A new report says the median wages of recent college graduates have not kept pace with the pay of the overall U.S. workforce. Above, UCLA’s 2013 commencement. (Wally Skalij / Los Angeles Times)
On July 22, 2014, Chris Kirkham writes in the Los Angeles Times:
Starting salaries for recent college graduates have risen far more slowly than the average earnings of all U.S. workers since the recession, an analysis by the Federal Reserve Bank of San Francisco found.
The study, released Monday, found that median earnings for recent college graduates rose only 6% in the seven years between 2006 and 2013, less than half the rise of 15% for the overall U.S. workforce over roughly the same period.
Such disparities in pay growth rates have been seen in previous recessions, but the report says the current one “is substantially larger and has lasted longer than in the past.”
“The gap between the two groups of employees appears to be substantially wider and their paths appear more divergent,” the report found.
College graduates are particularly susceptible to wage stagnation during weak labor markets because older, experienced employees tend to have more job protections.
In trying to pinpoint the lackluster wage growth for recent college graduates, researchers at the San Francisco Fed had a key question: Are graduates getting different jobs that pay lower wages, or are salaries in the traditional career fields not growing?
The study concluded that college graduates are going into the same fields as before the recession, but that wage growth has been slow. In the two most popular categories for recent graduates — professional occupations and management, business & finance — there was only a 2.6% growth in median earnings since 2007.
“For almost all occupations and skill groups … we find that recent graduates experienced lower wage growth than other workers,” the report said.
Such sluggish growth could dissuade potential college students from enrolling, the report said, but the authors cite ample research showing that the lifetime earnings of college graduates far outpace those of non-graduates.
Entering the job market during an economic downturn, however, is likely to make it more difficult to pay back debt in the near term, the report finds.
“Low growth in starting wages does not mean that going to college is a poor investment,” the study concluded. “It just reflects that it will take longer to recoup the cost of the college.”
Just what IS the purpose of an education? To pay a few gazillion dollars to prepare you for a job that doesn’t exist? Or is there something else?
Conventional wisdom says you need to get a “good education” to get a “good job.” A college diploma is a sure ticket to a lifetime of employment with the money just rolling in… hopefully enough to repay all those student loans that were taken out to pay for the education that was guaranteed to get you that good job.
That’s the economics of the wage system, yet why is it that college graduates are having such a hard time finding jobs at all, much less “good” ones that pay well.
As for those majoring in economics: “The Georgetown University ‘Hard Times’ study reports that recent graduates of economics have an unemployment rate of 10.4 percent. That seems quite high for a degree that, according to the College Board, teaches important lessons on how to understand economic models and how factors such as labor disagreements, inflation, and interest rates affect them. . . . [E]conomics degrees often have a strong theoretical component but not enough real-world, practical experience to entice an employer.”
Of course, as a culture we never really address the question of what an education is for. Did you go to school to get a job? Or to get an education? For those who went to school to get a job they will eventually learn a lesson in supply and demand when it comes time for he or she to pay for the education that supposedly will guarantee him or her a good job. What you are supposed to learn in college is theory. The practical experience comes after you get out of college.
A primary reason that the American and other global economies are empowering their citizens to fulfill their desires for prosperity, affluence, opportunity and economic justice is the economics taught today is such a concatenation of bad assumptions and worse theory that all it’s good for is getting a Ph.D. to teach bad assumptions and worse theory to new generations of students and old generations of politicians.
To get a good grade, the students tell the professor what he or she wants to hear, while to get a good grant, the professor tells the politicians what they want to hear. In neither case does anybody truly address what is really true or practical.
Sound theory leads to good practice and planning begins with a goal. If a practice is bad, first look to the underlying theory. Are employers finally catching on to the fact that so-called “mainstream” economics doesn’t exactly reflect reality?
My colleague at the Center for Economic and Social Justice (www.cesj.org) poses the question: “As an employer, are you going to hire somebody who is convinced that the government produces wealth, and your goal as a company should therefore be to become as dependent on government as possible as the source of all wealth? Or are you going to hire somebody who believes in the Just Third Way principle based on Say’s Law of Markets that the only way to have wealth is to produce it yourself by means of your labor and capital?
“Who is the better prospect for employment? The guy who is waiting for government to redistribute what somebody else produced, or the gal who rolls up her sleeves and gets to work helping the company produce a marketable good or service?”
In today’s technological world where tectonic shifts in the technologies of production are destroying jobs and devaluing the worth of labor, even if EVERY citizen achieved a Ph.D they would still be faced with the reality that labor’s input in the production of products and services is exponentially declining with fewer and fewer job opportunities that pay well. Given this reality then how is one to contribute to society as a productive citizen? The answer is to structure the economy so that there would be an infusion of credit into productive capital investment. This would result in a majority of Americans earning additional income from wages and salaries and dividends, interest, and capital gains from other opportunities created beyond the dividend income payout from the productive capital investments. The accelerated growth rate would produce jobs that pay well and would significantly expand markets due to rising consumer demand, which in turn would generate greater business profits and opportunity for more productive capital investment. Everyone would benefit––rich and poor. There would be lower unemployment (making for the elimination of make-work), higher personal incomes, lower deficits due to greater tax revenues, lower tax rates, and better government services, with every citizen benefiting from a higher standard of living.
Such a path to prosperity would empower ordinary citizens, the majority of which are capitalless, to own a substantial percentage of the future productive capital formation creating the growth of the economy. The GOAL would be to assure that every child, woman and man would be able to accumulate a portfolio of productive capital assets large enough to provide a secure source of income. After a few decades, dividend income from the ownership of productive capital assets would become the primary source of income, though well-paying job opportunities would be plentiful for those who want to work for the satisfaction that can come from employment, whether in business, education, healthcare, science, and government or other self-rewarding contributions to society.
What our leaders and those in academia need to advocate is their ability to lead America on a path based on a paradigm shift to an equal opportunity economic democracy.
The JUST Third Way is that paradigm shift. It calls for a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.
For a new vision see http://www.foreconomicjustice.org/?p=12331 andwww.facebook.com/uniteamericaparty. Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.