College-Educated Households Hold Increasing Proportion of Income

Although income inequality continues to be a growing problem in the United States, according to the latest data released by the Census Bureau, an increasing concentration of wealth in the hands of those with a college degree accounts for much of the gap. The data proves that even at the time when more experts are questioning the value of a college degree, it continues to correlate strongly with improved economic outcomes.

How strongly? According to the report, despite the fact that only one in three US households were college-educated, they held one out of every two dollars in US income. As Richard Fry of Pew Research put it, about 1/2 of America’s wealth went to about 1/3 of its households – those headed by people with at least a college degree.

That represents a substantial increase from the income breakdown in 1991, the first year for which such figures are available. At the time, about 23% of households were college-educated and held about 37% of the country’s wealth.

The share of the income pie received by households with only a high school education or less fell 15 percentage points from 1991 to 2012.  The share of household income going to households with some college (including those with an associate’s degree) increased modestly over the same period (23% to 25%).

Since educational attainment has risen and there are more college-educated households, one would expect the college educated to receive a growing share of the pie.

However, college-educated households are the only group whose income on the per-household basis has grown every year since 1991. Incomes for households without degrees declined over the same period.

According to Fry, a number of factors probably contribute to the substantial improvement of the futures of highly-educated Americans. They typically have lower unemployment rates, receive higher salaries than those without degrees and suffer less during the periods of economic instability. However, there are social reasons for the disparity too.

But the household income differences between the college educated and lesser educated go beyond the labor market.  College-educated households are more likely to be married and thus more likely to have secondary earners contributing to household income.

In addition, my research on “assortative mating” or “who marries whom” shows that married college-educated persons are more likely to have a college-educated spouse. Thus, they are more likely to have a spouse with high earnings. For example, in 2011, 75% of married men ages 30 to 44 who are college educated also have a college-educated wife.  Among their married counterparts with a high school education, only 17% have a college-educated wife.