Monday, September 9, 2013

Nice graph showing the change over time in High, Medium and Low Skilled employment in the US. I see a major reason for income inequality. What do you see?

There are lots of reasons stated for income inequality in the US, and for that matter, around the world (it is not a problem solely with the US)---greed, unbalanced tax code, globalization, etc.

The one that does not get enough serious attention is the argument that the returns from education and high skills acquisition by INDIVIDUALS is a significant culprit.

I copied and pasted and modified a couple of graphics from HERE that show in the US the change, in millions, the number of workers engaged in either "High Skilled", "Medium Skilled" or "Low Skilled" employment.  Below the graph I calculated the percentage change in each category since 1995 to 2008.
(I left off 2009 for the calculation to leave out one year of the recession).

If we believe that "Education = Earning Power" then this seems to be some supporting evidence for increasing income inequality.

High Skilled employment increased 36% from 1995 to 2008.  Medium Skill employment edged up 6.10%. Low Skilled employment actually DECREASED by 4.20%.

The number of total net jobs created over that time is 17.7 million (151.7-134.0), or an increase of 13%.  So, a preponderance of those those jobs have gone to the High Skilled workers---13.3 million  (50.7-37.4) of the 17.3 million!
Source: www.KNOEMA.com

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