One step forward, two steps back - the working poor

American Demographics, Sept, 1997 by William O'Hare, Joseph Schwartz

Schooling Equals Dollars

Educational attainment is becoming an increasingly important factor for economic success. Today, one in five jobs requires a four-year college education, according to the Bureau of Labor Statistics. That share is expected to creep up to 22 percent by 2005 due to continued growth of the economy's "college-intensive" sectors, such as health care, education, and computer-based industries.

Of course, this means that about four in five jobs still don't require a college education. And increasingly, these jobs are not good ones. "There probably is a modest increase in the skill levels needed in most industries," explains Dan Hecker, a labor economist in the Office of Employment Projections at the Bureau of Labor Statistics. "It is not a case of there not being jobs for people who have minimal job skills and education; there are lots of those kinds of jobs. But very, very few of those jobs come with pay that is much above the minimum wage."

The result is that more and more Americans are working for less. Among all American men and women aged 25 and older, 10 percent are living below the poverty level, according to the Census Bureau. The share living in poverty climbs to one in four people for those without a high school diploma. Just 3 percent of adults with a bachelor's degree or higher education have incomes below the poverty line.

Work effort has little to do with income. "The main reason for the rise in the working poor is a decline in real earnings," says Rebecca Blank, professor of economics and director of the Joint Center for Poverty Research at Northwestern University. This loss of earnings is more striking among men than women and is highest among high-school dropouts, says Blank. Blank's findings echo federal statistics regarding the link between education and success in today's economy: "Men who are high school dropouts and full-time, year-round workers saw a 20 percent decline in real weekly earnings from 1979 to 1995," Blank says. "For those with a high school degree, there was a 10 percent drop in real earnings during this period."

Nearly four in ten parents in working-poor families (38 percent) do not have high school diplomas; another 35 percent have a high school degree, but no college experience. Between 1973 and 1993, entry-level wages for males with a high school education dropped 30 percent; for women, they dropped 18 percent.

"Since 1973, the economy has shifted from one that was relatively independent of international trends to a global economy where our fate is increasingly linked to that of other countries," says Douglas Massey, professor of sociology at the University of Pennsylvania. Massey divides the labor market into three classes of people who will benefit differentially from economic globalization. The first group includes the owners of capital, who always have done very well because capital is in scarce supply. The second group includes workers with the training and abilities that make this economy run.