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1.14: Education

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    What Is The Relationship Between Education and Money?

    Here’s the fact, pure and simple—more education means more money and opportunity in the United States. Typically, the higher your education the higher your economic status, power, prestige, and levels of property. Socio-Economic Status (SES) is a combination of one's education, occupation, and income and has been found to be highly correlated with a better quality of life for those in society who have higher SES scores. There is more job stability (less unemployment and more pay) for those with higher educations. In Figure 1 below you can see data extracted from the US Census Bureau on this.

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    Figure 1: Census Data Shows that More Education Means Less Unemployment and Higher Wages in 2008. *Retrieved from Bureau of Labor Statistics Internet 23 March 2009 from www.bls.gov/emp/emptab.htm

    High school dropouts are more than 4 times more likely to be unemployed than doctoral (Ph.D., Ed.D., MD, or JD) graduates. Four-year graduates (Bachelor’s) make $387 more per week than high school grads. That’s $1,548 per month or $18,576 per year more for Bachelor’s grads. This pattern holds true among all US racial groups and among males and females.

    A recently published E-article articulated the many benefits of college graduation (see “Education Pays: The Benefits of Higher Education for Individuals and Society” by Sandy Baum and Jennifer Ma; in Trends in Higher Education Series 2007 Taken form Internet on 23 March 2009 from http://www.collegeboard.com/prod_downloads/about/news_info/trends/ed_pays_2007.pdf ). Baum and Ma also pointed out that the higher your education the better your medical insurance, health, lifestyle for family and next generation, contribution to society, and more. Education, especially earning degrees, is a doorway to many life-long payoffs to college graduates.

    You need education because we live in a credentialed society. Credentialed Societies are societies which use diplomas or degrees to determine who is eligible for a job. The key in the US is to graduate every chance you get: a Certificate=1-year past high school; an Associates=2-year degree; a Bachelor’s=4-year degree; a Masters=another 2-year degree past Bachelor’s; and a Doctorate=another 4-6 years past Bachelor’s degree.

    Look at Figure 2 below to see the relationship between higher education levels and the “American dream” or “Ideal” lifestyle. Education is the great equalizer and allows the tradition of college attendance and graduation to be introduced into any individual’s personal and family life experience if they so desire and can muster the personal work and commitment along with the resources needed to attend then graduate. Tens of millions in the US have zero, nada, or no medical or health care coverage. Most of them have lower education levels and little to no college education. The extremely poor and disabled may have limited government coverage, but most poor and near poor have no medical insurance.

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    Figure 2: How People Get the Best US Jobs. © 2009 Ron J. Hammond, Ph.D.

    For the most part, working class and middle class people have some level of medical insurance. Interested in a job or career with yearly salary and not hourly pay? Interested in medical benefits and year-end bonuses with paid time off and vacations? Then you need at least a Bachelor’s, Masters or Doctoral degree. Or you may be from the top 10-25 percent of our economic strata that are born into privilege. They get the educational levels, social networking, marriage market, and overall better life chances that only money can buy, including exclusive education, prep-school, admittance into competitive programs, and Ivy League launch pads.

    Remember Max Weber’s concept of life chances? Life Chances are an individual’s access to basic opportunities and resources in the marketplace. The very few in our society born into extreme wealth have enormous life chances when compared to the rest of us. Can you run for political office without the proper social connections among the country’s power elite? Probably not. Can you become famous or extremely successful without access to extremely well educated friends and associates who are connected to those corporate owners and board members? Probably not. Can you call a friend and get a huge favor for your children with the understanding that someday you will reciprocate back with a huge favor for their children? Probably not, especially if you were born into an average family.

    You may not be able to change your ascribed status of having been born poor or middle class, but you can definitely change the SES of your own family by choosing to attend and graduate from college. You see, compared to most people outside the US, you and I have it better. You even have it better today than most royalty from just 100 years ago. Look at Figure 3 below to compare your average US life today to the life of European royalty back then.

