Educated workers took a major paycut this year, those without education went up
Reported by Victor O.
Ordinarily, some people would expect employees with more education to be less exposed to pay cuts when firms are experiencing tough economic periods, but a new report has revealed the contrary, based on earnings of workers in 2014.
The report was released by the Economic Policy Institute (EPI), which is based in Washington, D.C. The institute’s analysis of data from the U.S. Department of Labor showed that salaries of college-educated professionals took the biggest cut last year, while the pay of those workers with less education experienced a slight surge.
CNN Money reports that the hourly earnings of employees with a first degree slipped to $29.55 in 2014, representing a drop of 1.3 percent from the year before. Workers with advanced degrees experienced a higher 2.2 percent cut in their hourly wage, which slumped to $38.20.
But while college-educated workers were not having it too good in terms of earnings, their counterparts with less education were actually getting a raise in pay, or at worst, have their earnings largely unchanged.
Employees with a high school education or who have taken some college courses saw their hourly pay remain virtually unaltered at $16.46 and $18.14, respectively. Workers who did not finish high school got a slight raise of 0.6 percent in their hourly pay to $12.31.
Although it is not exactly clear why employees with college degrees were earning less, it has been suggested that the raise in minimum wage in some cities and states could have contributed to the observed trend.
The EPI report shows that the hourly wages of young college graduates between the ages 21 and 24 have declined by 2.0 percent since 2007 and by 2.5 percent since 2000.
Economic experts have given two possible reasons for the fall in the earnings of young college graduates over the years. The first is that the skills shortage that used to be a common complaint in the past is no longer an issue as it used to be. The second reason is that more young Americans are getting a college education and swelling the number of people with degrees, thereby driving down wage levels.
The unemployment rate for young graduates rose to 7.2 percent, compared to 5.5 percent in 2007, while the underemployment rate jumped from 9.6 percent to 14.9 percent during the same period.
However, the wages of college-educated employees have performed fairly better when data is analyzed over a longer period.
Earnings of workers with graduate degrees have returned to the level they were at the beginning of the Great Recession in 2007, while people with first degrees are just 2 percent below the level they were at that time.
But the wages of those with less education are at lower levels. The earnings of workers who have taken college courses, have a high school diploma or did not finish high school are 6 percent, 3.7 percent and 5.2 percent below their 2007 levels, respectively.