By Chris Kramer
When you were little, you probably remember going to visit your grandparents. They would spoil you with treats or toys, and you would listen to your grandpa tell you stories about when your mom or dad misbehaved.
And then he would start in with the well known phrase, "when I was a boy..." His accounts were about walking to school uphill both ways, getting up at the crack of dawn to do 100 chores before breakfast or making toys out of sticks and stones. He would also talk about how expensive everything is these days: how candy use to cost a penny, gas a nickel a gallon and houses were a fourth the cost they are today.
Times have changed since your grandpa was growing up. The cost of living has risen dramatically since our parents' days. Just in the years that you have been around, there has been a big adjustment in prices. You can probably remember the day when gas was $1.50 and bread was under $1. But inflation has sent prices sky-rocketing. Although it has become more expensive to live, employees have been making more to compensate. As prices rise, so has wages to keep up - at least, until now.
According to The Wall Street Journal, the Census Bureau released a survey showing that professional degrees, including doctors and lawyers, were the only educational group that earned inflation-adjusted wages during the most recent economic expansion. Employees in other educational groups - high school graduates, bachelor's degree, Master's degree and Doctoral degree - ended up earning less in 2007 than in 2000, once inflation was accounted for. This information only adds to the concern that higher-earning employees are continuing to benefit at the cost of others - another economic problem that voters and candidates are considering in the upcoming election.
Going to college was a novelty when our grandparents were growing up, but these days it is seen as the only way to "make it" in the middle class. A college degree guaranteed you a bigger paycheck and more money to spend on more than just the necessities. Yet, the recent statics show that this is not the case with most degrees.
An economic division is beginning to grow between the wealthy and the rest of society. And this has started to become a hot topic during the presidential debate. Both candidates have proposed policies to work on the inequality among workers.
Some Democrats believe that foreign trade is a major reason why income inequality has started to become an issue. Senator Barack Obama is proposing a couple of policies that would raise taxes for employees earning more than $250,000 to cover tax cuts for people making less than that benchmark.
On the other hand, Senator John McCain believes that free trading is not the problem. He is presenting policies that will rebuild unemployment insurance and retraining to better help people who have "fallen behind." McCain is also purposing to cut corporate income taxes to boost economic growth and jobs.
Although there was an economic expansion, wages for employees in the educational group are continuing to fall. Economists believe there are a number of reasons for these results. One belief is that open borders took many blue- and white-collar jobs overseas as well as brought skilled immigrants to the U.S. to compete for jobs.
And although there was an economic expansion between 2001 and 2007, the growth was not as great as the boom in the late 1990s. Employers didn't feel as much pressure to increase wages. Also, rising health-care costs are gradually becoming a larger part of workers' total compensation than in previous years. The study did not include health-care bills that employers covered.
The Census Bureau did not include 2008 wages, but with the outlook of the economy, experts do not expect that lower-earning workers will make up any ground. Every group saw a decline, even though wages grew and unemployment was at an average low of 4.6 percent in 2007. And now, more than 20 million people have lost their job, with 600,000 not being able to find a new one, causing the unemployment rate to rise to 6.1 percent.
Since 2000, the inflation-adjusted median salary for people with bachelor's degrees has fallen about three percent to $47,240, while the median master's-degree salaries fell about four percent to $56,707. The median salary for high school graduates also fell about three percent to $28, 290. However, the median salary for people with professional degrees was up three percent from $87,158 in 2000 to $89,602 in 2007.
Although there is a downward trend, the data showed the value of education is continuing to grow. For people with a bachelor's degree, the median income was more than 60 percent more than people with a high-school diploma last year. People with a master's degree made around 20 percent more than people with a college degree.
Yet the relative gain in education is slowly declining. According to the 2006 Economic Report of the President, The Wall Street Journal reported that workers with college degrees were making 60 percent more a year than people with high-school diplomas in 1975. But now the trend is starting to swing the other way. Up until 2000, people with college degrees continued to see their wages grow to double those of high-school graduates, but by 2004, they are on average making only 80 percent more.
Falling wages is a big concern for people who have invested a lot of time and money into furthering their education. You obtain a college degree to make a better living, provide for your family and save for the future. With inflating prices and coveing the cost of student loans, people are watching their savings account dwindle. With all the other economic issues the country is currently dealing with, the decrease is wages is sure to be a hot topic during the presidential election.
|Change in inflation-adjusted earnings from 2000 to 2007|
|High School Graduate||-3.2%|