College No Guarantee of Top-Dollar Pay
College No Guarantee of Top-Dollar Pay
David Wessel, deputy Washington bureau chief of The Wall Street Journal, talks with Steve Inskeep about why having a college degree doesn't guarantee the pay graduates would like to see.
STEVE INSKEEP, host:
The business news starts with the extra money you're not making.
(Soundbite of music)
INSKEEP: The economy may be growing, but wages are not. At least they're not rising very quickly for working Americans. Even the typical worker with a four-year college degree has not seen raises much beyond inflation.
David Wessel, Deputy Washington Bureau Chief of The Wall Street Journal, has been asking why. And David, what have you found?
Mr. DAVID WESSEL (Deputy Washington Bureau Chief, The Wall Street Journal): Well, it's really unusual for wages, in general, to be growing so sluggishly five years into an economic recovery. And it's been five years since the recession ended.
It's easy to understand, or it's easy for me to understand, why workers who don't have very many skills and are competing with imports and perhaps immigrants and are being replaced by technology, why their wages aren't going up. But it's a bit of a mystery why the workers who've played by the rules and actually got a four-year college degree are finding themselves with wages that since 2001 have gone up only 1.3 percent more than inflation.
INSKEEP: Especially since this is a time when productivity is going up, which means that people are producing more; which means that they ought to be making more money for their companies and for themselves.
Mr. WESSEL: Right. Well, they are making more money. And some of the answer is that the answer is going to their companies, to the shareholders or their employers, or it's going to the very best paid people in any workplace. And I think that that's one of the answers to this mystery - that something has changed in our social mores, in our attitudes at the workplace, and it is now more acceptable than it was, say, a quarter-century ago to say if we had a good year, more of the raises go to the people who make a lot of money to begin with.
INSKEEP: Which, if you used a baseball analogy, the star player is going to make millions of more dollars than the bat boy, or the guy selling the popcorn is going to make the same or less.
Mr. WESSEL: Right. Some people call it the winner-take-all phenomenon. And I think that explains part, but not all of what's going on here.
If you look at college graduates as a class, their wages are not going up very fast relative to inflation. But the top quarter of them actually have been getting raises. So one question is, who is in that top quarter? And we don't have enough information to really answer that question.
But one interesting fact is that if you look at the starting salaries of people who are graduating from college this year, 2006, and you look at, say, chemical engineering majors, two things stand out. One is, the starting salaries this year are 4 percent higher than last year. And secondly, the gap between what you get as a chemical engineering major and what you get, say, as a history or a psychology major, is growing. So that suggests that maybe there's some rationale to this, that employers are paying more for college graduates, but only for the ones that are in the hot fields, perhaps the technology fields.
INSKEEP: Does that mean it's really not worth it to get a college degree in certain fields?
Mr. WESSEL: No. It is absolutely worth it to get a college degree.
Even though they haven't seen decent raises for the past five years, the typical person who goes to college earns 75 percent more than the typical person who only has a high school degree. So the rewards for getting a college diploma are huge. It's just that those people with college diplomas are among those who haven't seen very big raises in, on average, in the past five years.
INSKEEP: Are college graduates getting into the same circumstance that autoworkers have been in for decades? There's increasing competition in the high-tech industries and the knowledge industries around the world, and that means that American workers are not necessarily going to get a big raise every year?
Mr. WESSEL: Yes, I think that is part of the story. The way I look at it is, once upon a time, those of us who were white-collar workers thought of globalization and foreign competition as a problem, really, for factory workers. Factories were going to go overseas, but our jobs were going to be safe.
And what we've learned over the past several years with outsourcing and the ease of communications among countries and travel and all those things that have led to the growth in India and China of professional workers, as well as factory workers, is that white-collar workers are also vulnerable. And I think when they're vulnerable it's easier for employers to exploit them; to not give them a raise, to cut their them benefits, because they're afraid to look for another job and they're worried about their futures.
INSKEEP: David Wessel is Deputy Washington Bureau Chief of The Wall Street Journal. And, David, from the look of your very loose tie, I'm guessing you haven't gotten a raise yet today.
(Soundbite of laughter)
Mr. WESSEL: Not this week.
INSKEEP: David, thanks very much.
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