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 Part V Education Up For All, Wages Up For Some Women1

 Table 1 Prime Age Workers2 Are Completing More Years of Formal Education

Occupation Tiers by Average Years of Education


Tier 1 jobs average
10.5 years
of education or less

Tier 2 jobs average
10.6 - 12.0

Tier 3 jobs average

Tier 4 jobs average


Highest Level Completed

1971 Percentages by Column
High school dropouts 58.3 34.9 11.0 1.4 28.5
Only high school diploma or GED 36.4 51.8 49.4 9.4 41.4
Some university 4.5 10.5 23.0 11.6 13.43
University degree 0.8 2.9 16.7 77.6 16.7
Totals 100.0 100.0 100.0 100.0 100.0

Highest Level Completed

1995 Percentages by Column

High school dropouts 26.1 12.0 2.4 0.5 8.9
Only high school diploma or GED 49.2 45.9 28.2 5.7 32.5
Some university 20.4 33.1 37.0 13.4 28.9
University degree 4.3 9.0 32.4 80.3 29.6
Totals 100.0 100.0 100.0 100.0 100.0
Data is from Table 3.4 of Who's Not Working and Why .  

Table 2 Median Real Wages Are Dropping for Prime Age Men

Occupations Tiers by Average Years of Education

Tier 1 jobs
10.5 or less

Tier 2 jobs
10.6 - 12.0

Tier 3 jobs

Tier 4 jobs

All Tiers

1970 median hourly wages for men
(1994 prices)
11.78 13.72 16.08 19.32 14.31
1994 median hourly wages for men 9.23 11.53 15.13 19.23 12.60
Note: This problem of lower median wages for all tiers is compounded by the problem of many educated workers not possessing high tier skills and therefore having to take lower tier jobs. (See Table 3 of Who Gets the Good Jobs and How Much They Pay.)

Median Real Wages Are Increasing For Many Prime Age Women
Who's Wages Still Lag Behind Men

1971 median hourly wages for women (1994 prices) 6.17 6.82 9.22 12.30 7.91
1994 median hourly wages for women 6.24 6.73 10.85 14.15 9.61
Data is from Table 5.1 of Who is not Working and Why.

Many Tier 4 Workers Have Not Done Well

I. Tables 1 and 2 reveal the following about prime age workers (25-49).
  A. Prime age workers with at least one college degree increased 77% (from 16.7% to 29.6%).
  B. For Men, all tiers, even Tier 4 which had 80.3% college graduates, had a lower real median income.
  1. Other data from Table 5.1, not shown here, reveals that Tier 4 male college graduates had a slight increase in real median wages (from $19.98 to $20.16).
  2. Tier 4 wages for other males went down substantially causing the net decrease.
  C. Educated women did very well but still lagged behind males.
II. The wage dispersion for the 40 Tier 4 occupations with over 100,000 participants is interesting.
  A. In Tier 4, pre-kindergarten and kindergarten teachers earned the least, about $7.60/hour, and physicians earned the most, about $52.80/hour.
  B. The top four Tier 4 occupations, physicians, dentists, lawyers, and pharmacists, had enormous increases amounting to 48% between 1970 and 1994.
  C. In the middle 20 or so occupations, engineers, managers, biology and life sciences, etc., real median wages decreased slightly.
  D. Median wages for the bottom 10 or so Tier 4 occupations, social workers, preschool teachers, elementary school teachers, librarians, etc., changed little.
  E. "Within the most education intensive occupations, women are disproportionately entering those occupations which either have a low median wage for all workers, or which have a middle level median wage across all workers but a significantly lower wage for women than for men." (page 158)
III. These are the four major causes for the increase in wage dispersion within all tiers.
  A. Competition for lower tier jobs has increased as women entered the labor force causing men with lower cognitive skills to accept lower tier occupations.
  B. Technical changes caused an increase in demand for "...those with relatively high levels of cognitive skills in occupations requiring considerable education." (page 138)
  C. Winner-take-all labor markets reward those at the very top resulting in a very long thin right tail to the wage distribution of all prime age Tier 4 workers.
  D. Wages of college educated people in health care and legal professions have increased substantially.
IV. It appears that ..."Some of what others are interpreting as an increased rate of return to education is in fact an increased rate of return to cognitive skills independent of education." (page 137)

Investing In Education, Thoughts From www.businessbookmall.com

I. It is apparent that the 25 year investment in prime age worker education, which decreased the proportion of high school dropouts by 69% (from 28.5% to 8.9%) and increased the proportion of prime age workers with a college degree by 77% (from 16.7% to 29.6%) had a poor economic return.
II. Here are some thoughts from our prominent economists.
A. "Education is a very lumpy investment where often there is little or no payoff from having a little bit more." ..."There are big returns to the first years of education (the education where one gains literacy) and big payoffs to the last years of education (a college or graduate degree where one distinguishes oneself from the pack) but only small payoffs to those years of education that move the individual from somewhat below average to somewhat above average." From page 283 of The Future of American Capitalism by Lester C. Thurow, former Dean of the MIT Sloan School of Management and published in 1996 by William Morrow and Company, Inc.
B. When asked to make economic comments as if he were looking back on 1996 from 2096, economist Paul Krugman said the following on what he called "The devaluation of higher education." Or consider the panic over "downsizing" that gripped America in 1996. As economists quickly pointed out, the rate at which Americans were losing jobs in the nineties was not especially high by historical standards. Why, then, did downsizing suddenly become news? Because for the first time white-collar, college-educated workers were being fired in large numbers, even while skilled machinists and other blue-collar workers were in high demand. This should of been a clear signal that the days of the ever-rising wage premia for people with higher education were over, but somehow nobody noticed." From page 201 of The Accidental Theorist, written by Paul Krugman, the MIT Ford International Professor of Economics, and published in 1998 by W.W. Norton & Company.
III. Parents are willing to do almost any amount of work needed to provide funds for their child's education but find it difficult to determine the most appropriate education and training for their child.
IV. Educators are understandingly prejudice toward what they do well and have designed our educational system in their own image. But educators are not typical, and their system has many flaws as depicted in The Ten Deadly Sins of Education, located at www.businessbookmall.com.
V. When making an investment, whether it be in education, capital equipment, or the stock market, one should consider the potential income from the investment and the risk associated with success. The drop in real income earned by prime age workers for many levels of education between 1970 and 1994, even as education attainment by these individuals was increasing substantially, indicates less money should be spent on education by individuals and society. Perhaps the savings should be spent figuring out how to spend money wisely and on making sure children are conceived by healthy parents, carried to term by a healthy mother, and raised during infancy in an appropriate environment. For our suggestions on improving the economic and cognitive return from education, visit www.businessbookmall.com and read A Critique of Standardized Tests, The Ten Deadly Sins of Education , Education in a World of Multiple Intelligence.
1I. These tables, with minor adjustments, and the analysis in the section entitled Tier 4 ... are from Who's Not Working and Why. (ISBN 0521651522). Table names are from www.businessbookmall.com.
A. Authors: Economists Frederic L. Pryor of Swarthmore College and David L. Schaffer of the University of Wisconsin at Eau Clair
B. Publisher: Cambridge University Press, 1999
II. Primary data sources used by authors
A. Current Population Surveys of the Census Bureau from March of 1971 and 1995 with the 1971 survey adjusted for changes in occupational definitions.
B. National Adult Literacy Study of 1992

2Prime Age Workers are 25-49.
3Bold numbers are of particular interest.

View Part VI  
Many Without A Bachelor's Degree 
Have High Earnings

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Education is Up For All,
Wages are Up For Some Women

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