The Wall St. Journal (WSJ), which for my money has by far the best editorial pages of any major newspaper had a guest editorial today worth noting. I didn’t like the tone as it was blatantly anti-Obama. While I am not an Obama fan, as most of you know, I thought the editorial was unfair. However, it did have some interesting stats worth passing on.
Change in Real (inflation-adjusted) Income 2006-2011 (US Census Data)
Top 20% of earners fell -5%
Bottom 20% of earners fell -11%
Earnings >150K 3.2%
Earnings 40K-60K 7.8%
Earnings <20K 24.4% Declining Economic Mobility (Federal Reserve Bank of Boston)
1980 – 21% of those in the bottom 20% moved up to the middle 20% 10 years later
1995 – 15% of those in the bottom 20% moved up to the middle 20% 10 years later
Percentage of Kids Finishing College (Pew Charitable Trust)
Parents in top 20% of earners – 80% enroll in college, 53% finish
Parents in bottom 20% of earners – 33% enroll in college, 11% finish
What are the lessons here?
Education makes a huge difference. Those who fail to complete college, and thus normally get lower-paying jobs have less job security, have less chance to move up in income than was the case 30 years ago, almost 90% of their children will also not complete college, thus faring no better.
Besides the obvious economic challenges, there are strong cultural challenges at work here, including the incredible narcissism in our country that depresses self-sacrificial behavior, and an anti-education bias in some socioeconomic circles, among other issues.
My dad worked for a charity all his life and made little money. My mom was a secretary as I was growing up. My parents did not give me a single $1 in the several years after I graduated high school and certainly did not buy me a car or contribute to college tuition or living expenses. Even in my teens, all my discretionary money came from my after-school and summer jobs. Even Christmas and birthday gifts were simply clothes I needed – socks and shoes, a couple shirts or pants, and underwear.
I married a girl after our freshman year of college (kind of jumped the gun on that one but she was a prize). She also got not a penny from her parents after high school. Together, we worked hard and for several years paid our college costs in cash while we lived on hot dogs and little Swanson pot pies (the 1970’s equivalents of Ramen Noodles) and raised four kids. During our 5 1/2 years that one of us was in college, Friday date night was a 25 cent ice cream cone and a walk together. After 39 years of marriage we still almost never miss a Friday date night together. Though we are able to do a little more. I’m not sure the quality of the date is higher due to spending more money, though. Time to talk is what makes a date night special.
Today, I have a successful business, two graduate degrees, and actually also have two small part-time jobs as well. My wife stays home and helps with grandkids and charity work.
Unless you have to support siblings, and many poor teens do, the problem is not being poor; the problem is that many are not willing to sacrifice. I know college costs a lot more today, but you can go to community college the first two years, sometimes get employer help for education costs, get a scholarship or grant, work part-time or full-time as we did, or have the military pay for your schooling.
And, don’t get pregnant in your teens. That’s a real killer for many girls today, especially in the lower economic strata. Like foregoing fun time, more clothes, and new cell phones in order to work and save, it just takes willpower.