YES, Education paves way out of poverty.
BREAKING THE CYCLE of poverty isn’t easy, but it’s possible. We can all
agree it’s a problem — for those who experience it and for those who try
to help others climb out or simply survive it.
But it doesn’t have to be permanent.
We’ve all heard it, and many of us have
said it to our children, our friends, our neighbors: Get an education.
You’ll make more money. You’ll experience a better quality of life.
Fact is those with higher education levels do earn more money and often avoid the difficulties associated with poverty.
Difficulties include inadequate nutrition, clothing, medical care, even shelter.
And the innocent recipients, children who
live in low-income homes, suffer when their parents can’t afford those
basic necessities.
Low income is defined as twice the
federal poverty level, or $38,700 for a family of four in 2005,
according to the National Center for Children in Poverty. Nationally, 38
percent of children live in low-income families.
Education does make a difference.
Economists may disagree a lot on policy,
but we all agree on the “education premium” — the earnings boost
associated with more education. But what role can education play in a
realistic antipoverty policy agenda? And what are the limits of that
role?
First, it depends on whether you’re
talking about children or adults, and schooling versus job training. And
second, the extent to which education is rewarded depends on what else
is going on in the economy. As Greg J. Duncan’s companion piece (page
A20) suggests, investment in early childhood has immense benefits. And
at the other end of the schooling spectrum, college graduates’ wage
advantage over those with only a high-school diploma went up
dramatically in the 1980s and early ’90s. But the premium that
high-school graduates enjoy over dropouts has been flat for decades. In
1973, high-school grads earned about 15.7 percent more per hour than
dropouts, 15.9 percent in 1989, 16.1 percent in 2000, and 15.5 percent
last year. And for adult workers, the historical record for job-training
programs is pretty dismal, though more recent initiatives — with their
focus on more carefully targeting training for local labor markets —
show much more promise.
Nobody doubts that a better-educated
workforce is more likely to enjoy higher earnings. But education by
itself is a necessary insufficient antipoverty tool. Yes, poor people
absolutely need more education and skill training, but they also need an
economic context wherein they can realize the economic returns from
their improved human capital. Over the past few decades, the set of
institutions and norms that historically maintained the link between
skills and incomes have been diminished, particularly for
non-college-educated workers. Restoring their strength and status is
essential if we want the poor to reap the benefits they deserve from
educational advancement.
What Research Shows Julie Strawn of the Center for Law and Social Policy, reviewing an
extensive sample of basic education and training programs, concluded
that education alone is much less successful in raising employment and
earnings prospects than education combined with a strategy of focused
job training (with an eye on local demand), “soft skills,” and holding
out for quality jobs.
One study found that a year of schooling
raised the earnings of welfare recipients by 7 percent, the conventional
labor economics finding. But given that many of these workers entered
the job market in the $6- to $8-an-hour range back in the 1990s, you’re
talking about moving families closer to the poverty line, not pushing
them significantly above it.
Strawn reports that when education is
combined with multidimensional job training, readiness, and a quality
job search, the returns more than double. One Portland, Oregon, program
resulted in a 25 percent increase in earnings, a 21 percent increase in
employment, and a 22 percent reduction of time spent on welfare (all
compared with a control group that didn’t get the services).
This finding makes intuitive sense:
Programs that combine general education with training specific to both
the individual and his or her local labor market work better than ones
that fail to combine these activities. (They’re also more expensive, but
you get what you pay for.) Yet to get to the nub of the strengths and
limits of education and poverty reduction, we need to go back to first
principles and think about how they interact with the realities of the
political economy.
Education is only a partial cure for
poverty because of all the other recent changes in the labor market. At
least half of the inequality increase has taken place within groups of
comparably educated people, and since 2000 that proportion has been
increasing. Income-inequality data show that the concentration of income
in 2005 is the highest it has been since 1929. Yet research that
Lawrence Mishel and I conducted shows that since the late 1990s, the
college wage premium has been flat. In real terms, college wages were up
less than 2 percent from 2000 to 2006. Even among the highly educated,
only some are getting ahead, and lots aren’t.
In short, we are not living in a
meritocracy, where we can reliably count on people being fairly rewarded
for their improved skills. So we need additional mechanisms in place to
nudge the invisible hand toward outcomes that are more meritocratic and
just.
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