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Posted by: Michael Mandel on September 12
Here’s another appalling chart:
The top line is the cost of private four-year institutions, adjusted for inflation. The bottom line is the real annual pay of young full-time workers with a bachelor’s only (where young means ‘25-34’). The college cost data comes from the College Board, and the income data comes from the latest Census report. Both lines are indexed to 1991=1.0.
You can see that in the 1990s, pay for young college grads rose at basically the same rate as college costs.
But since 2000, the two lines have moved in opposite directions. In real terms, college costs are up by 23% since 2000. But real pay for young college grads is down 11% over the same period.
This can’t go on. It’s just not possible.
Technical note: I used the nominal cost data from the College Board, and then applied the same price deflator for both earnings and college costs.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.