To me, this chart sums up everything that is wrong with this economy, on so many different levels.
I’ve run similar charts like this before. But now, with the just-released income data from the Census Bureau, we can see for the first time the entire business cycle from the peak in 2000 to the latest peak in 2008. And we can say, without fear of contradiction:
Boy, this sure was a putrid period for college grads!
Since 2000, the real earnings of college-educated workers have been on a downward trend (these are full-time workers with a bachelor’s degree only). They poked up ever so slightly in 2008, but not enough to even get back to 2006 levels, much less 2000.
How the heck can we run a modern economy when college grads have falling real wages? The answer is, we can’t.
For one, the only way we can compete globally is by having a better-educated and capable workforce. That means encouraging more young Americans to get a college education. But if the real pay for college grads is falling, then the pro-college argument becomes a lot tougher to make.
Moreover, if college-educated workers are doing worse, that suggests everyone with less than a college education is doing worse as well.
Third—and this is my own pet hobby horse—college-educated wages were falling even before the mass introduction of subprime mortgages, and even before the housing market really ran amok.
That suggests to me, at least, that there’s an underlying problem in the U.S. economy which goes far beyond the financial crisis. I’ve written about the innovation shortfall, and the problems with U.S. trade.