Labor Market Polarization in US – Higher education and the Wage Gaps

The earnings gap between people with a college degree and those with no education beyond high school has been growing since the late 1970s. Since 2000, however, the gap has grown more for those who have earned a post-graduate degree as well. The divergence between workers with college degrees and those with graduate degrees may be one manifestation of rising labor market polarization, which benefits those earning the highest and the lowest wages relatively more than those in the middle of the wage distribution.

Figure 1 displays the earnings advantage attributable to college and post-graduate education in the United States over the 35 years from 1979 to 2013. It shows the gap in average hourly wages for all workers ages 25 to 64, both hourly and salaried, for three educational groupings: the broad group of all workers with at least a four-year college degree, labeled “College plus,” and the two subgroups consisting of those with a four-year degree only and those who also hold a post-graduate degree. The gaps are measured as the percentage difference in wages for these groups compared with workers who hold a high school degree only. The differences account for the changing demographic composition of each group, which also affects earnings and therefore can distort the wage differentials that are directly associated with educational attainment.

Chosen excerpts by Job Market Monitor. Read the whole story at Federal Reserve Bank San Francisco | Higher Education, Wages, and Polarization.