I have been thinking a lot recently about changes in the economic prospects of folks with a college degree. After immigration, higher educational attainment among earlier generations has been one of the central hero’s journey story of my extended family: my paternal grandmother was one of the few women in the early 1930s to attain a college degree (at the University of Minnesota no less! Woohoo!), while my maternal grandfather was able to leave agricultural life in the 1930s to a community college, then to a small four-year college in Rock Island, Illinois. Higher education provided an anchor of meaning across many dimensions of life: it was a natural extension of the world of books of our Lutheran heritage, it was important for one’s personal development and comprehension of the world, it connected you to a world of art and literature and beauty, it provided an avenue of escape from hard manual labor, it was a mechanism of female empowerment and gender equality, and it acted as the catalyst of opportunity to get connected to those professional occupations which provide a comfortable middle-class existence.
These days, the debate around college education has become nearly exclusively narrowed to a dimension of meaning defined by the economists: the worth of a college degree to one’s income and occupational attainment. The economists have yet again won, for better or worse. There is a lot of energy in the documentation of the expected returns to particular higher education institutions and fields of study. Substantial attention, policy proposals, and worry has been directed to the massive explosion of student debt. And many have speculated that we have neared the maximum extent to which educational attainment can expand via post-bachelor degrees.
I have also seen some arguments out there about the problems of “overeducation.” These tend to center around the work of Peter Turchin, who lifted out the concept of the overproduction of elites: with too many people expecting upper middle class lifestyles compared to the number of possible slots, educational expansions tends to create trouble.
In my substantive neck of the woods, inequality research has focused on the average financial benefits of a college degree. But one problem that we are currently facing, and will have to deal with in the near future, is the increasing spread of college degree holders across the income distribution. As more people get college degrees, these folks are not only finding themselves in the upper end of the income distribution.
I used Census and American Community Survey data between years 1980 and 2019 to look at the density of college degree holders among different income percentiles. The the actual amount held in a particular income percentile will vary across decades. But we can use this exercise to see where college educated folks are relative to others in a particular time. Let’s say that in 2019 earning between $83,000-84,000 placed you in the 85th percentile of the income distribution. In the figures below, I’m visualizing the percent of people earning between 83k-84k who have a college degree. I do that for all income percentiles.
Below is the distribution of college degrees in 1980.
There’s a gentle increase between the 1st and roughly 90th percentiles. In 1980, only about 6% of people in the lowest income percentiles held a college degree. At the 90th percentile, about 1 in every 3 people held a college degree. We then see a much more rapid increase in degree concentration between the 90th and 99th percentiles. Among the highest income earners in 1980, about 3 out of every 5 people held a college degree. This all makes total sense. Education is associated with higher incomes, so we see more people with degrees in higher earnings portions of the distribution.
My sense is that lots of folks thinking about pursuing higher education for economic reasons over the last four decades looked at the empty space above the line from the 90th percentile and above. Yes, high incomes are more concentrated places of college degree holders. But higher incomes in 1980 were hardly saturated by college degree holders. Higher educated folks had a lot of unconquered territories among high incomes to invade and claim.
Let’s look at the distribution in 2019.
An invasion of high-income locations by the highly credentialed is largely what has happened over the past 40 years. Whereas about 60% of the highest income earners in 1980 held college degrees, about 85% do today! You wouldn’t be too surprised to see clear skies with a 60% chance of rain. You would with a 90% chance. Or: it is quite uncommon these days to see high-income earners without a college degree.
We can also see a run on the upper middle of the income distribution by the college-educated. The highwater mark of 60% of a percentile in 1980 now occurs at about the 70th percentile. Whereas in 1980, we saw a gentle increase through the 90th percentile followed by a sharp increase, today that break occurs at roughly the 40th percentile.
Let’s look at the two lines in the same graph to make comparisons.
This is college expansion. More people have college degrees today than 40 years ago, so there’s a larger concentration of folks with a college degree in different income percentiles today than in 1980. Note that the increase is not exclusively concentrated at the top of the income distribution. Every percentile, including those below the median, has a higher concentration of folks with a college degree today compared to 1980. This is easier to see if we visualize the difference of the two lines.
The image above shows the difference of the red and purple lines from the earlier figure. For example, at the 50th income percentile, there has been an increase of 10 percentage points of folks holding a college degree between 1980 and 2019. The largest change in the concentration of degree holders occurred roughly between the 70th and 90th percentiles. Less change occurred at the top of the income distribution, probably because this location had a large stock of degree holders to begin with.
Let’s look at all roughly decennial years between 1980 and 2019.
I see a few things going on:
Two jumps in the concentration of top incomes: the 1980s, then the 2000s. There hasn’t been much change in the concentration of college degree holders in the last decade.
The expansion of degree holders in the upper middle of the income distribution was most pronounced in the 1980s and 1990s. This expansion has continued since then, but at a more modest pace.
Something very interesting is going on at the bottom of the income distribution that is easy to miss when looking at the graph above. Let’s zoom in to the 40th percentile and below.
Between 1980 and 2000, the percent of folks with a college degree in low income percentiles was pretty darned consistent, at around 7.5-10% or so. College expansion mostly resulted in more folks with higher relatives incomes. In the 2000s, the percent of folks at the bottom of the income distribution with a college degree began to grow, from about 7.5% to around 12%. By 2019, it’s easy to see a relatively uniform growth of folks with very low incomes but who also hold college degrees. Compared to 2000, 2019 has a fairly uniform 5-7.5% increase in folks holding college degrees in the lowest 40 income percentiles.
Whereas the expansion of higher educated, higher income folks was perhaps the dominant story of the education-economics link through the 2000s, I wonder whether the expansion of low earning, highly educated folks in the past decade will become the dominant story. This low-end expansion is probably really, really bad. It’s bad for student debt. It’s bad by adding a greater tail risk for folks pursuing higher education. It’s bad for the legitimacy of higher education institutions in an era where ROI is the dominant schema used for higher education. It’s bad for potentially providing the kindling for a Turchin-style revolt.
For me and other social science researchers, I think this trend highlights a critical point: focusing primarily on average income differences in relation to higher education is clearly insufficient. The tails are probably where the interesting action has been and will be.