There’s more to inequality than education

In a blog post yesterday, Paul Krugman again noted that the growth in income inequality is not all about education.

He pointed to two different charts to illustrate: one showing the growth of the top 1 percent relative to other income groups and a second with wage growth by education levels. Since the two charts had different scales, it was hard to see just how out of whack the education-explains-inequality story really is.

Below is a chart that combines the two series in one chart, showing that the top 1 percent has outpaced, by a very wide margin, not just those with less formal education, but college grads as well. And this gap between the growth of the top 1 percent and the rest is much larger than the growth gap between education levels.

This is not to say that education is not important. The chart also shows that those with a college (or post-secondary) degree have outpaced others. But it’s also clear that this trend only explains a small part of the broader inequality story.

(Note: The top 1 percent line shows the growth in average after-tax incomes for this group, via the CBO, data from Figure 2. The education lines show the growth in wages for all workers, via EPI’s State of Working America data on wage and compensation trends by education. Both are inflation adjusted.)


  • Tutti1121

    Sen. Boehner asked whether the 14 million people who are unemployed are better off today than they were 4 years ago, and it appears to me from the chart that most people are actually at the same or higher income level, with the top 1% blowing the other 99% out of the water!   If the other 99% had had the favored tax treatment that the top 1% got and is still getting, I wonder how different that chart would be today?  Perhaps some people who were financially unable to attend college might have been able to do so?  If some of the billions that were and still are sheltered from taxes were allowed to remain in the pockets of those of us who are actually working for a living, is it possible that those lines might be closer together? 

    Yes, Senator, most people have about the same income as they did, but they have eroded their savings, their retirement, and most other assets.  But the top echelon of society has grown richer and richer, thanks to your help.  Are you proud of your record, Sir?

    • Marvin McConoughey

      It would be interesting to know how much taxes paid by the 99% would drop if all took full advantage of existing tax laws.  At least part of the top 1% avoidance of taxes comes from simply having the resources to hire tax experts who take full advantage of our Byzantine tax laws.

      • http://pulse.yahoo.com/_3Q45DH2ISMSST72B3P3O6FVDWE Raphi

        …how much taxes paid by the 99% would drop…  That’s not the central issue.  Unless of course the point is to eliminate public schools, fire departments, roads, public health, etc.    

        Maintaining the common good is the cost of healthy community.  Understood as the adult responsibility of citizenship.

        The point is that the economic emperors feel no concern for the country as a whole.  Natural resources and that ugly term human resources are simply things to be strip-mined for whatever is of value to the 1%.  

        The current set of tax laws were passed by members of Congress beholden to the economic elite.  Were these rules of no benefit to that elite, they wouldn’t exist.           

        • Marvin McConoughey

          I expect the top one percent include persons with a range of attitudes.  The donations of billionaires Gates and Buffett suggest some level of concern, and they are not alone.

  • Daisy

    It would be interesting to see the education level of that top 1%.  Just wondering how many are getting by on their parent’s efforts.  American Aristocracy.

  • gigi

    What is the best factor analysis of the increase in the average after tax income for the top 1%?

    • Anonymous

      stock market gains + ceo pay
      Wall Street became a Cabal of interlocking directorships and ceos.
      A small group of less than a1000 per Kevin Phillips in Arrogant Capital 
      simple analysis
      10% take 50% individul Income   50% take 13%
      10% each of whom get $5.00 and 50% each of whom gets $0.16

      $5 to 15 cents is Inequality

      Net Wealth is $7 to 18 cents
      Financial Wealth is $7 to 9 cents

      10% own America

  • http://pulse.yahoo.com/_3Q45DH2ISMSST72B3P3O6FVDWE Raphi

    A century ago, the Social Darwinists were the propaganda arm for the elite.  Which is how the Robber Barons justified turning what was grand theft into family “heritage.”  As the product of superior genes and the forces of economic evolution, these people felt entitled to everything they wanted.  Working people, small farmers, ethnic minorities, et al. were by definition inferior and should feel grateful for whatever they were allowed to have.

    Their de facto heirs, the current gang of uberright-wing economic royalty like the Scaifes and the Kochs, are simply utilizing the same tactics.  Since we peasants far outnumber the wealthy, that’s a potential problem.  Answer? Purchase one political party outright; turn the other into fearful collaborators.  Scream ‘socialism” when the issue of economic fairness or the ideal of the common good are raised.  We’ve seen this all before.

    How about a little more history?  Like the current situation of OWS, the opposition knew more of the same was no fix at all.  This econopathic system was (and is) deeply unfair.  Nor has it ever been ”free”– its operations, then and now, are determined by rules codified into law by the congressional minions of that 1%.  This kind of egregious greed led to the rise of the Populist movement, labor organizing, and other powerful reforms.  

    It will again.  Or we may witness the end of American democracy and of the American dream.  However, we who built this country and served to protect it are not going to go quietly.  When we working people fully mobilize, then caveat emporers.          

  • Marko

    Inequality in the US s mainly driven by two factors: cost/quality of education and health care. Those that can afford Ivy League will most probably do well, perhaps be the 1%, while others will have to do with less quality, yet still expensive education, with fewer guarantees of social-scale progress. Our conclusions should not only be based on who is “college educated” but whose college education provides for a well-paid job and whose not.

    Access to health care is also crucial. The costs for medical services have been constantly rising and the number of Americans without a health plan is currently around 50 million. Already an indication of relative income poverty, this ends up dragging them down even further if they actually do get sick.

    If these two are not fixed, inequality will continue to rise.

    • Marvin McConoughey

      Inequality has many causes.  One factor is personal intelligence, which is affected by environment and genetics.  We all know individuals we consider our intellectual superiors, and know of some who are not as mentally able as we view ourselves to be.

    • JeffNeumanLee

      Social mobility is measured by the amount of change between generations in income and wealth. The US is one of the least mobile of the industrial countries. Education, intelligence, healthcare are important when you are talking about the 99%. Something else is happening at the top percent.

  • http://www.tapanmunroe.com/ Tapanmunroe

    Education matters but educatioanal performance matters a great deal.