    Our Standard of Living

    Have you ever toured a medieval castle? Their best accommodations were far better than the average person of their time, but way sub-par in comparison to the average person in our time. You grew up with central heat, running water, electricity, basic health knowledge and medical care, opportunities for 12-13 years of public education that cost you nothing (although your parents paid taxes), all the electronic gadgets you can buy, extra money to save or invest, and a life expectancy that very few royalty dreamed possible hundreds of years ago. Sure, they could control their subjects and servants, even take their lives if they so desired; but, today you can control your personal choices at the personal level and dramatically impact your own and some of your family member’s life course as you see fit.

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    Figure 3: You Live Better in the United States Today than Medieval European Royalty Lived Back Then. © 2009 Ron J. Hammond, Ph.D.

    Take for example one of my students from my Social Problems class back in 1996. To illustrate the personal level of stratification, I was interviewing the students in the class to see how much education and income their parents had, what their own majors were, and how much income they could anticipate after graduation. This way we could estimate their mobility between generations. For the most part my students were from working class backgrounds except one who had a medical doctor for a mother and a banker for a father. Her parents’ income was $2 million higher per year than all the other students.

    The very last student in the class, “Julie” was from a family of 9. Her father was a disabled Vietnam War vet who could not hold a job and who had asked a war buddy to let him, his wife, and their 7 children live in his barn. They had only one extension cord, one garden hose, and a port-a-potty. She said she came to our college to become a school teacher and have a steady full-time job with medical benefits. She generously explained how happy she was to have 5 roommates in an apartment.

    “I’ll never take another garden hose cold shower if I can help it. Did you know my apartment has 2 bathrooms with tubs and toilettes in each? We’ve got a dishwasher, fridge, and electric oven, too.” She had the entire class’ attention by now. “Yep, I’ll be a school teacher and when I do I'll help my brothers and sisters go to college…”

    Interesting isn’t it? We often take for granted all the luxuries and comforts we have in our modern society and yet, sometimes right next door there are people who don’t have what we have. Julie did graduate and become a school teacher. I have since lost contact with her, but I’m sure she’s settled down and is helping her siblings through college. The point is that she, like all of us, can chose higher education, to graduate, and to acquire for ourselves a larger piece of the American Dream of a comfortable lifestyle and job security. We do this through education.

    Measuring Education

    In Sociology we measure two distinct types of educational accomplishments: Educational Attainment is the number of years of school completed and Educational Achievement refers to how much the student has learned in terms of reading, writing, and arithmetic. Look at Table 1 to see how attainment typically correlates with degrees.

    Table 1: Years of Schooling and Typical Degrees Associated with Them. *Extracted from Jason Amos, (August 2008) Dropouts, Diplomas, and Dollars: US High Schools and the Nation’s Economy taken from Internet on 24 March 2009 from http://www.all4ed.org/files/Econ2008.pdf All4edu funded by Bill and Malinda gates Foundation.
    Years Typical Degree
    <12 Drop out
    12 High School
    13 Vocational Certificate
    14 Associates
    16 Bachelor’s
    18 Masters
    20 Doctorate (Ph.D.; Ed.D. ; JD,; or MD)
    21+ Specialization or Post-doctoral education

    Table 2 also shows the levels of income typically associated with these typical degrees. The difference between high school dropouts and graduates is about $8,100/year more for graduates or on a 35-year career in the labor force at least $283,500 more money earned by graduates. What would a 4-year Bachelor’s degree add per year? $19,400 per year for Bachelor’s grads compared to high school grads or $679,000 in 35 years of career work. A 4-year degree is financially well worth it.

    Table 2: Degrees and Median Incomes Associated with Them*
    Degrees Median Yearly Incomes
    Drop out $ 23,400
    High School $ 31,500
    Vocational Certificate $ 37,100
    Associates $ 40,000
    Bachelor’s $ 50,900
    Masters $ 61,300
    Doctorate (Ph.D.; Ed.D. ; JD,; or MD) $ 79,400
    Specialization or Post-doctoral education $100,000+

    *Extracted from Baum and May (2007) Figure 1.1 Median Earnings and Tax Payments of Full-time Year-Round Workers Ages 25 and Older by education Level, 2005

    When students ask me how I feel about taking out student loans I explain the following to them. If you choose to go to college and forfeit full-time wages to become a full-time student you will lose about $126,000 of lost wages while in college. Plus it might cost you another $25,000 in student loans or expenses. So you could conclude that it cost you about $151,000 to earn a 4-year degree. Subtract that $151,000 from the extra $697,000 and you end up a $546,000 net increase in career earnings even accounting for missed wages and student loan expenses. So going to college pays, but how does dropping out of high school affect individuals and society?

