Wages of male graduates of U.S. colleges are falling

September 05, 1994|By New York Times News Service

Despite the creation of more than 4 million jobs since President Clinton took office, many of them for college graduates, the wages of men with bachelor's degrees have continued to deteriorate, a study by a Washington research organization has found. Administration officials say the findings are probably accurate.

The study, by the Economic Policy Institute, is the first to find that the hourly wages of the college-educated lost ground to inflation even after the nation's economy began to recover from recession in the spring of 1991.

The deterioration continued at least into 1993, despite an increasingly robust economy. Previous studies had found that wages of college-educated men -- but not women -- slipped during the economic stagnation from 1989 to 1991.

"I don't see any reason why this trend should have changed since 1993 or will change in the near future," said Lawrence Mishel, research director of the Economic Policy Institute.

One message that emerges from the study by the institute, which issues a book-length report on "The State of Working America" every two years, is that the bachelor's degree, like the high school diploma before it, is no longer a ticket to a rising standard of living.

Only college-educated women have gained ground on inflation, but their wages are still lower than those of men with bachelor's degrees, whose median hourly wage in 1993 had slipped to $17.62, the study found. Adjusted for inflation, the decline was about 3 percent since 1989.

Another message from the study is that putting people to work -- Mr. Clinton has promised to create at least 8 million jobs during his term -- no longer translates easily into higher living standards.

Indeed, college graduates have taken jobs in rising numbers, and as a result, the total wages paid to all college graduates have risen, Mr. Mishel said.

"But because the money has to be spread over so many people, the typical college graduate finds that his income has not kept up with inflation," he said. And this remains the case even when the amounts that employers pay for pensions and health insurance are added in.

The Economic Policy Institute, which campaigned for Mr. Clinton's election and now criticizes his economic policies, argues that wages have become resistant to a prospering economy, so other steps must be taken to improve them.

Wages, Mr. Mishel said, are held back by "structural" factors -- including weak unions, a proliferation of low-wage industries, competition from foreign labor, too little improvement in productivity or efficiency and a minimum wage that is too low. This in turn pulls down the entire pay scale, he said.

The administration, and many economists, disagree with Mr. Mishel's diagnosis, although they do not challenge the institute's finding that the hourly wages of college-educated men continued to deteriorate during the recovery.

It is a finding that challenges the administration's view that a growing economy will eventually produce enough wage gains to raise the living standards of those who possess the education and training to function in a high-technology workplace.

"There is a danger in using the Economic Policy Institute's figures as a report card on the administration," a senior administration official said.

"The institute's wage data are probably accurate, but they go only through the middle of 1993, which is the president's first six months in office. During that time, the priority was to facilitate job growth by lowering interest rates to get the economy growing. And, historically, a growing economy has led to wage growth."

That was certainly the case in the early 1980s. From 1979 through most of 1982, a period of recession, the median wage of the college-educated lost ground to inflation. But from 1983 through 1988, with the economy growing again, the median wage of the college-educated rose by more than enough to improve their standard of living.

During most of the 1980s, the median hourly wage of those with a high school education fell, particularly during the recession early in the decade. Many of the high school-educated were blue-collar workers in manufacturing, where employment declined.

The two trends gave rise to a huge college-high school wage gap. It grew until 1989, when the nation entered another period of weak economic growth and recession, one that lasted until the spring of 1991. This time, however, the wages of the college-educated did not bounce back when the recession ended.

From 1989 through mid-1993, college-educated and high school-educated men lost ground to inflation at the same pace, roughly 3 percent annually. Specifically, the median wage of a man with a bachelor's degree fell to $17.62 an hour in 1993 from $18.16 in 1989, after adjustment for inflation, while the median for a man with a high school education was $11.19 an hour in 1993, down from $11.83 in 1989.

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