Education gap creates a new divide in wages, class and place

  • Article by: EMILY BADGER , Washington Post
  • Updated: July 11, 2014 - 11:00 PM
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– Census data suggests that in 1980 a college graduate could expect to earn about 38 percent more than a worker with only a high-school diploma. Since then, the difference in their wages has only widened as our economy has shifted to bestow greater and greater rewards on the well-educated.

By 1990, that number was 57 percent. By 2011: 73 percent.

These figures, though, reflect only part of the inequality that has pushed the lives of college and high school graduates in America further apart.

As the fiscal advantages of education have increased, according to Stanford economist Rebecca Diamond, the geographic segregation of the most educated workers has, too — and not by neighborhood, but by entire city.

This effectively means that college graduates in America aren’t simply gaining access to higher wages.

They’re gaining access to high-cost cities like New York or San Francisco that offer so much more than good jobs: more restaurants, better schools, less crime and even cleaner air.

“With wage inequality, you could just observe the average wage of a college graduate and the average wage of a high school graduate,” said Diamond, whose research has gone a step further to calculate what she calls “economic well-being inequality.”

“But then on top of that, college graduates also live in the nicest cities in the country. They’re getting more benefits, even net of fact that they’re paying higher housing costs,” she said.

It’s easy to recognize this phenomenon in San Francisco, or even Washington, D.C. College graduates have flooded in, drawn by both jobs and amenities.

Changing neighborhoods

Yet more amenities have followed to cater to them — luring yet more college graduates. Housing costs have increased as a result, pushing low-wage and low-skilled workers out.

At the neighborhood level, this sounds a lot like how we describe gentrification. At the scale of entire cities — picture low-skilled workers increasingly excluded from Washington and San Francisco and segregated into cities like Toledo or Baton Rouge — Diamond described this as a kind of nationwide gentrification effect.

She was not just talking about outlier cities here.

“New York, San Francisco, Boston — those places are the ones that get the most press because they’re the biggest cities and they have the most extreme changes at this time, but it’s everywhere: Philadelphia, Baltimore, Chicago, Atlanta,” she said. “It’s an across-the-board phenomenon.”

Between 1980 and 2000, cities that already had a lot of college graduates increasingly became magnets for more of them.

A city like Boston historically had an advantage on this front, but its advantage has only grown stronger with time.

The larger the share of a city’s workforce that’s made up of college graduates, the more expensive it is to live there.

By Diamond’s calculation, for every 1 percent increase in a city’s ratio of college graduates to non-graduates, the city experiences a 0.6 percent increase in rents.

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