    The worst possible scenario in terms of work and lifestyle is to drop out of high school. And millions drop out each year in the US. Table 3 shows the dropout rates by racial classification for the US. By far, Asians Americans dropout the least at only 18.7 percent, followed closely by Whites at 22.4 percent. Hispanics, African Americans and Native Americans each have over 40 percent dropout rates—all that income lost; all that lifestyle forfeit; and all those other benefits of higher education missed.

    Table 3:Dropout rates by Racial Classification in The United States 2007*. *Extracted from Jason Amos, (August 2008) Dropouts, Diplomas, and Dollars: US High Schools and the Nation’s Economy taken from Internet on 24 March 2009 from http://www.all4ed.org/files/Econ2008.pdf All4edu funded by Bill and Malinda gates Foundation.
    Racial Classification Percent Dropping Out of High School
    Native American 49.4%
    African American 44.7%
    Hispanic 42.2%
    White 22.4%
    Asian American 18.7%

    Jason Amos (2008) in his study of US dropouts also stated that:

    “Individuals who fail to earn a high school diploma are at a great disadvantage, and not only when it comes to finding good-paying jobs. They are also generally less healthy and die earlier, are more likely to become parents when very young, are more at risk of tangling with the criminal justice system, and are more likely to need social welfare assistance. Even more tragic, their children are more likely to become high school dropouts themselves, as are their children’s children, and so on, in a possibly endless cycle of poverty (page 7).”

    Truly this is an accurate statement. The US has some of the best educational opportunities for average children to acquire a good public education. But, it lacks cultural motivations that translate across racial and ethnic lines in such a way that education become valued and pursued by average children as a way of opening doors and improving life chances for themselves and their families. It is a paradox in the context of Weber’s life chances, because so many life chances are readily available to average people. Yet, they are refused or ignored by millions.

    Amos (2008) also pointed out that high school dropouts from the Class of 2008 will lose $318,000,000,000 in lost lifetime earnings. They will be more likely to be arrested and use welfare for another combined cost of $25,000,000,000 to local and state agencies (page 8). The billions of lost earnings and judicial and welfare costs translate to a lower collective standard of living that could be corrected and improved upon if dropouts would graduate or even go back to earn their high school equivalency diploma GED.

    Figure 4 shows US dropout rates by race for 1972 and 1980-2006. Overall, the dropout rate has been slightly declining for years, but remains disproportionately high for non-Whites. This confirms data listed above and shows that it has been an ongoing problem, especially where non-White schools and districts have been historically underfunded at the basic level of need.

    CH14figure4.jpg
    Figure 4: Percentage of United States High School Dropouts by Race for 1972, 1980-2006*. *U.S. Department of Education, National Center for Education Statistics. (2008). The Condition of Education 2008 (NCES 2008-031), Indicator 23.

    There appears to be a geographic trend in best and worst dropout rates by states. Look at Table 4 below to see state dropout rates with the 10 best. Please note that all of the 10 best states with lowest dropout rates located in the Northern states, except one Western state, Utah.

    Table 4: 2005 Ten Best States for Dropout Rates (lowest) From Amos 2008. *Extracted from Jason Amos, (August 2008) Dropouts, Diplomas, and Dollars: US High Schools and the Nation’s Economy taken from Internet on 24 March 2009 from http://www.all4ed.org/files/Econ2008.pdf All4edu funded by Bill and Malinda gates Foundation.
    State Percent Dropout
    1. New Jersey 16.7
    2. Iowa 17.2
    3. Wisconsin 19.5
    4. Pennsylvania 19.6
    5. Vermont 19.8
    6. Nebraska 20.4
    7. North Dakota 20.8
    8. Utah 21.4
    9. Connecticut 21.9
    10. Minnesota 21.9

    Now look at Table 5 to see the 10 worst states with highest dropout rates. Seven of the 10 are in the Southern states with Washington DC in the North and New Mexico and Nevada in the west.

