.
About 34 percent of Austin workers are over-educated relative to their occupation, he said, and they make less money than their educational peers. Yet the metro economy as a whole did not appear to fare any worse, he said, and the same tended to hold true in other metro areas.
"My sense is that the demand (for more-educated workers) continues to outrace the supply, and we're a long ways away from any kind of elimination of the advantage for education," Rothwell said. "While some degrees pay more than others and probably are more in keeping with current trends and demands, any college degree provides an advantage."
On the flip side, he said, that typically means a disadvantage for workers with less education — whether due to the higher skill requirements of today's employers or due to the recession forcing more-learned workers into occupations typically filled by workers with a high school diploma.
Administrative assistants used to need little more than high school, good literacy skills and a quick typing finger. Today, Rothwell said, "it's hard to compete if you have just a high school diploma when you're going up against people with college degrees."
That's not to suggest a growing economic boon exists at every step along the educational path. College gets more and more expensive, skewing the cost-benefit analysis of higher education. And starting wages across the board — including for 23- to 29-year-old college graduates entering the workforce — have been largely stagnant over the past decade, said Lawrence Mishel, president of the Economic Policy Institute.
But the simple fact remains that, on an individual level, more education almost always means more income.
Dan Zehr covers economics and finance for the American-Statesman. Contact him at dzehr@statesman.com or 445-3797.