IG of the Day: The Wage Gap

This chart, taken from the Weldon Cooper Center’s newly published, “Virginia Income Trends, 1980-2010,” illuminates the growing income gap in Virginia. This chart, which shows the growing disparity in wages, has more meaning to me than stats showing the disparity as measured by adjusted gross income reported to the Internal Revenue Service, a commonly cited metric.

If income inequality on the lower end results from the breakdown of the family structure and the rise of single-parent families, the problem is cultural in nature, not economic. Likewise, if income inequality on the upper end arises from an increasing number of two-income families, my reaction is, what’s wrong with that? But if income inequality results from a higher rate of return on education and declining opportunities for Americans with low levels of education — as shown here — the public policy implications are very different.


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4 responses to “IG of the Day: The Wage Gap”

  1. I’d like to point out that for wage earners.. their income is taxed at least twice.

    how so?

    well.. look at their gross.. which FICA withdrawals are based.. but then unlike deductions for 401/IRQ.. income taxes are assessed on the Gross income, not what is left after FICA is assessed.

    why is that?

    No wonder those who can – get compensation in methods that are taxed far less, eh?

  2. “a higher rate of return on education….”

    There is no doubt people with degrees make more money – the chart clearly shows that. However, looking at a persons income vs. their education level is only one part of the equation.

    The issue now is whether or not education is a good investment because the cost is so great and the payback takes so long (assuming you have to borrow money).

    Some of the stats mentioned in the link below are down right scary.

    “Today, assuming you graduate and learned anything, your employment prospects are uncertain. Slightly more than half, 53 percent, of college graduates are employed full-time, according to a 2011 study from Rutgers University’s John J. Heldrich Center for Workforce Development. Meanwhile their average salary between 2009 and 2010 was $27,000 — barely enough to either pay back their student loans or to live on — but probably not both. Another 21 percent are in graduate school. And almost half of the employed are working in jobs they could have qualified for straight out of high school. The numbers are even worse for the many weak students colleges now admit. An analysis of Bureau of Labor Statistics data by the Chronicle of Higher Education indicates that 60 percent of the increase in the number of college graduates from 1992 to 2008 worked on jobs barely requiring a high school diploma.”

    “Many college graduates and especially dropouts might reasonably wonder if they might have been better off forgoing college and instead getting an apprenticeship or on-the-job training, perhaps at the elbow of a successful, ethical entrepreneur and investing the fortune they would have spent on college in blue-chip stocks. Indeed, in a GfK Roper Public Affairs & Media poll, nearly half of Americans polled felt college students, at both public and private colleges, were not getting their money’s worth.”

    Read more;


  3. HardHatMommy Avatar

    I’d love to see the median income data from Northern Virginia alone and from the state without Northern Virginia. I feel like we can’t figure out the real story of what is happening when Northern Virginia’s data is mixed in with the rest of the state. There are unique social and economic structures at play in Northern Virginia that may skew the data from the rest of the state.

  4. HardHatMommy, a previous post on a study published by the Commonwealth Institute contains some interesting data. (Check the third chart.)

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