    Table 5: 2005 Ten Worst States for Dropout Rates (highest) From Amos 2008
    State Percent Dropout
    1. Mississippi 38.2
    2. Alabama 38.7
    3. Florida 39.2
    4. Delaware 39.9
    5. Georgia 41.9
    6. District of Columbia 42.4
    7. South Carolina 44.4
    8. Louisiana 45.3
    9. New Mexico 45.9
    10. Nevada 54.6

    *Extracted from Jason Amos, (August 2008) Dropouts, Diplomas, and Dollars: US High Schools and the Nation’s Economy taken from Internet on 24 March 2009 from http://www.all4ed.org/files/Econ2008.pdf All4edu funded by Bill and Malinda gates Foundation.

    For those who stay in school, there becomes an issue of quality of education. I know it is relatively difficult to define what “quality of education” even means, much less which states or schools get the best quality. It’s a real challenge given that the US spent about $290,700,000,000 on public education in 2007 which is designed to serve nearly 50,000,000 public education students (taken 24 March 2009 from http://nces.ed.gov/ and http://nces.ed.gov/pubs2009/expenditures/tables/table_03.asp ).

    We can approach quality of education at the personal level. One thing you can try to avoid at your own educational personal level is what is called Bureaucratic Ritualism, or the habit of following the rules and procedures and forgetting the main purpose of the bureaucracy's mission. So often teachers, schools, and school districts become large and they end up trying to meet the needs of 10's of thousands of diverse students and do so fairly.

    This inevitably leads to what educational leaders call Transparency - the creation of rules, regulations, and guidelines to be followed by all students, teachers, and parents. Transparency is a bureaucratic effort to be open, fair, and legally protected. It also creates a culture of a bureaucracy rather than a culture of learning. Students come to feel like a number and not an individual. Students get bored, disheartened, and fall into the daily routines and become somewhat a part of the bureaucracy. This is bureaucratic ritualism and it can be fatal to learning and creativity.

    Table 6 below shows the state by state per pupil total spending as reported in 2007. Please note that the worst per pupil spending is also the 8th best state for low dropout rates in 2005, Utah. There are also 2 states on Table 5 that were among the 10 worst for dropout rates.

    Table 6: 2007 Top Worst States for Annual Per Pupil Spending*. *taken 24 March 2009 from ttp://nces.ed.gov/pubs2009/expenditures/tables/table_03.asp Table 3. Student membership and current expenditures per pupil for public elementary and secondary education, by function, subfunction, and state or jurisdiction: Fiscal year 2007
    State # of Students $Per Pupil Expenditures
    1. Utah 523,586 5,706
    2. Idaho 267,380 6,648
    3. Tennessee 978,368 7,129
    4. Arizona 1,065,082 7,338
    5. Oklahoma 639,391 7,430
    6. Mississippi 495,026 7,459
    7. Nevada 424,240 7,806
    8. Texas 4,599,509 7,850
    9. North Carolina 1,427,880 7,878
    10. Kentucky 683,173 7,940
    11. South Dakota 121, 158 8,064

    Compared to other countries the US does not always compete in math, reading, and problem solving. An analysis of 2003 comparative data between the US and a dozen other countries yielded some discouraging results, given the hundreds of billions spent for US public education each year. For mathematics, the US scored worse than 12 other countries with Korea, Canada, Hong Kong, Netherlands, and Japan coming in the top 5. In reading the US scored worse than 10 other countries with Korea, Canada, Hong Kong, Ireland, and Sweden coming in the top 5. In problem solving, the US Scored worse than 12 other countries with Korea, Hong Kong, Canada, Japan and Denmark coming in the top 5. The US did beat Italy and Mexico in math, reading, and problem solving and also beat Spain and Germany in reading (see Baum and Ma, 2007).

    What Can You Do To Succeed?

