YOUNG families are better educated than ever before, but they are earning lower real incomes.
The Federal Reserve Board’s newly released 2013 Survey of Consumer Finances indicates that the median family headed by someone under 35 years of age earned $35,509 in 2013 dollars. Adjusted for inflation, that is 6 percent less than similar families reported in the first such survey, in 1989.Since 1989, the Fed has conducted extensive interviews of consumers every three years. Respondents are asked about their family’s income in the previous year, as well as about wealth, debt, education and attitudes toward financial issues. The results are released by family, not by individual, so the median family income may include the income of both spouses. Single-person households are included in the family calculations.As can be seen in the charts, younger families have fallen further and further behind older families as time has passed. Nearly a quarter-century after the first survey was taken, families headed by people over 55 generally have higher incomes, after adjusting for inflation, than their predecessors did. But those in groups under 55 generally earn less than their predecessors.In the first survey, the younger group included families headed by people born after 1954, and so was dominated by baby boomers. The latest group includes families headed by people born after 1984, and they seem not to have done nearly as well early in their careers. The earlier group came of age in a stronger economy and its members were generally not burdened by education loans as many of the latter group are.The largest declines have come since the 2007 survey — the last one in which participants discussed their income in a year before the Great Recession began. The following survey covered income earned during the recession, and it was not easy to know how much of the falloff was a cyclical phenomenon that would disappear when the economy recovered.But the newest survey covered income in 2012, three years after the recession ended, and shows that most of the lost ground has not been recovered. In fact, the real median income for all of the age groups except those in the 35-to-44 group declined from 2010 to 2013.
And you know that jive about how education is the issue, that those with higher educational attainment do better than those with lower?
Among families of all ages, those with more education tend to earn more than those with less. But that differential appears to be shrinking. at least for younger families. In 1989, the median income of families headed by young college graduates was twice that of similar families headed by high school graduates who never attended college. Now, the difference is only 52 percent. There are more college graduates in the group, but those graduates have a lower real median income than their predecessors.
They're still pushing college for everyone in schools, selling kids on the myth that people who go to college make more money than those who don't.
It's of course much more complicated than that, as can be seen by the diminishing gap between those with college degrees and those without in the recent surveys.
I know that the NYCDOE is pushing so-called "college readiness" as one of the school metrics for whether a schools is "good" or not.
That means there is pressure on administrations to push as many students into college DIRECTLY after graduation as they can.
Here's a lesson you won't hear much in schools these days, but one that needs to be given:
If students are not careful, going to college can harm them irrevocably for life.
Taking on tens of thousands of dollars in debt at the start of their adult lives for a piece of paper that doesn't do much for them is irrevocable harm, whether the NYSED, the NYCDOE or the USDOE want to use that piece of paper as an emblem for college readiness or not.
Yesterday, Fred Klonsky linked to a Huffington Post piece about senior citizens swamped with student debt who are having their Social Security checks garnished:
The Education Department is demanding so much money from seniors with defaulted student loans that it's forcing tens of thousands of them into poverty, according to a government audit.
At least 22,000 Americans aged 65 and older had a part of their Social Security benefits garnished last year to the point that their monthly benefits were below federal poverty thresholds, according to the Government Accountability Office.
Education Department-initiated collections on defaulted federal student loans left at least another 83,000 Americans aged 64 and younger with poverty-level Social Security payments, GAO data show. Federal auditors cautioned that the number of Americans forced to accept poverty-level benefits because of past defaults on federal student loans are surely higher.
More than half, or 54 percent, of federal student loans held by borrowers at least 75 years old are in default, according to the federal watchdog. About 27 percent of loans held by borrowers aged 65 to 74 are in default. Among borrowers aged 50 to 64, 19 percent of their loans are in default. The Education Department generally defines a default as being at least 360 days past due.
As unpaid student debt approaches $1.3 trillion, the federal watchdog's findings underscore the consequences of increased student debt burdens and the risk they'll wreak havoc on households in the coming years if U.S. workers continue to see little increase in their paychecks, the economy barely grows, and the Education Department's contractors keep borrowers in the dark on repayment options.
22,000 senior citizens having their Social Security benefits garnished now.
Just wait and see what those numbers look like when the younger generations surveyed by the Federal Reserve start getting older and are still swamped by student debt.
This is where we're at these days - the American Dream, circa 2014.
As Carlin said, it's called the "American Dream" because you have to be asleep to believe it.