The Highly Educated Cities in US – Higher wage growth for both low- and high-skill workers and substantially larger increases in housing costs

Over the past three decades, the earnings of workers with a college education have substantially increased relative to those with less education. In 1980, the average college graduate earned 38% more than the average high school graduate. By 2000, the college-high school graduate wage gap increased to 57%, and by 2011 it rose to 73%.

At the same time, workers have become increasingly spatially segregated by education. Cities that initially had a large share of college graduates in 1980 increasingly attracted larger shares of college educated workers from 1980 to 2000, while cities with relatively less educated populations in 1980 gained few college grads over the following 20 years. The increasingly “highly educated cities” also experienced higher wage growth for both low- and high-skill workers and substantially larger increases in housing costs. The economic trajectories of these increasing high skill cities are diverging from those with fewer college graduates.

From 1980 to 2000, for every 1% increase in a city’s ratio of college graduates to non-college grads (referred to as the “college employment ratio”), a city experienced a 0.6% increase in rents (Figure 1).

For each 1% increase in a city’s college employment ratio, the city experienced a 0.3% increase in wages for college workers (Figure 2) and a 0.2% increase in wages for non-college workers (Figure 3).

Chosen excerpts by Job Market Monitor. Read the whole story at U.S. Workers’ Diverging Locations: Policy and Inequality Implications