One common refrain we hear from a lot of conservatives, and some centrists, too, is that the reason many Americans aren’t getting ahead in this economy is that they’re “unskilled” and undereducated. If only they went to college — that would do the trick! Sending more people to college has been recommended as the main policy fix for inequality by everyone from the National Review’s Marcus Winters to center/left economists like Claudia Goldin and Lawrence Katz.
While making college more affordable is a great idea, there are good reasons to be extremely skeptical about the notion that an undereducated workforce is to blame for soaring economic inequality. Evidence that is supportive of that skepticism can be found in the Bureau of Labor Statistics report released last month, Characteristics of Minimum Wage Workers, 2013.
According to the report, there are 260,000 worker’s with bachelor’s degrees and 200,000 workers with associate’s degrees who are making the minimum wage. As a reminder, the federal minimum wage is $7.25 an hour, and the minimum wage for tipped workers is a shockingly low $2.13 an hour. In some cities and states, the minimum wage is higher, but the BLS report defines only those making $7.25 an hour or less as “minimum wage workers.”
Some other fun facts about the minimum wage: the U.S. has the third lowest minimum wage of any OECD country, the value of the minimum wage has declined dramatically since its peak in 1968, and about half of the increase in inequality in the bottom half of the income distribution is due to the decline in the minimum wage.
Something has gone terribly wrong here.