Slowdown in Educational Attainment

Society professes a dedication to promoting higher educational attainment. Are we doing a good job?

We always hear how education is a top priority in today’s economy.  We are told that society needs people to be better educated, and that progress in educating people is slow but steady.  Educational attainment may be rising, but is society doing a good job of ensuring that its young are educated?

The graph below, which is built on data from and reproduces a slightly modified graphic produced by the Census Bureau1, describes how educational attainment has changed across society since 1940.

attain1

 

The graph suggests remarkable improvements in educational attainment over the past seventy years. In 1940, roughly three-quarters of the population dropped out before completing high school, about 5% attended some college and 4.6% completed college. By 2014, only 12% of society had less than a high school education, 27% had some college, and 32% completed college.

The figure suggests that US educational attainment has improved continuously over the past seventy or so years. The smooth transition from a less- to more-educated society seems to have continued unabated. It looks like society has been in a continuous march toward more education.

However, the appearance of a smooth transition to a more educated society is partly an artifact of the data. Overall educational attainment figures include people of different generations, who came of age during during different periods. The inclusion of older generations obfuscates the ways in which society’s young have been educated at different rates.  It will make change look slower and more incremental.

To get a sense of these changing rates at which the young are being educated, it makes sense to focus on educational attainment among young people who are of an age at which college completion is likely. To do this, Census figures look at attainment among those aged 25 to 34.

The figure below shows changing educational enrollment among Americans in this age group. The data source is the same:

attain2

 

This graph provides a different picture to the image of continuous improvement imparted in the first figure. The graph suggests that the pace of increasing educational attainment was much faster in the 1940s through late-1970s, but slowed afterwards.

For example, high school drop outs fell from about 63% of young adults in 1940 to 15% in 1980. From 1980 to 2014, this proportion fell to 10%, a marginal improvement. On one hand, society might be forgiven for not being able to eradicate the phenomenon of dropping out. That final 10% to 15% of drop outs might be a particularly tough group to marshal towards high school completion. On the other hand, society has not made a concerted press for universal high school completion, much in the way that it stamped out illiteracy. It is reluctant to make bigger investments in education, and it is much more reluctant to expand social assistance to those who drop out due to economic pressures. It is hard to tell whether our failure to ensure universal completion is a matter of the problem being too difficult or society not caring enough to do the needed work. In any case, the pace at which minimum educational attainment improved has slowed considerably over the past thirty to forty years.

The proportion of young adults who have only completed high school completion is roughly where it was in 1940. In 1940, it was a result of too many people not having gone far enough in attaining education. By 2014, it was a matter of more people attaining high school and moving on to at least some college.

The pace at which college attainment rose accelerated between 1940 and 1977, and then stalled until the mid-1990s. From then to today, the proportion of young adults with college attainment has grown steadily. The proportion of college graduates grew faster between 1940 to 1977 (3.8% average annual growth) than from 1994 to today (2.1% average annual). Near-college attainment also grew faster before 1977 (2.9% average annual growth rate) than after 1991 (1.4% average annual growth rate).

What can we glean from these figures? Educational attainment rose much more quickly during the mid-20th century than since the mid- to late-1970s. In part, this is probably because the easier work has been done. Conceivably, it is easier to promote high school and college completion when fewer people do it. As rates rise, schools and education policy-makers have to find ways to educate more obstinate cases.

However, I’m not so sure that we should give the past several decades a total pass. Society has shown that it can stamp out obstinate problems if it is sufficiently motivated. We seem to lack that kind of motivation. It is harder to convince society to invest more in education. More people oppose extending economic aid to poor people to help them complete college. We are much less concerned with making college affordable, and more concerned with ensuring that college students don’t get “free rides.”  We might say that we are committed to educating Americans, but this self-image may be at odds with our revealed true preferences.


