Education linked to poverty

Alan B. Krueger presented "Mind the Gap: Inequality and Education" on Tuesday as part of the 43rd Annual Winter Institute Speakers Program.

Krueger is Bendheim Professor of Economics and Public Affairs and director of the Survey Research Center at Princeton University. He is the author of "Education Matters: A Selection of Essays on Education" and currently writes "The Economic Scene," a monthly column for The New York Times.

Krueger spoke in the Ritsche Auditorium about wage inequalities and the importance of education on income.

Since the early 1990s, a trend has been occurring that is creating a wider gap between the rich and the poor. Higher education has become a huge factor in widening the gap between skilled and unskilled workers, Krueger said. 

Economics professor Patricia Hughes was impressed with Krueger's presentation and believes Krueger was on the mark.

"What we're seeing is a higher premium on a college education and we're seeing manufacturing and union jobs being competed away internationally," Hughes said. "So we've got the middle class basically faltering which creates a higher gain to the upper class and fewer gains to the lower end of skilled labor."   

Krueger stressed that although increased education raises income dramatically, it is not the only factor. 

"Within educational levels we see a fairly large difference in people's earnings," Krueger said. "The differences are probably related to their desire to have a high-paying job as opposed to a job that has less responsibility and related to skills that aren't measured by education alone."

Although wage inequalities still exist between men and women, Krueger said that it should not be an area of concern for most people. The recent trend of male and female incomes reaching parity is expected to continue in the future. The reason for approaching equality is because more and more women are getting higher educations and vying with men for upper level jobs, Krueger said.

"Since the gap between males and females is narrowing, the gaps between the rich and poor and between racial groups are what we need to worry about most," Krueger said.

Another issue Krueger addressed was the withering of labor unions.  In the 1940s, 35 percent of the workforce was in labor unions and the number has dropped to less than 13 percent today.

Labor unions are needed to establish contracts and they become sort of a monopoly in the workplace, Krueger said.

"Labor unions just demanded too much and lost out," Krueger said. "Companies would threaten to move overseas and then when the demands got too high, they did."

Hughes agreed with Krueger, adding that labor unions lost the battle because they were not proactive enough.

"I honestly do not know what could take the place of labor unions," Hughes said. "Unions are important though because it is very hard for one person to stand up and negotiate with large corporations."

Krueger believes education may be the answer to closing the wage gap.

"I think education is the solution," Kruger said. "Drop out prevention is particularly important. What we see is that students who graduate from high school have much better economical opportunities than those who drop out."