According to my favorite tabloid, Bernanke echoed John Edwards in describing "the two societies" meaning the rich and the poor in America. He thinks "it’s based very much, I think, on educational differences... If you’re a college graduate, unemployment is 5 percent. If you’re a high school graduate, it’s 10 percent or more. It’s a very big difference."
The Census has a great chart showing the effect of education on incomes:
There is a small problem with this analysis, namely that it shows the U3 unemployment rate, not the U6. The U3 is the 7.9% that is universally trumpeted in the media; the U6 is a larger number that includes, among other groups, people who are no longer looking for jobs because they are discouraged. (See
here for more.) I am not making a general statement that U6 is the better metric; for this particular comparison, U6 is the right metric. Why?
Because college graduates are more likely than high school graduates to be "discouraged" and "not looking for work". Not looking for work means you can live without earning a salary; this is, for lack of a better term, a luxury good. This means that the difference between U6 and U3 should be larger for college grads than for high school grads.
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So what if we believe this analysis. I find it instructive to place the median high-school graduate and the median college graduate onto our nation's highly skewed income distribution.
The question for you is when you talk about the gulf between the rich and the poor, are you talking about the gap between the two vertical lines I drew on the chart, or some other gap?
Credits: I borrowed a nice graphic from Visualizing Economics. The median household incomes can be found in Table H-13 of the Census's Current Population Survey, Annual Social and Economic Supplements: for high school, it was $38K, and for college, $77K.
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