Saturday, September 20, 2014
Young Households Are Losing Ground In Income Despite Education by Floyd Norris
http://www.nytimes.com/2014/09/13/business/economy/young-households-are-losing-ground-in-income-despite-education.html?ref=economy&_r=0
The Federal Reserve board revealed that the median family headed by someone under 35 years of age earns $35,509 in 2013. That number is less than similar families reported in 1989. You would think with all the technological advances and popularity of education nowadays, we would do better than adults living in the 80's.
Young families have been doing worse and fallen behind older families. The survey of consumer finances pointed out that families headed by people over 55 years of age generally have higher incomes after inflation is adjusted.
The earlier generations came of age in a stronger economy and were not bothered with some problems adults face today like educational loans. Three years after the recession ended, the consumer survey showed that real income for all age groups except 35-44 years old declined from 2010-2013.
At first families with the most education earned more than those with less. People with more education earned almost twice as much but now the difference is only 52%. The age group where real income has improved the most over the last quarter- century are those aged 65-74. People who are past the traditional retirement age of 65 are still working now than they used to be. Higher pension income may be another contributing factor as to how this age group is bring more money home than vibrant young families.
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I believe the main reason for this outcome is the fact that as time increases, the value of a college education decreases. With more people earning college degrees, the demand for employees with degrees decreases, and therefore so will the wages. I also agree that student loans are also a contributor. When a student graduates with significant debt they often take whatever source of income they can get as soon as possible, instead of taking the time to search for and/or attain the best possible job they could get.
ReplyDeleteI believe that there are two main reasons for this difference in earnings between current adults heading families under the age of 35 as compared to in the 80's. One of which is that a lot of these families are fairly new, and thus, as they were just starting out and gaining their ground they were also being strongly affected by the 2008 recession. Taking care of children, holding a job, and providing stability for your family was definitely a problem. Another reason for this gap would be that in the 80's a college education wasn't valued nearly as much as it is now. Back in the 80's you could succeed without a college degree and actually get a decent job; however, now almost all people need college degrees to be taken even the slightest bit seriously. Thirty years ago everyone and anyone could become a firefighter, and now you need a college degree.
ReplyDeleteI agree with both Kevin and John. Years ago if you had a just a college degree you can get a great job and easily do well. However, a college degree today is almost like a high school diploma. A lot of people have to go to graduate school to be able to separate themselves from all the other college graduates.
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