College Remains Key to Prosperity

As more parents and students worry over how to pay tuition in the current economy, it's still more true than ever that going to college will increase your income, a sociologist says.

The past 30 years have put a huge economic squeeze on middle-class American kids, due to an income gap that widened by two-thirds among families with children, according to a new study led by Bruce Western of Harvard University. And educational disparities were one of the big contributors to this divide, his team found.

His advice to young adults is school, school, school. Not just college, but also graduate school, according to his latest unpublished analyses.

"The gap between the 'haves' and the 'have-nots' is widening for families with children in the United States," said Western, director of the Multidisciplinary Program in Inequality and Social Policy at Harvard. "Inequality for these families has grown faster than the combined rates of inequality for all families and for men's hourly wages."

Prospective students might be paying attention. College applications reportedly are up at various higher-education institutions, with Harvard receiving a record number of applicants for the freshman class of 2009.

Although many students are probably heading to college for the usual reasons, the uptick is likely related to the economic downturn, with people heading to school to ride out the storm and also to gain more skills and credentials to better compete in the tight job market.

Here's what the Bureau of Labor Statistics (part of the U.S. Department of Labor) says those college degrees recently translated into, dollar-wise:

Women with less than a high school diploma earned $323 weekly in 2002 compared with $809 for those with a college degree. Male high school dropouts had earnings of $421 weekly that year compared with $1,089 for male college graduates.

College-educated parents help

The inequality study involved an analysis of annual income data from the March supplements of the Current Population Survey from 1976 to 2006. Western and his colleagues built a model to figure out which variables were responsible for widening the income gap among American families with children.

The model pointed to a growing income advantage for college graduates. Families with college-educated parents made increasingly more money than families headed by high school graduates.

"Families headed by college graduates by the 2000s were doing very much better than families headed by people who had just graduated high school," Western told LiveScience.

However, education also has kept things from getting worse than they are. More heads of household are more educated in recent years, and there are fewer high school dropouts heading up families than there were in the 1970s, and many more college graduates, the team found. This rising educational attainment among parents has tended to equalize families incomes.

Go to college

So the advice to go to college if you want to make decent money is still good.

"I think that the same advice is even more true today," Western said. "The economic and social advantages of a college degree have grown significantly. People with college degrees are more likely to live in two-parent households and more likely to have a working spouse and more likely to have a spouse in a well-paying job, Western said.

All that means more income and a better standard of living for these folks' children.

The prevalence of low-income single parents also explained a lot of the income inequality found by Western's team. By the early 2000s, nearly one-quarter of mothers were single, he said.

However, increased rates of women's employment also helped to balance the growth of inequality resulting from single-parent families.

The shrinking middle class

The researchers also found that regardless of family type, the gap between high- and low-income families increased between 30 and 100 percent, making within-group inequality the leading cause of inequality for all families with children from 1975 to 2005.

"Our research suggests a broad increase in income insecurity that goes beyond low-skill workers and single parents and extends to families from every class," Western said. "The polarization of family incomes among this generation has implications for the social and economic mobility of future generations and suggests the further erosion of the middle class in years to come."

Education is the key to this polarization, Western said.

"It used to be that families could enjoy a middle class standard of living without a high school education, and that is clearly no longer true," he said, "and in fact, in more recent data that our paper didn't report on, it seems what's really important just over the last five or 10 years is post-graduate education, some sort of higher degree."

The only workers whose earnings grew in the past eight years were those with higher degrees, who make up 2 percent of the work force, Western said.

The analysis is incomplete, but it looks like the typical graduate degrees attained were MBAs, JDs and MDs, he said.

The research, detailed in the December issue of the journal American Sociological Review, was co-authored by Western's Harvard colleague Christine Percheski and Deirdre Bloome, a Harvard Hargraduate student. The study was supported by a grant from the Russell Sage Foundation, a John Simon Guggenheim Memorial Foundation fellowship and the New York University Center for Advanced Social Science Research.