The responsibility of higher education to work toward alleviating wealth inequality
Setting the stage
We live in a time of unprecedented economic inequality in this country—unprecedented in severity, not in its existence.
Policy changes, like increasing the minimum wage, revising tax codes to make them more equitable, making health care more affordable, and funding child trust accounts (baby bonds) to promote asset building and reduce the racial wealth differences, hold promise for reducing economic inequality. But all those policy changes face stiff opposition—and if the income tax efforts in Washington State are any indication, too many won’t happen without a radical revision in our political organizing. The entrenched systems of power and privilege resist change. The most organized opposition in recent history, Bernie Sander’s bid to run as the Democratic presidential candidate, failed—at least in the short term. Without significant strategic organizing by those on the left, the dominant two party system that maintains the structures of inequality will continue apace.
Within this context, earning a college degree has taken on near mythical status as the most available means by which individuals can improve their own and their family’s economic status. Researchers and policy makers agree: people with more education have higher earnings. On average, high school grads earn more than those without high school diplomas; college grads earn more than high school grads; and those with graduate degrees earn more than those with undergraduate degrees. The overall trend is clear: earning a college degree is a key to earning a higher income.
False dichotomy between learning and earning
Two factors—the uneven distribution of costs across race, ethnicity and family income that are associated with going to college, and the uneven distribution of income across race, ethnicity and family income post-college—raises a third question for all students, but particularly for low-income students, Black students, and Latinx students: what exactly do you get in exchange for your tuition?
Some object to this line of questioning, arguing that focusing on student learning outcomes, one of the strategies used to assess and improve the quality of a college education, is part of a larger Neoliberal project aiming to “corporatize” universities. This position is short-sighted, even reactionary, and all too often expressed by those earning more than a living wage, sometimes with a lifetime guarantee awarded through the tenure process.
Indeed, higher education institutions find themselves existing in the context of corporatized public life where the distinction between the interests of corporations and those of individuals is still being sought through efforts to repeal Citizens United. For-profit colleges and universities too often make a profit at the expense of middle-class and working-class people who bought into the myth that a college degree would provide a rung on the proverbial ladder of opportunity. Too many administrators in higher education avoid questions about the quality of student learning, focusing instead on time to degree and rates of completion, as if the time-motion principles devised by Frederick Taylor in his early 20th century efforts to increase workers’ productivity could be applied to education. These dynamics effect all of education, not just higher education, and they merit resistance.
Resisting the call to focus on the quality of the education offered by colleges and universities to students, however, is antithetical to efforts to promote social justice, including reducing the wealth gap between Blacks and Latinxs and whites, and the employment opportunity gaps that exist between low-income families and families with higher incomes. Efforts to segregate conversations about learning from conversations about earning require educators to turn their backs on the material circumstances of students’ lives.
Costs of college
The Higher Education Act (HEA) signed by Lyndon Johnson in 1965 made college accessible to a generation of Americans. As Mark Huelsman argues in a paper written for Demos.org in 2015, the HEA created a system of need-based grants, work opportunities for students, and interest-free loans to cover unmet financial needs. Interest-bearing student loans were used primarily by middle-class families. Nixon extended those policies, arguing to Congress that “no qualified student who wants to go to college should be barred by lack of money.”
More students entered college, but then, Huelsman writes, “our public officials began to renege on their promise to invest in the higher education system. States started cutting per-student funding at public institutions and modest increases in grant aid were dwarfed by rising tuition.” Simultaneously, middle-class and working-class incomes began to stagnate. Gaps in wealth between white and Black, and white and Latinx households increased. Post-recession, Huelsman writes, White households have a median net worth 13 times higher than the wealth of Black households, ten times higher than the wealth of Latinx households. Two decades ago, median net worth of white households was six times higher than Latinx households, and seven times higher than Black households.
The combination of increased costs, decreased grant support, stagnant wages, and pre-existing and growing gaps in wealth across race and ethnicity effects college students differently. In an article that appeared in a January 2016 issue of Children and Youth Services Review, researchers from the School of Social Work at Washington University use data from a national sample of low- and moderate-income households to examine racial and ethnic variation in education debt. They found that the odds of student loan indebtedness are twice as high for low- to moderate-income Black students as compared with their white counterparts. These disparities persist after graduation.
In another study, written for Demos.org in 2016, Mark Huelsman describes the racial and class bias behind today’s levels of student borrowing like this: “The need to borrow for a four-year degree differs substantially by race and income. In fact, at public institutions, 81 percent of black students must borrow for a bachelor’s degree compared to 63 percent of white students. Low-income students—those who receive Pell Grants—are overwhelmingly more likely to borrow for a degree as well: 84 percent of Pell recipients who graduate must borrow compared to less than half (46 percent) of non-Pell recipients.”
Income after college
The racial and class bias present in student borrowing to go to college persists in income earned after college. In a memo on social mobility written for the Brookings Foundation in February 2016, Brad Hershbein presents data showing that the wages are lower for BA holders raised on low incomes than for those who were not. Hershbein writes: “college graduates from families with an income below 185 percent of the federal poverty level (the eligibility threshold for the federal assisted lunch program) earn 91 percent more over their careers than high school graduates from the same income group. By comparison, college graduates from families with incomes above 185 percent of the FPL earned 162 percent more over their careers (between the ages of 25 and 62) than those with just a high school diploma.”
