The latest edition of Education Pays, a publication in the College Board’s Trends series (of which Sandy Baum is the lead author) highlights, along with much else, the work of the talented MIT labor economist David Autor. Autor assembled the data year-by-year going back to 1970 to document the remarkable growth in the wage premium accruing to college-educated workers, which reached its all-time high last year. The key graph summarizing this trend is reprinted here from Education Pays.
Autor further shows that each additional year of schooling, even for those who attend but don’t finish college has a labor-market payoff, but with a bigger gain for the 20th year of schooling, which corresponds to college completion.
The bad news is that the growing gap between high-school and college wages has more to do with the declining earnings of high-school graduates than big gains for college completers. Autor draws on labor-market data to help make sense of this outcome. He classifies jobs into three skill groups and shows—not surprisingly—that the higher-skill jobs are better paid. The middle-skill jobs, including sales person, office worker, craft and repair worker, and machine operator, offer an inviting career aim for high-school graduates who haven’t made it through to a bachelors’ degree. But these jobs went from employing 57% of the workforce in 1979 to just 49%% in 2007, and have dropped by 2.9 percentage points more during the Great Recession. Meanwhile, low-skill jobs, like those of security guards, cleaners, and personal-care staff, have grown in absolute numbers and as a share of all jobs over the same period, and gained further during the recession. High-skill jobs in professional, managerial, and technical work have prospered too, although their numbers have stagnated during the recession.
This “hollowing-out” of the middle of the job distribution may have a variety of sources, which Autor investigates with care. But whatever the relative weight of computer automation, job off-shoring, declining unionization, and other forces, this reality presents the next generation of American students with a serious challenge. Those bent on claiming college doesn’t pay, in the face of so much evidence, are fond of anecdotes about auto repairmen who make more money than lawyers, but the fact is that those middle-range opportunities are harder than ever to get, for reasons that are unlikely to turn around in any near-term future.
Autor’s paper is available for download at http://www.brookings.edu/papers/2010/04_jobs_autor.aspx