This article from Forbes is a disturbing evaluation of a recent trend in income distribution. From 2001 to 2004, while incomes for white collar workers fell by 5.2%, incomes for high school graduates rose by 1.6%.
I had a personal experience of this trend when I went for a job interview at the Construction Career Academy, a local charter school here in Cranston for those wanting to join the construction trade. During the interview I learned that, upon graduation from the Academy, students can earn an average of $25 dollars an hour plus benefits. In other words, an 18 year old out of high school joining the construction trade in Rhode Island can make roughly the same amount of money as a social worker with over 18 years of education and 10 years of post-graduate experience in the field.
I don’t begrudge that 18 year old construction worker his wage, and I didn’t go into social work to make a lot of money. But this situation bodes ill for those of us raising children and wondering what kinds of jobs will be available for them after we plow big bucks into their education. From the article:
We don’t yet have complete data, but anyone with his eyes open can see obvious possibilities. Just maybe the jobs most threatened by outsourcing are no longer those of factory workers with a high school education, as they have been for decades, but those of college-educated desk workers.
Perhaps so many lower-skilled jobs have now left the U.S.–or have been created elsewhere to begin with–that today’s high school grads are left doing jobs that cannot be easily outsourced–driving trucks, stocking shelves, building houses, and the like. So their pay is holding up.
College graduates, by contrast, look more outsourceable by the day. New studies from the Kauffman Foundation and Duke University show companies massively shifting high-skilled work–research, development, engineering, even corporate finance–from the U.S. to low-cost countries like India and China. That trend sits like an anvil on the pay of many U.S. college grads.
We need more evidence before concluding that we’re at a major turning point in the value of education to American workers. But it certainly feels like one, based on what we can observe. Higher education still confers an enormous economic advantage. Just not as enormous as it used to be.
As for income inequality, pretty much everyone has always hated it, and its growth was a certain cue for handwringing and brow furrowing. Well, it’s not growing anymore. Because our best-educated workers are earning less, and the incentives for higher education may thus be declining, the result could be a more uniform–and lower–standard of living. Be careful what you wish for.
On a practical level, it makes sense to me as a parent to encourage my children to go into professions that cannot be easily outsourced to other countries. Education and health care are both sectors where a certain number of jobs will need to remain in the US.
Kmareka.com 
As a parent of five school age kids (9 – 19), business owner and a part-time professor at Bryant (finance, business and entrepreneurship), I see what you are seeing.
Fields like social work and day care, while the emotional back bone in our society of dual wage earnings and single parent households, they have always been unfairly low paid. Arguably given the premise shared above, the demand may likely drive up compensation.
Maybe an optimist, but I feel that college provides two specific things regardless of concentration. More critical thinking skills and often more employment options, but not necessarily in the concentration. That is a personal choice.
I also feel that historically American’s strength was to make lemonade out of lemons and create new and better mousetraps. Alternative energy and stem cell research are just two examples the opportunity exists for immense new job creation.
One thing is sure after my recent trip to China, we need to think more globally and be prepared that corporations don’t see borders, they see markets and lower labor costs.
This is EXACTLY why Capitalism cannot drive a Democracy while special interests have more to do with the selection of the field of elected officials who will feed from their contribution troughs.
One thing to point out. The overall level of blue collar wages took a tremendous hit in the years, say, 1985-2000. Lots of high-paying jobs simply evaporated, driving the average wage of a blue collar job way down. As a result, if the average increases by, say, $1/hr, then that $1 is a higher percentage of the total. If my job paid $5 and goes up to $6, that’s a 20% gain. If my white collar job pays $20 and goes up by $1, that’s a 5% gain.
I’ve also read (BusinessWeek) that housing construction has been a big employer over the last few years. This has traditionally paid an above-average wage, so this may have skewed the numbers a bit, too. As a result, I’m not sure that this represents a real trend that will survive a deflation of the housing market.
There is good money to be made in Trades; electrician, plumber, etc. These pretty much cannot be outsourced. However, if overall income continues to decreases as it has been over the last few years, the wages paid for these Trades will decline as well. Fewer people will be hiring them, depressing demand, which will depress wages.
Ergo, there is no magic profession that will guarantee a secure job. Remember how we used to think that computers were the way to go? That thinking seems so pre-millenial now, doesn’t it?
Still, college probably offers the best bet. More people are attending college, which means that picky employers can insist on that sheepskin even for jobs that don’t require a degree.
Overall, though, the creation of a viable middle class in India, China, and Brazil will help everyone by creating a bigger market that will spur demand. And that’s where the focus needs to be; so-called “Supply-Side” economics is a joke. Remember the Depression? One of the causes was overproduction: we produced so many goods (Supply) that there weren’t enough people to buy them (Demand). It wasn’t until the GI Bill and the escalation of union wages redistributed enough money to spur demand that our economy not only recovered, but became the envy of the world.