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Pay between college grads and everyone else at a record gap

By Christopher S. Rugaber
AP Economics Writer

WASHINGTON (AP) — Americans with no more than a high school diploma have fallen so far behind college graduates in compensation that the earnings difference has reached its widest point on record.

Increasing inequality has become a source of frustration for millions of Americans worried that they — and their children — are losing economic ground.

College graduates, on average, earned 56 percent more in 2015 than high school grads, according to data compiled by the Economic Policy Institute. That was up from 51 percent in 1999 and is the largest such difference in EPI’s figures, which date to 1973.

Since the Great Recession ended in 2009, college-educated workers have captured most of the new jobs and enjoyed pay gains. Non-college grads, in contrast, have faced dwindling employment opportunities and an overall 3 percent decline in income, EPI’s data show.

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“The post-Great Recession economy has divided the country along a fault line demarcated by college education,” Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce, said in a report last year.

The biggest driving force behind these changes was the recession, which reshaped the economy in many ways. Scores of routine jobs were replaced by computers or robots or were sent overseas.

There are nearly 1.5 million fewer office administrative and clerical jobs now than there were before the recession, according to an analysis by Georgetown’s Center on Education and the Workforce. That narrowed a long-time path to the middle class for high school graduates, particularly women.

The manufacturing industry also has 1.5 million fewer jobs than when the recession began in 2007. The construction industry had offered a lifeline to many high-school educated workers, particularly men, during the housing boom in the 2000s. Yet construction now employs 840,000 fewer people than it did nine years ago.

Even with that loss, though, contractors complain that they continue to struggle with a persistent labor shortage. Survey results released Tuesday by the Associated General Contractors of America found that 75 percent of U.S. contractors believe they will have hard time finding skilled workers this year.

With the labor market tight, pay has been on the rise. Even so, industry officials have expressed concerns that high schools, parents and others remain reluctant to steer teenagers to construction apprenticeships. This is true, they say, even though apprenticeships are often paid for by employers and thus avoid the heavy debts than can come with college diplomas.

Part of the trouble, no doubt, is that a college education still tends to give someone advantages over Americans who have less schooling. Nowadays, the disparities go beyond income, affecting everything from homeownership to marriage to retirement. Schooling has become a dividing line that affects how Americans vote, the likelihood that they will own a house and their geographic mobility.

The favored place that college graduates hold in the economy is, if anything, only becoming more entrenched. Last year, for the first time, a larger proportion of workers were college grads (36 percent) than high school-only grads (34 percent), Carnevale’s research found. The number of employed college grads has risen by 21 percent since the recession began in December 2007, and the number of employed people with only a high school degree has dropped nearly 8 percent.

Behind the trend is a greater demand for educated workers, and the retirement of older Americans, who are more likely to be high school-only graduates.

Yet few experts think the solution is simply to send more students to four-year colleges. Many young people either don’t want to spend more years in school or aren’t prepared to do so. Already, four in every 10 college students drop out before graduating — often with debt loads they will struggle to repay without a degree.

“If the only path you offer them is a traditional college path, they’re not going to be successful,” says Harry Holzer, an economist at Georgetown University.

If they only knew where to look, high school graduates would find they have a long list of options for acquiring vocational training — from two-year programs to online courses to for-profit schools. Yet many aren’t likely to get much help from high school guidance counselors.

Joseph Fuller, a professor at Harvard Business School, says counselors increasingly concentrate on things such as substance abuse, discipline and standardized testing, rather than on career advice.

Nor do U.S. high schools funnel students into the kind of on-the-job apprenticeships that exist in some countries. Instead, Fuller says, apprentices in the U.S. are typically older workers who are acquiring new skills in occupations like construction. The average age of an apprentice in Germany is 17, he notes; in the United States, it’s 27.

“We have a very limited vision of how to get people from their graduation in high school onto a path that’s going to lead them to have a successful, independent life,” Fuller said.

The Daily Reporter associate editor Dan Shaw and AP Writer Collin Binkley also contributed to this report.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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