    As we get closure on the discussion of education we have to focus on the personal level efforts you make toward graduation. Please note there is a Study Skills and Stuff chapter for you online with this textbook. It has guidelines for helping you increase your own odds of graduating college with a 4-year degree. These guidelines should be helpful in addition to that chapter:

    1. See your academic advisor
    2. Pick a major as soon as possible and set specific goals to graduate
    3. Attend all classes most of the time
    4. Ask any question you have (even if it sounds dumb because this is your education and you pay for it which allows you to ask questions)
    5. Learn to love: learning, gaining new information, and insights
    6. Visit all your professors during their office hours and get to know how they succeeded in college
    7. Go to on and off-campus events
    8. Make a good friend
    9. Volunteer and do something good for others and tell your parents what you did
    10. Manage your time, and money as though it were priceless

    The Economy In Society

    We’ve spoken about how important education is to you and your career and even how important it is to our national economy. Let’s discuss a few concepts about the economy. Economy is a system of producing and distributing goods and services and can be local, state, national, international, and global. There are various types of economic systems in today’s global marketplace. Capitalism is an economy based on the amount of goods and services produced in a free trade setting. Socialism is an economy based on governmental management and control of goods and services.

    Communism is an extreme socialistic economy with extreme governmental management of goods and services along with management of public and private ideologies. Cuba, Venezuela, North Korea and China are a few remaining national-level communistic economies. However, China has become the most open capitalistic economic systems among the remaining communistic countries. There are communist parties in many countries today, but few have national control as do the four above or the many that existed during the Cold War.

    Recently many have criticized the US as having forfeited its capitalistic ideals in favor of a form of Democratic Socialism, or an economic system based on the merger of capitalism and socialism that often is accompanied by vague boundaries between governmental management of goods and services and diminished “hands-off” governmental involvement in the individual pursuit of economic stability.

    Adam Smith (1723-1790) was an eccentric professor who wrote in The Wealth of Nations that an “invisible hand” emerged when people pursued their own business interest and collectively benefitted society at large. The full impact of Adam Smith’s work is hard to estimate. He is considered to be one of the most intellectually potent thinkers of the last four centuries. His ideas have been taught and have guided national economic policy for decades.

    Today’s economy is far different from that of Adam Smith’s. In Adam Smith’s day, much work was located in the Primary sector of the economy. The Primary Sector is the part of economic production involving agriculture, mining, fishing, and materials acquisition. Smith’s day also was laden with work in the Secondary Sector, or the part of the economic production involving manufacturing (factories and home-based). Today, the majority of our work involves the Tertiary Sector, or work which involves providing a service to others such as food, retail, computer processing, or information management. The tertiary sector emerged along with telecommunications and the computer chip technologies (the Three–Sector Theory originated with research by Colin Clark and Jean Fourastié).

    In Adam Smith’s day, I’d estimate 2 percent of all work was in the tertiary sector with the rest being in primary and secondary sectors. See Table 7 below to see US percentages of jobs in each of the three sectors for 2007. Note that 8 out of 10 jobs are in the service sector. Where exactly is all the primary and secondary work taking place for us in the US if not here? Look at the label on your shoes, clothes, computers, cell phones, cars, TV’s and even groceries. The US is a nation populated widely by consumers with most of its production being service-related.

    Table 7: 2007 Service Sector Employment Percentages*
    Sector Percent employed in Sector
    Primary Almost 1%
    Secondary 17%
    Tertiary 82%

    Taken from Bureau of Labor Statistics 24 March 2009 from http://www.bls.gov/news.release/ocwage.t02.htm Table 2. Employment by Industry and Occupational Group, 2007.

    Part of the explanation of why jobs shifted to service-related classifications has to do with supply and demand. Supply is the availability of goods and services in the market place. Demand is the desire in the marketplace for goods and services. Typically with higher supply and lower demand you’d see lower prices. With higher demand and lower supply you’d see higher prices. This is true in many markets, but does not appear to apply to the very unstable US cost of gasoline per gallon which changes without traditional regard to supply and demand.

    As the supply of labor-ready employees increased in the US factories and other labor-based industries the demand for these employees appeared to never end. But, as the computer chip transformed technology to the point that less demand for labor became the norm and then workers from all over the world were willing to do the US’s primary and secondary labor for a fraction of the cost, the US literally became an import nation for its primary and secondary goods. Much of the current job market pays and rewards education because education is still in high demand in a service economy. Without it a worker has to compete with cheaper foreign labor or get lucky with the very few labor-related jobs that are in the US economy today.


    This page titled 1.14: Education is shared under a CC BY 3.0 license and was authored, remixed, and/or curated by Ron J. Hammond & Paul Cheney via source content that was edited to the style and standards of the LibreTexts platform; a detailed edit history is available upon request.