Apr 4, 2017

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Working Colorado: Is college-level earning power flattening?

by | Apr 4, 2017

The conventional wisdom that college grads earn more than those with less education still holds true today. According to 2016 data, annual median earnings for college graduates were nearly $24,000 greater than for Coloradans who stopped at high school. What’s changed, however, is that wages for college graduates have essentially stalled. College-educated workers in Colorado haven’t seen a meaningful raise in years. The 2016 median wage of college graduates was essentially the same as it was in 2000.

College graduates experienced a short-lived period of rising wages during the technology boom of the late 1990s which slowed as the U.S. economy approached the Great Recession. Since then, college graduate wages have remained mostly stagnant. For certain, college graduates are doing better than high school graduates whose wages are down 8.1 percent in Colorado since 2000. Essentially, college graduates have been treading water while workers with less education have fallen farther behind. Here are a few possible explanations for this wage stagnation for college graduates:

Median Earnings in Colorado, by Education, 2016

  Median Annual Earnings
Less than High School $25,900
High School or less $31,700
Some College $35,900
Bachelor’s or more $55,600


Shifting job market – –
One factor is that the economy has failed to produce enough jobs for college-educated workers. In the early years of the post-recession recovery, high-skill (engineering, management and technology) and lower-skill jobs (maintenance, food service and sales) returned first. The middle-skill jobs were slower to return, in part because this broad category includes some industries hardest hit by the recession such as construction. Many middle-skill jobs were also replaced by technology. Fortunately, middle-skill jobs have recovered in recent years, according to a new analysis by the Federal Reserve Bank of New York. This broad middle skill category has mostly seen growth in jobs requiring some post-secondary education or training, such as health-care technicians and paralegals.

College graduates settling for lower-skilled and lower-wage jobs – – With fewer jobs that require a college education, more college-educated workers are taking lower-skilled and lower-paying jobs. Lower demand for advanced degree holders leads more highly qualified workers — those with advanced and graduate degrees — to compete for slightly lesser-skilled work. In 2015, 44.6 percent of young college graduates were working in jobs that did not require a college degree — up from 38 percent in 2000. Furthermore, the quality of these jobs changed. According to the Economic Policy Institute, these “non-college” jobs occupied today by college-educated workers offer less career advancement and are lower-paying. In 2000, about 55 percent of college educated workers in “non-college” jobs earned at least $45,000 a year. In 2015, only 44 percent of these workers were in jobs that earned that much.

Yet, college is becoming “a must” to compete in the job market – – All this is occurring at a time when college graduates are becoming a larger part of the labor force. According to a 2016 report by Georgetown’s Center on Education and Workforce, nationally, those with a bachelor’s degree or higher make up 36 percent of the labor force. This is the first time college-educated workers slightly outnumber high-school educated workers in the United States. But this means tougher job competition for workers at the lower end of the pay spectrum. Since the recession ended, the vast majority of the jobs created have gone to workers with at least some college education. Employers are now requiring more education from applicants for jobs that previously required less education.

The majority of Colorado workers are experiencing wage stagnation. Unfortunately, in today’s economy, a college degree does not necessarily provide immunity to the trend of stalled wages. The result is that while a college education is a prerequisite for moving into the middle class, it no longer guarantees the opportunity for financial gains over time.

Wage growth for our state’s educated workers is essential to growing our economy and requires action that would benefit all workers. Pay and productivity used to rise in tandem. Yet, with eroding labor and wage protections that is no longer the case and the result is wage stagnation for most workers in the state, even our college educated workers.

Robust public policy that ensures economic growth is broadly shared is the solution. That includes strengthening labor standards and collective bargaining rights, updating sick and paid family leave, and ending discriminatory practices that contribute to race and gender inequities.

– Jesus Loayza

Recent articles

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.