Education and Wages

From Ed Luce’s excellent article on the crisis of the American middle class:

And although the golden years were driven by the rise of mass higher education, you did not need to have graduated from high school to make ends meet. Like her husband, Connie Freeman was raised in a “working-class” home in the Iron Range of northern Minnesota near the Canadian border. Her father, who left school aged 14 following the Great Depression of the 1930s, worked in the iron mines all his life. Towards the end of his working life he was earning $15 an hour — more than $40 in today’s prices.

Thirty years later, Connie, who is far better qualified than her father, having graduated from high school and done one year of further education, makes $17 an hour. The pace of life has also changed: “We used to sit around the dinner table every evening when I was growing up,” says Connie, who speaks with prolonged vowels of the Midwest. “Nowadays that’s sooooo rare.”

There are a lot of things going on here, but one point to keep in mind is that progress in educational attainment is generally beneficial not just beneficial to the people who get the extra education. Insofar as more Finnish people acquire skills and learn to be cell phone company executives or furniture designers or Finnair pilots that’s (a) more income to be spent on goods and services produced by lower-skilled people and (b) fewer lower-skilled people to compete for those jobs. Consequently, the Finnish people who don’t upgrade their skills also benefit from the fact that other Finnish people have been upgrading. Consequently, the great expansion in educational opportunities in the 1870–1970 era helped produce prosperity even for people like Connie Freeman’s dad who didn’t necessarily personally acquire a great deal of education.