  1. US Census Bureau (2015) “Table A-1. Years of School Completed by People 25 Years and Over, by Age and Sex: Selected Years 1940 to 2014” Data table downloaded June 2015 from http://www.census.gov/hhes/socdemo/education/data/cps/historical/

Download the raw data and Markdown file

Immigration Boom: Levels Back to 19th Century Levels

Immigration has been a hot button issue in both the United States and over much of Europe. Has immigration risen substantially? We examine the issue below.

How Big Is the Immigrant Population?

Compared to previous decades, the immigrant population is large.  The figure below charts out the ratio of migrants to the overall population since 1850.  It uses Census data compiled by the Migration Policy Institute.

immigrantpopulation

Throughout much of the 19th century, America’s borders were largely open to immigration. America began to restrict immigration at the beginning of the 20th century.  Its immigrant stock fell as immigrants died and were not replaced by new immigration. By the 1970s, immigration reached a low point, after which the country progressively opened its borders. By the 2010s, the country’s immigrant stock is roughly where it was during the 19th century.

The Changing Composition of Immigration

Not only has the number of immigrants risen, but so has teh composition of the immigrant population. The Migration Policy Institute’s Jie Zong and Jeanne Batalova note:

In 2014, Mexican immigrants accounted for approximately 28 percent of the 42.4 million foreign born in the United States, making them by far the largest immigrant group in the country. India, closely trailed by China (including Hong Kong but not Taiwan), and the Philippines were the next largest countries of origin, accounting for about 5 percent each. El Salvador, Vietnam, Cuba, and Korea (3 percent each), as well as the Dominican Republic and Guatemala (2 percent each), rounded out the top ten. Together, immigrants from these ten countries represented close to 60 percent of the U.S. immigrant population in 2014.

The predominance of Latin American and Asian immigration in the late 20th and early 21st centuries starkly contrasts with the trend seen in 1960 when immigrants largely originated from Europe. Italian-born immigrants made up 13 percent of the foreign born in 1960, followed by those born in Germany and Canada (about 10 percent each). In the 1960s no single country accounted for more than 15 percent of the total immigrant population.

So, not only have the raw numbers risen, but their composition has changed. In contrast to fifty years ago, immigrants come mainly from non-white or Hispanic countries, and today’s migrant population has one large group from a common origin (Mexico).

Anxiety over Immigration

A rising tide of non-white and Hispanic immigrants, and a perceived large influx of a particular community, evokes anxiety among those who fear or harbor animosity towards these ethnic groups. These groups are often blamed with damaging the economic fortunes of native Americans, while pushing up crime. The data suggests that there is little basis to arguments linking immigration to crime – immigrants are more law-abiding than natives, and crime has generally been falling during this long growth in the immigration stock. The argument linking immigration to the native-born population’s economic problems is far more complex, and there is little reason to believe that people would be better off economically if immigration were to be cut (I will save that for another entry).

Still, the high level of salience attached to immigration in our policy debates reflects the fact that it is a real and major trend. America is certainly becoming a national of immigrants again.

Entrepreneurial Business Formation over Time

Entrepreneurs come to own their businesses in a variety of ways. Most small businesses are startups, in which the entrepreneur starts the business from scratch. Other businesses are bought. Some are inherited or received as gifts.

How to entrepreneurs come to own their businesses? The figure below, which is built from Survey of Consumer Finances data, summarizes how business owners report having come to own their enterprise:

entrepreneur-acquisition

Over time, the proportion of businesses that were acquired through purchase or gifts has declined as an overall proportion of businesses. In 1989, about 25% of enterpreneurial enterprises were acquired through purchase, and another 9% or so were received as gifts or inheritances. About 64% had been started by the entrepreneur operating the business.

The proportions appear to have been changing slowly but steadily over the past several years. By 2013, the proportion of bought businesses fell by half to about 13%. Given businesses stood at about 5%, roughly the range in which they stood since the early 1990s. In contrast, over three-quarters (76%) of enterpreneurial enterprises were started by their owners.