Darrick Hamilton and William Darity (2016) make a related argument about the racial bias in income earned in a paper posted on the Federal Reserve Bank of St. Louis website: “Black college graduates are about as likely as white high school graduates to be unemployed, and have the average household wealth of white high school dropouts. So even after potentially earning a degree, those who came to college with fewer savings are less likely to see an earnings and wealth boost associated with a bachelor’s degree.”
In another Federal Reserve Bank of St. Louis publication, William Emmons and Bryan North show that between 1992 and 2013, the median income of college-grad white families grew 13 percentage points more than their non-college counterparts, and the median income of college-grad Asian families grew 31 percentage points more than their non-college educated counterparts. In that same period, the median incomes of Hispanic and Black college-grads fell 10 percent and 12 percent respectively, while the median incomes of their non-college counterparts rose by 16 and 17 percent. Clearly, Emmons and North argue, higher education alone doesn’t level the economic playing field.
Esoteric radicalism or genuine alternative: Evergreen State College at a crossroads
The Evergreen State College was founded nearly fifty years ago as an alternative public liberal arts college. At that time, it was considered a radical revision to traditional universities because of the way it organized its courses and evaluated student learning.
According to the College Scorecard, a website established by the federal government because of concerns that too many students were attending schools that didn’t serve them well, and leaving them saddled with debt, fewer than half of students who attend Evergreen earn more than high school graduates of a comparable age. That’s the case at 53% of institutions nationwide—a group that includes two-year, four-year, public, independent, and for-profit colleges and universities. Washington State colleges and universities do better, on average. At 66 of 80 colleges and universities included on the College Scorecard site, at least half the students who have attended earn more than similarly aged high-school graduates. That’s not the case with Evergreen.
Table 1: Percent of students meeting “threshold earning” six years after enrolling in selected WA institutions*
|U of Washington -Tacoma||75%|
|U of Washington – Bothell||75%|
|Saint Martin’s University||70%|
|South Puget Sound||49%|
|The Evergreen State College||46%|
* % of students earning more than similarly-aged HS graduates, 6 years after enrolling
The percentages reported here represent the share of former students who, six years after enrolling (four years for SPSCC), are earning more than similarly aged high school graduates. It’s based on the assumption that high school graduates between the ages of 25-34 earn an average of $25,000 per year. This calculation excludes students enrolled in graduate school.
The College Scorecard also reports average earnings of students who attended college ten years after they first enrolled. On this measure, Evergreen also falls short. According to MIT’s living wage calculator, in Thurston County, a living wage for one adult requires an hourly wage of $11.29. Annually, that’s $23,483. For an adult with one child, a living wage requires an annual income of $49,005. The median earnings for students who received federal financial aid ten years after entering Evergreen is $31,800.
Table 2: Median earnings of students who received federal financial aid, ten years after entering college
|Avg annual salary after graduating|
|U of Washington -Tacoma||$52,100|
|U of Washington – Bothell||$52,100|
|Saint Martin’s University||$47,400|
|South Puget Sound||$31,600|
|The Evergreen State College||$31,800|
Evergreen students accrue levels of debt similar to students at other Washington State universities, and their average monthly payments are similar. But with lower average earnings, the burden of that debt payment is bigger. Where U-Bothell and UW-Tacoma students pay, on average, less than 5% of their monthly income towards federal loans, Evergreen students pay, on average, closer to 7% per month.
Table 3: Median federal debt for graduates; repayment of 10-year loan with 6% interest
|Avg debt – graduation||Avg loan payment|
|U of Washington- Tacoma||$16,326||$181|
|U of Washington – Bothell||$16,326||$181|
|Saint Martin’s University||$25,000||$278|
|South Puget Sound CC||$9,331||$104|
|The Evergreen State College||$17,594||$195|
Given the racial and class biases in both borrowing and income earned after graduation, the demographics might help explain the relatively low wages of students who’ve attended Evergreen, but they don’t. As table 4 shows, Evergreen has a relatively high number of low-income students compared with comparable institutions, but it also has a relatively high proportion of white students.
Table 4: Students from families with incomes less than $40,000; percentage of white students
|family incomes < 40K*||white students|
|U of Washington -Tacoma||46%||47%|
|U of Washington – Bothell||35%||46%|
|Saint Martin’s University||37%||54%|
|South Puget Sound||31%||64%|
|The Evergreen State College||44%||66%|
* receiving income-based PELL
What’s a college to do?
The earnings outcomes described here aren’t inevitable. Anthony Carnevale, Nicole Smith, and Jeff Strohl, researchers at Georgetown University’s Center on Education and Workforce, provide suggestions for educators interested in their students’ futures. By 2020, the team writes, 65% of all jobs in the economy will require postsecondary education and training beyond high school, and there will be 55 million job openings. Health care, community services, and STEM (science, technology, engineering and math) are the fastest growing fields. The four most in-demand competencies in the labor market will be these:
- Judgment/decision making
All four of these competencies are compatible with a liberal arts education. All are learnable—people get better at them with practice over time and skilled coaching.
The question facing Evergreen today is whether, as a collective body, it can commit to providing students with sequenced learning opportunities designed to help all students develop skills and abilities necessary to make a living. In that way, not only would Evergreen be helping to alleviate economic inequality one student at a time, but those very same students would become an even more potent force for changing the very structures that hold inequality in place.
Emily Lardner lives and works in Olympia, Washington.