College Tuition and the Lack of Mobililty

One of the reasons that college is so expensive is that the cost of college has risen much faster than both the minimum wage and median household income. I noted:

In 1961, the minimum wage was $1.15, which means that a student who worked part-time in high-school (and summers) and in college could pay his way through school. UC Berkeley tuition was equal to around 600 hours of minimum wage (not including taxes). Here’s the situation in 2011:

Flagship state universities set their prices below those of elite private colleges. But they are not cheap by any other standard. At the University of Michigan, an in-state freshman will face total expenses of $25,204, a senior $26,810. At Penn State, an in-state freshman will pay $25,416 for tuition, fees, and living expenses this year.

That’s around 3,500 hours of minimum wage (again, I haven’t factored in taxes). Unless a student is involved in one or more of the various sex industries, loans are a requirement–for in-state students.

Daniel Becker relates these rising costs to the lack of economic mobility now found in the U.S. (boldface mine):

The article in the paper talked about a Mr. Bacon. He worked in the mill in 1956 along with 700 to 800 other residents. The job was not as a machine tool maker (the mill as most had their own machine shop) or a special machine operator that required special skill. He was a laborer. The tasks mentioned were stuffing waste wool into burlap sacks or “picking up the yarn” or fetching parts from the machine shop. We’re talking menial labor tasks. Starter jobs.

For this work Mr. Bacon was paid $1.80 per hour. The minimum wage was $1.00 per hour. At some point he was earning $80 per week for 40 hours work. This is $4160 per year. With this income Mr. Bacon was able to put himself through college and became a teacher in the local school system. It was not just any old college he went to. It was Providence College with a tuition of $500 per year. Yes, a private college that cost only 1/8th of his annual income.

Mr. Bacon’s story is the story that not only are the Republican presidential candidates promoting as to what we need to “get back” to, but the democrats are saying we need to go forward to. Mr. Bacon’s story with this mill is the proof that the 2 parties are not talking about a fantasy time in our history. It did exist.

Here’s the problem though with both of their directions. I’m just going to list them.

1. $40,000 is the annual tuition at Providence College today.
2. $1.80 per hour is equivalent to the following: $14.40/hour standard of living, $17.80 real value, $18.20 unskilled labor and $22.00/hour production labor.
3. Tuition of $500 is equivalent to the following: $4010.00 standard of living, $4960 real value, $5050 unskilled labor and $6120.00 production labor

Are you seeing the problem here? It’s not just the difference of tuition going up 80 times. It’s that the wage equivalent today for what amounts to stacking shelves in Walmart is not being paid at Walmart. Not only is this Walmart job not paying such wages, this is what the current autoworker is earning. The autoworker was one of the best compensated citizens we had. Look up the definition of middle class in the dictionary, and you would have seen an autoworker!

It really is a double whammy: wages haven’t kept up, while the ticket to a good life has become more expensive. Actually, it’s a triple whammy, once we factor in the inability of our tax code to moderate income inequality–which drives up college costs even more.

Having a middle class was nice while it lasted.

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1 Response to College Tuition and the Lack of Mobililty

  1. joemac53 says:

    My generation (I’m 58) was able to go to college without money from parents. We worked two jobs in the summer (very hard, sometimes, but lots of fun), worked during the school year and took out minimal loans. (I had to sign a statement that I was not a communist to get my National Defense loan). I was totally independent from my parents at the age of 19. I had an adult relationship with them from that time on. We never had much discussion about college, since that was “my thing”.
    The old man said “you know where the tax stuff is, I’ll sign a form if I have to, but if I ever hear about it from the feds, you’re dead”. Later he bragged that his three kids all got degrees and it didn’t cost him a dime.
    Contrast this with my kids. All sharp, accepted to high end (not top) private schools with plenty of financial aid, but still needed more than ten thousand dollars a year from their parents. The youngest may have gone to a state school, but the difference in the bottom line was only 4 grand, so we said go where you want.
    The Bank of Joe also helped the older two with house purchases and upgrades. I assume this will be true with the youngest as well. I look forward to a retirement called “working”, but I am happy with how it has turned out.
    What concerns me is the lack of freedom my children have. They had to get a real job as soon as the ink was dry on their diplomas so they could start to pay their loans. No fooling around or travel for them.

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