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Salary Gap Between High School And College Education Narrows

By Louis Uchitelle

In the bifurcated job market of the last 25 years, a college education became an indispensable credential for a middle-class wage. That is still the case, but the payoff from a bachelor’s degree is beginning to falter.

The turning point was the 2001 recession. Until then, the typical pay of a worker with a bachelor’s degree had pulled steadily away from the wages of those with only high school diplomas. Even recessions did not interrupt the climb. Starting in 2001, however, college-educated people stopped gaining ground and even lost some, suggesting that employers increasingly take degrees for granted.

They have reason to do so. The percentage of college-educated young people has never been higher, and they are jostling for jobs in the fourth year of a recovery whose chief characteristic is a lack of robust hiring. The oversupply of college graduates is likely to disappear in the years ahead, some economists argue, but until then it is an obstacle.

“People have become accustomed to thinking that when they get out of college, they will earn 40 percent more than their high school friends who never went to college,” said David Card, a labor economist at the University of California, Berkeley. “Now we are chipping away at that wage premium.”

Actually, it peaked in 2001 at just over 45 percent, and with the premium at more than 40 percent today, a four-year college degree is still a solid investment. Consider the median wage of full-time workers who are at least 25 years old. At the end of last year, it was $986 a week for those with a bachelor’s degree or higher, versus $574 for those with only a high school education, according to the most recent calculation from the Bureau of Labor Statistics.

The narrowing in the premium partly reflects a surge in demand for high-school-educated workers in construction and health care, both booming industries in the current recovery. That helps explain why the median weekly pay of the high-school educated is up 3.6 percent since 2000, adjusted for inflation, a rate of increase four times as great as the rise in pay for the college-educated.

“There has been enormous demand for low-skilled workers,” said David H. Autor, an economist at the Massachusetts Institute of Technology. “The reason the college premium has not fallen through the floor is that there has also been a growth in the demand for the college-educated.”

That growth is not what it was in the late 1990’s, a thriving era for high-tech industries and Wall Street investment companies. But after a fallow couple of years, hiring picked up last spring for new graduates with bachelor’s degrees, the National Association of Colleges and Employers reported. While the revival is a shadow of what used to be, a college education is still a ticket into the work force.

Nearly 76 percent of those with a four-year college education in America hold jobs, the Bureau of Labor Statistics reports, compared with only 60 percent of high school graduates. Those percentages are down only a hair this decade, but among the college-educated a noticeable number with bachelor’s degrees are showing up in jobs that seem to require only a high school education.

The bureau tracks this through a periodic survey of workers age 25 to 44. The most recent survey, completed in 2002, shows, for example, that 17 percent of the nation’s office clerks had bachelor’s degrees or higher. So did 12 percent of the derrick operators; 19 percent of the theater ushers, lobby attendants and ticket takers; 13 percent of the bank tellers; 14 percent of the typists and word processors; and 37 percent of the flight attendants — to cite just a few occupations that do not seem to require a college education, although at least 10 percent of the jobholders have one.