Want to fix inequality, Democrats? The answer is wages, not education

Just as the Republicans’ default solution to any domestic problem is “lower taxes,” Democrats insist on “more education, especially college education.” But this obsession with education is misplaced, and in some cases actually harmful to the project of building “a more perfect union.” A better tactic for Democrats would be to raise wages through government policies, especially those aimed at workers without college educations. 

We have seen historic increases in educational attainment over the last 42 years. In 1980, approximately 69% of Americans above age 25 had completed high school and 17% had college degrees. By 2022, those figures had reached 91% and 37%, respectively. Conversely, the percentage of adult high-school dropouts decreased by more than two-thirds, from 31% to 9%. Since politicians often claim that the best predictor of adult poverty is the lack of a high school degree, one might imagine that poverty also substantially decreased over these 42 years. It did not. In fact, the poverty rate fluctuated between 11% to 15% over that period, with no clear trend. 

Many people regard income inequality as the biggest domestic problem of our time. If education were the solution, then presumably inequality should have continued to shrink in recent years. Instead it has been soaring. While the top one percent of households increased their proportion of total national income from 9% in 1979 to 16% in 2019, the bottom 20 percent of households decreased their proportion from 5% to 4%. Historic levels of educational attainment appear to correlate, if anything, with higher levels of inequality. Similarly, if education were the primary driver of higher incomes as many politicians allege, we might expect to see substantial gains in incomes. But such gains have been weak, especially compared to overall economic growth. From 1980 to 2022, inflation-adjusted per-capita GDP grew by 108%, but over that same period, inflation-adjusted median household income rose by just 15%, about one-seventh the rate of overall economic growth. 

The belief that higher education leads to higher productivity, which in turn leads to higher wages, is also flawed. While productivity (defined as output per worker) grew by 70% from 1979 to 2018 — along with the growth in educational attainment — median inflation-adjusted wages only grew by 12%, one-sixth the growth of productivity. 

Here’s an important distinction: For any given individual, higher education generally translates into higher wages, but for all workers as a group, that is not the case. The first step in unpacking this apparent contradiction is to understand that job structure matters. Approximately 72% of American jobs do not require a four-year college degree. 

The Bureau of Labor Statistics publishes the top 30 occupations with the largest predicted employment growth to the year 2032. Three of the top four are home health aides (with a 2022 median annual income of $30,180), restaurant cooks ($34,110), and stockers and order fillers such as Amazon warehouse workers ($34,220). Other occupations on the list include laborers ($36,110), nursing assistants ($35,760) and food service supervisors ($37,050). Jobs that typically require a college education, and that clearly pay more, include software engineers ($127,260) and registered nurses ($81,220). The median salary for all occupations is $46,310. 

When we consider this job structure, education likely acts as a screening device to help employers decide who gets the highest-paying jobs. In other words, if all applicants for all these jobs had college educations, employers would likely then select applicants with graduate degrees or those from the most prestigious colleges. For workers as a group, it is the job, not the level of educational attainment, that determines wages. 

When we consider wages differentiated by education, they tell us more about the persistence of inequality. Inflation-adjusted wages for high school graduates with no college education fell by 12% from 1980 to 2019. For college graduates, they increased by 18% — but that is far below the 108% increase in inflation-adjusted per-capita GDP growth. The bottom 90% of workers claimed 70% of total U.S. wage-earnings in 1979 but only 61% in 2019, while the top 1% of workers nearly doubled their share, from 7.3% to 13.2%. 

That 42-year period of stagnating or falling wages is entirely consistent with relatively stable poverty rates, rising inequality and weak growth in median incomes. Moreover, that relative decline in wages have been implicated in increasing rates of “deaths of despair” — largely meaning suicides and drug- and alcohol-related fatalities — as well as unprecedented drops in life expectancy even before the COVID pandemic, and exacerbated death tolls during that traumatic public-health crisis.

There is no question that government policy can directly lift wages. From 1980 to 2023, the inflation-adjusted federal minimum wage fell by 37%, from $11.49 in 1980 to $7.25 today. Two-thirds of Americans support a $15 federal minimum wage. States and cities can also enact minimum wages, and so far 30 states have done so https://www.ncsl.org/labor-and-employment/state-minimum-wages.  Higher minimum wages, by definition, increase wages, and evidence indicates they also reduce poverty and income inequality. 

From 1983 to 2022, membership in labor unions fell by half, from 20% to 10% of the workforce. That dramatic decline was the result of pro-business policy decisions, exemplified by Ronald Reagan’s mass firing of unionized air traffic controllers in 1981. The Protecting the Right to Organize Act, currently under consideration in Congress, could begin to reverse these trends — but is unlikely to pass unless and until Democrats win back a House majority. Unions lift wages by 10% to 20% for their members, and also tend to raise wages significantly for non-union workers in the same industry. Unions also reduce poverty and income inequality and, like minimum-wage increases, tend to reduce wage disparities across gender, race and ethnicity. 

There are numerous other policies that can directly increase wages: eliminating “non-compete” clauses, increasing the salary thresholds for workers eligible for overtime pay, requiring that government contracts go to firms that pay a living wage, defining “gig workers” such as ride-share and delivery drivers as employees. There are also indirect policies that would help: imposing taxes on firms that move jobs overseas, expanding Medicare to younger age groups to reduce the effects of employer-provided health insurance on wages, and tilting monetary policy to focus more on employment than on inflation.

People without college educations have suffered the most from stagnating and falling wages; their longevity has also declined. Many people in that demographic have migrated from the Democratic to the Republican party since the Reagan years; these days, a college education (or lack thereof), is the best single predictor of party affiliation. That is no coincidence. The Democratic Party moved away from wage workers, labor unions and those without college educations.

A recent poll of likely 2024 battleground states indicated that voters prefer Republicans over Democrats by 18 percentage points when it comes to “keeping wages and salaries up with the cost of living.” Harvard philosopher Michael Sandel, among others, argues that people without college educations have become increasingly resentful, believing that they are being blamed for falling behind: “It’s your own fault you have low wages; you never went to college!” 

We witnessed a rising tide of wage and labor issues in 2023: more strikes, more union votes such as those at Starbucks, Amazon, Trader Joe’s and elsewhere, more statewide referendums for higher minimum wages, and all-time highs in public approval for higher minimum wages and labor unions. Democrats have a rare opportunity to ride this wave of sentiment and reclaim the mantle of the party of the working class. They should embrace it by once again paying obsessive attention to wages.