Report: Education is Beneficial, But Won’t Reduce Income Gap


In recent years, much attention, including the focus of the infamous Occupy movement, has been devoted to the growing inequality in American income. One solution that both sides agree on is increasing the access to and quality of education — but is it really a solution?

Education is a boon for the middle and lower class because it increases pay and security on an individual level. However, it won’t fix the real source of the inequality: the skyrocketing income of the very richest, dubbed the 1%.

These findings come from Lawrence Summers, the Treasury Secretary for Bill Clinton in 1999 and 2000, and the head of the National Economic Council in 2009 and 2010, Melissa Kearney, and Brad Hershbein. The study was published by the Hamilton Project, a centrist research group.

The findings, as quoted by Kevin G. Hall of the Fresno Bee, were that:

Increasing the education attainment of men without a college degree will increase their average earnings and their likelihood of being employed.

However, the authors stressed that it “will not significantly change overall earnings inequality.” It may improve the inequality between the lower and middle classes, but it would not touch the larger difference between the middle class and the highest, writes Slate’s Jordan Weissman.

In the hypothetical world of their simulation, 10% of working age men (about 6.8 million individuals) suddenly obtain a college degree. It’s left ambiguous how exactly this comes about. The paper noted:

To be clear, this would be a tremendous accomplishment. It is only slightly less than the observed increase in the college share over the entire 34-year period of 1979 to 2013.

This would raise their pay rates to that of current college graduates, with adjustments for the fact that more college graduates would slightly deflate the wages of everyone with a degree. That would bring the average worker back to the inflation-adjusted income he had in 1979: $37,838. However, the 90th-percentile worker in both 2013 and the simulation would make more than $100,000 compared to $75,700 in 1979.

The Gini ratio is a measure of income equality, notes Neil Irwin of the New York Times. In the simulation, it was .55, compared to .57 in 2013 and .43 in 1979.

Max Ehrenfreund of the Washington Post quotes Summers:

“I am all for improving education. But to suggest that improving education is the solution to inequality is, I think, an evasion.”

On the individual level, education makes a difference in quality of life. The analysis noted that pushing for more education and training, particularly for those in the lower class, is “the most effective and direct way to increase their economic security, reduce poverty, and expand upward mobility.”