The educated get poorer

In this article we find increasing evidence that educated individuals are valued less and less in America.
I happen to believe that is worrisome in dozens of ways. It also dispells the myth that education is failing to supply big business qualified people.
Big business is, in fact, fleecing college educated people. Read on...

The Poor Get Richer
Blue-collar workers are making salary gains -- but don't cheer yet.
Fortune Magazine
By Geoffrey Colvin, FORTUNE senior editor-at-large
March 13, 2006: 10:13 AM EST

"The real annual earnings of college graduates actually declined 5.2 percent, while those of high school graduates, strangely enough, rose 1.6 percent.

That is so contrary to the conventional view of this major economic trend that it demands explanation. One possibility is that it's just a blip. Could be, but remember that 2004, when the readings started going haywire, was a year of strong economic growth, low unemployment, and rising productivity, offering no obvious reason to expect weird results.

The other main possibility is that something unexpected and fundamental is changing in the way the U.S. economy rewards education. We don't yet have complete data, but anyone with his eyes open can see obvious possibilities. Just maybe the jobs most threatened by outsourcing are no longer those of factory workers with a high school education, as they have been for decades, but those of college-educated desk workers.

Perhaps so many lower-skilled jobs have now left the U.S.--or have been created elsewhere to begin with--that today's high school grads are left doing jobs that cannot be easily outsourced--driving trucks, stocking shelves, building houses, and the like. So their pay is holding up.

College graduates, by contrast, look more outsourceable by the day. New studies from the Kauffman Foundation and Duke University show companies massively shifting high-skilled work--research, development, engineering, even corporate finance--from the U.S. to low-cost countries like India and China. That trend sits like an anvil on the pay of many U.S. college grads.

We need more evidence before concluding that we're at a major turning point in the value of education to American workers. But it certainly feels like one, based on what we can observe. Higher education still confers an enormous economic advantage. Just not as enormous as it used to be.

As for income inequality, pretty much everyone has always hated it, and its growth was a certain cue for handwringing and brow furrowing. Well, it's not growing anymore. Because our best-educated workers are earning less, and the incentives for higher education may thus be declining, the result could be a more uniform--and lower--standard of living. Be careful what you wish for."

The Bullshit Human Capital Story (BHC)

In an opinion piece at TPMCafe called "IT'S WHO YOU KNOW, STUPID" by Max Sawicky, a recent Paul Krugman argument is analyzed.

This fallacy is that income or wage inequality results from an increasing "skill" differential. It's your own damn fault you don't make more money. You should have spent more time drilling calculus and less in all-night games of hearts followed by excursions to Dunkin Donuts. If you're worried about outsourcing, you're a weenie; real men are not afraid to compete in the new world economy.

I would label it the Bullshit Human Capital story (BHC). BHC was big in the Clinton Administration and lives on in the Gospels of Sperling (a.k.a. Gene Gene, Neo-Liberal Machine). The Clintons attributed the suffering we must endure from free trade to lack of investment in training and education, and they had the courage to actually devote several teaspoons of resources to look like they were fixing that problem.

In an important departure, Krugman says it's about Power. It's not that more education is not always better than less; of course it is, and more public support for education and training should be welcome. But BHC does not strike at the root of the problem, nor its solution. It's about who makes the rules of the game, including the labor market game. We are not living under meritocracy. Merit is substantially compromised by privilege.

Privilege derives from wealth, race, and gender. It biases decisions in college admissions, employment, housing, political appointments, and credit allocation. It reduces economic efficiency and growth because a biased decision entails waste of real resources.

The resulting elite is what PK calls an oligarchy.

On a related note, Average family income drops 2.3% by Sue Kirchhoff, USA TODAY

From 2001 to 2004, average family income fell 2.3%, to an inflation-adjusted $70,700 from $72,400 in the 1998-2001 period. By contrast, from 1998 to 2001, average income jumped 17.3%. Median income — the midpoint of the income range — rose 1.6% to $43,200.

Fed economists said the figures were "strongly influenced" by a more-than-6% drop in median real wages during the period. Also, investment income was less than in the stock market boom years of the late 1990s. (Related: Full report)

Real net worth — the difference between family assets and liabilities — rose only slightly from 2001 to 2004. Median net worth rose only 1.5% to $93,100 during the period, vs. a 10.3% gain from 1998 to 2001. And liabilities rose faster than assets, due largely to a big rise in mortgage debt.

As we discuss next year's budget, Certified salaries will jump approximately 4.0% as will benefits.

In the free market world people all over CT are losing their jobs, taking massive pay cuts and both losing and paying larger deductables for their benefit packages.

Just something to think about.