Friday, July 11, 2014

College-Ed​ucated Americans Are Doing Better Only Because Everyone Else Is Doing Worse

College is expensive, but the income gap between college graduates and those without a degree has widened sharply in the last few years.

This chart from a presentation by Bill Emmons at the Federal Reserve Bank of St. Louis, and alerted to us by guest author Invictus over at Barry Ritholtz's The Big Picture blog, shows the growing gap in income between those with at least a bachelor's degree and workers who haven't finished college.

"[I]t’s not so much that those with college degrees are doing particularly well, it’s that everyone else is doing significantly worse," wrote Invictus. "This is a stunner."

Emmons chart tracks incomes on an inflation-adjusted basis. Only the college-educated households have been able to preserve their purchasing power.

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[This is my personal commentary: I have seen a political shift from the talking points of "income inequality" to that of "helping the middle class" which reminds me of simple political rhetoric rather than any desire to get things on a fair playing field. One reason I hated to see this change in emphasis is that big money currently seems to purchase "free speech," and so the focus may change just because of this. I felt that the reason we are subtly switching agenda is to reduce the implied threat to the Wall Street crowd and grab for the cash necessary to get elected, or just self enrichment. HOWEVER, this chart makes the problem look more like a "middle class" issue. It is clear to see that the average working man is falling drastically away from those who are college educated, possibly considered "the elite" but probably not the wealthiest as the term "income inequality" seems to address better. This trend, coupled with the high cost of education, just looks like it would spell disaster to the common man without the resources to get a college degree, or those who borrow money to acquire it and end up with high income and high debt. Judging by the education levels and nothing more, it appears that in the current job market that an expensive college degree is important to keep oneself in a holding-one's-own income group.The lack of spending in the re-education of the job force that is usually associated with recoveries might explain this grabbing of the perceived "qualified" job seekers first.]