"Whenever i talk with my wealthy friends about the dangers of rising economic inequality, those who don’t stare down at their shoes invariably push back with something about the woeful state of our public schools. This belief is so entrenched among the philanthropic elite that of America’s 50 largest family foundations—a clique that manages $144 billion in tax-exempt charitable assets—40 declare education as a key issue. Only one mentions anything about the plight of working people, economic inequality, or wages. And because the richest Americans are so politically powerful, the consequences of their beliefs go far beyond philanthropy.
A major theme in the educationist narrative involves the “skills gap”—the notion that decades of wage stagnation are largely a consequence of workers not having the education and skills to fill new high-wage jobs. If we improve our public schools, the thinking goes, and we increase the percentage of students attaining higher levels of education, particularly in the STEM subjects—science, technology, engineering, and math—the skills gap will shrink, wages will rise, and income inequality will fall.
The real story is more complicated, and more troubling. Yes, there is a mismatch between the skills of the present and the jobs of the future. In a fast-changing, technologically advanced economy, how could there not be? But this mismatch doesn’t begin to explain the widening inequality of the past 40 years.
In 1970, when the golden age of the American middle class was nearing its peak and inequality was at its nadir, only about half of Americans ages 25 and older had a high-school degree or the equivalent. Today, 90 percent do. Meanwhile, the proportion of Americans attaining a college degree has more than tripled since 1970. But while the American people have never been more highly educated, only the wealthiest have seen large gains in real wages. From 1979 to 2017, as the average real annual wages of the top 1 percent of Americans rose 156 percent (and the top .01 percent’s wages rose by a stunning 343 percent), the purchasing power of the average American’s paycheck did not increase.
Some educationists might argue that the recent gains in educational attainment simply haven’t been enough to keep up with the changing economy—but here, yet again, the truth appears more complicated. While 34 percent of Americans ages 25 and older have a bachelor’s degree or higher, only 26 percent of jobs currently require one. The job categories that are growing fastest, moreover, don’t generally require a college diploma, let alone a STEM degree. According to federal estimates, four of the five occupational categories projected to add the most jobs to the economy over the next five years are among the lowest-paying jobs: “food preparation and serving” ($19,130 in average annual earnings), “personal care and service” ($21,260), “sales and related” ($25,360), and “health-care support” ($26,440). And while the number of jobs that require a postsecondary education is expected to increase slightly faster than the number that don’t, the latter group is expected to dominate the job market for decades to come. In October 2018 there were 1 million more job openings than job seekers in the U.S. Even if all of these unfilled jobs were in STEM professions at the top of the pay scale, they would be little help to most of the 141 million American workers in the bottom nine income deciles.
It’s worth noting that workers with a college degree enjoy a significant wage premium over those without. (Among people over age 25, those with a bachelor’s degree had median annual earnings of $53,882 in 2017, compared with $32,320 for those with only a high-school education.) But even with that advantage, adjusted for inflation, average hourly wages for recent college graduates have barely budged since 2000, while the bottom 60 percent of college graduates earn less than that group did in 2000. A college diploma is no longer a guaranteed passport into the middle class.
Meanwhile, nearly all the benefits of economic growth have been captured by large corporations and their shareholders. After-tax corporate profits have doubled from about 5 percent of GDP in 1970 to about 10 percent, even as wages as a share of GDP have fallen by roughly 8 percent. And the wealthiest 1 percent’s share of pre-tax income has more than doubled, from 9 percent in 1973 to 21 percent today. Taken together, these two trends amount to a shift of more than $2 trillion a year from the middle class to corporations and the super-rich.
The state of the labor market provides further evidence that low-wage workers’ declining fortunes aren’t explained by supply and demand. With the unemployment rate near a 50-year floor, low-wage industries such as accommodations, food service, and retail are struggling to cope with a shortage of job applicants—leading The Wall Street Journal to lament that “low-skilled jobs are becoming increasingly difficult for employers to fill.” If wages were actually set the way our Econ 101 textbooks suggested, workers would be profiting from this dynamic. Yet outside the cities and states that have recently imposed a substantially higher local minimum wage, low-wage workers have seen their real incomes barely budge.
All of which suggests that income inequality has exploded not because of our country’s educational failings but despite its educational progress. Make no mistake: Education is an unalloyed good. We should advocate for more of it, so long as it’s of high quality. But the longer we pretend that education is the answer to economic inequality, the harder it will be to escape our new Gilded Age.
Today, after wealthy elites gobble up our outsize share of national income, the median American family is left with $76,000 a year. Had hourly compensation grown with productivity since 1973—as it did over the preceding quarter century, according to the Economic Policy Institute—that family would now be earning more than $105,000 a year. Just imagine, education reforms aside, how much larger and stronger and better educated our middle class would be if the median American family enjoyed a $29,000-a-year raise.
In fact, the most direct way to address rising economic inequality is to simply pay ordinary workers more, by increasing the minimum wage and the salary threshold for overtime exemption; by restoring bargaining power for labor; and by instating higher taxes—much higher taxes—on rich people like me and on our estates.
Educationism appeals to the wealthy and powerful because it tells us what we want to hear: that we can help restore shared prosperity without sharing our wealth or power. As Anand Giridharadas explains in his book Winners Take All: The Elite Charade of Changing the World, narratives like this one let the wealthy feel good about ourselves. By distracting from the true causes of economic inequality, they also defend America’s grossly unequal status quo.
We have confused a symptom—educational inequality—with the underlying disease: economic inequality. Schooling may boost the prospects of individual workers, but it doesn’t change the core problem, which is that the bottom 90 percent is divvying up a shrinking share of the national wealth. Fixing that problem will require wealthy people to not merely give more, but take less."
From:
https://www.theatlantic.com/magazine...enough/590611/
NICK HANAUER is an entrepreneur and a venture capitalist, the founder of the public-policy incubator Civic Ventures, and the host of the podcast Pitchfork Economics. He is the co-author, with Eric Liu, of The Gardens of Democracy: A New American Story of Citizenship, the Economy, and the Role of Government.