World Economy

Education Alone Won’t End Income Inequality

May 6, 2015  • Maureen Conway

We live in a paradoxical time of historically high income and epic wealth inequality. Academics, politicians, business leaders and religious leaders are all concerned about it. Indeed, the extreme level of inequality we now face is often cast as a moral challenge and a threat to the ideals and values of our society. The ideal of the American Dream — the idea that through hard work and individual effort Americans can create a better life for themselves and their families — is confronted by a reality of stagnant incomes, growing numbers of working poor, evidence that economic mobility in the U.S. is elusive, and rising concern that things will be worse for future generations.

This challenge is broadly recognized, but agreement on solutions is hard to find — with one big exception: education. That the route to a good job must pass through higher education is almost universally embraced. Political leaders from both parties as well as a host of academics, foundations and others promote postsecondary education as a silver bullet for ending poverty and inequality. How to achieve or pay for ever greater numbers of post-secondary degrees is a matter of sharp debate, but the idea that improved education is somehow the solution to poverty, economic disenfranchisement and inequality seems to have broad purchase. Alas, it almost surely — on its own — will not work.

Even without a plan for how to achieve or pay for vastly more higher education, everyone seems to agree it is somehow the solution to poverty, economic disenfranchisement and inequality. Alas, it almost surely will not work.

First, let’s try this thought experiment. Imagine that every poor person suddenly has successfully completed a rigorous course of study and has earned a bachelor’s degree. Do we then no longer need child care workers, home health aides, landscape workers, security guards, food servers, office cleaners and retail sales associates? Or will companies employing workers in these occupations suddenly decide that, since these workers now have bachelor’s degrees, they should be paid more than $11 or $12 per hour? Will these corporations now decide that these workers should have regular or at least predictable schedules and a predictable income? Or that they are due at least a modest amount of paid sick leave and the opportunity to save for retirement?

It seems unlikely that either the demand for these workers or their wages and working conditions will change as their education levels increase. Indeed that has been the experience to date. The truth is that we have more bachelors’ degreed workers than ever. Some economists find there is an excess of college graduates who are competing for jobs that don’t require a degree. The New York Federal Reserve found that 46 percent of recent college graduates, and 35 percent of college graduates overall, are employed in jobs that do not need a college degree.

In addition, while the rate of growth of jobs that require post-secondary skills is high, it is still the case that most jobs do not requires post-secondary credentials at all—of any type. The U.S. Bureau of Labor Statistics reported that in 2012 only about one-third of jobs required any post-secondary credential. And while the rate of growth for jobs requiring post-secondary credentials is faster, America will still create more jobs in the next decade that don’t require anything beyond a high school diploma. No one can deny that it’s heart-warming to see an individual come from difficult circumstances, get an education and achieve economic security. But we should not imagine that inspiring story for an individual provides a solution for the masses.

Next, let’s look at what keeps people from succeeding in education right now. One of the leading indicators that children and young adults will do poorly in school is their economic status: poverty correlates with poor education attainment. In particular, for young adults in post-secondary school, Public Agenda found that the main reason these students leave college without completing is the need to work and make money. In fact, the students who leave college report that, even if they had free tuition, they would still need to work to support themselves and would be unlikely to go back to school. This leaves us with a bit of a catch-22: to escape poverty one should get an education; but poverty is likely to prevent a person from succeeding in education.

In a country that purports to value work, we ought to consider why we are so unwilling to pay for it.

Education is a wonderful thing, but it is not costless and it is not a silver bullet to address poverty. One factor glaringly absent from all the celebratory discussions of education is the changing condition of work. The reason it remains a good idea for most individuals to at least try to get a college degree is not because today’s jobs require college level skills. Rather, it’s because employment options available to people without a college degree are terrifyingly awful. And in a country that purports to value work, we ought to consider why we are so unwilling to pay for it. We should ask ourselves why the people who care for our children and elderly parents or grandparents, the people who prepare and serve us food, the people who clean our homes and secure our office buildings — why do all of these people deserve poverty-level wages?

It is undeniable that investing in education is a good thing. But if we want the masses to get “good jobs” so they can support themselves through their work — and not just the lucky few who can get ahead of their peers through education — then we need to look much more carefully at the nature of work and the kind of opportunity a job offers. Businesses have choices about the ways they structure work just as surely as individuals have choices about pursuing education. Our society is unlikely to address the inequality we face by encouraging an arms race among people desperate to gain access to shrinking opportunities for decent work. We must address the dynamics that encourage companies to extract from, rather than invest in, their employees. We need to raise our expectations of the rewards of work and improve the quality of opportunities available to people willing to work hard. If we want people to climb the economic ladder through education, then we need to ensure that ladder rests on a stable foundation of work that pays enough to live on.