The striking decline in purchased businesses suggests that the secondary market for owned businesses is shrinking. Perhaps today’s small businesses are much more likely to close up shop than be sold off. The marketplace may be more competitive, and businesses might not be as profitable and thus valuable on secondary markets, so more entrepreneurs may simply opt to close up rather than sell their businesses to someone else.

The small proportion of businesses that have been acquired as gifts, including inheritances is striking. Small enterprise are rarely a vehicle for maintaining familial economic dynasties – most businesses live and die by the entrepreneur that started them. Of course, a successful small business may put an entrepreneur in a position to set up future generations, but these seem to be more the exception than the rule. About 5% of all entrepreneurial enterprises – less than 1% of society – operates a business that they did not build or buy.

These figures suggest that most business people live off of enterprises that they created and nurtured. Inherited businesses are not very commonplace, and the secondary market for businesses seems to be drying up over the long-term.

 

Home Prices and Income

Home prices are high, but how much more expensive than in the past?  Are all homes more expensive, or just homes for rich people?

Home Ownership Rates Roughly Similar

The table below describe changes in home ownership rates across the income scale. Although it looks like home ownership widely fell, these differences are generally insignificant at the bottom of the income scale. Below the 90th income percentile, home ownership rates in 1989 and 2013 are indistinguishable. At the top of the income scale, ownership rates seem to have fallen slightly, but these changes are at the border of statistical significance.

Income Class % Own Homes (1989) % Own Homes (2013)
Bottom 20% 29% 29%
Second-Lowest 20% 49% 45%
Middle 20% 56% 57%
Second-Highest 20% 73% 78%
80% – 90% 82% 86%
90% – 95% 92% 90%
Top 5% 92% 95%

Any difference in home values across the income scale are likely not the product of changes in home ownership rates.

Prices Have Risen Faster at the Lower and Middle End of the Market

The table below compares the median home value among owned homes in each income category. All values are in 2013 inflation-adjusted dollars.

Income Class Median Value of Owned Home (1989) Median Value of Owned Home (2013) Change 1989 – 2013
Bottom 20% $33,200 $100,000 +201%
Second-Lowest 20% $51,200 $125,000 +144%
Middle 20% $63,000 $133,000 +111%
Second-Highest 20% $75,000 $175,000 +133%
80% – 90% $112,800 $250,000 +121%
90% – 95% $167,600 $335,800 +100%
Top 5% $224,000 $646,000 +188%

Home prices rose fastest for those at the bottom of the income scale. On one hand, this means that poorer home owners got the proportionally greatest returns, relative to those higher on the scale. On the other hand, this means that poorer young people have to bear proportionally higher costs to buy a home. Overall, home values doubled to tripled between 1989 and 2013. Of course, incomes did not rise commensurately.

The table below shows how the ratio of home values to income changes during this period. In 1989, most households’ homes cost the equivalent of one year’s salary. Near the bottom end of the income scale, owned homes were two to three times annual salaries. By 2013, home values were double to triple annual salaries, and even higher at the bottom end of the income scale.

Income Class Median Income (1989) Median Home Value:Income (1989) Median Income (2013) Median Home Value:Income (2013)
Bottom 20% $11,313 2.9 $14,203 7.0
Second-Lowest 20% $26,398 1.9 $28,407 4.4
Middle 20% $47,139 1.3 $45,654 2.9
Second-Highest 20% $74,290 1.0 $76,090 2.9
80% – 90% $111,248 1.0 $121,945 2.1
90% – 95% $158,764 1.1 $183,021 1.8
Top 5% $285,473 0.8 $361,579 1.8

Homes have certainly gotten more expensive, relative to incomes.  In relation to incomes, housing costs have roughly doubled, and in some cases tripled.  The rise in home values seems to have been greatest for the middle of the income scale.

Welfare Spending: Most Goes to Seniors

More elderly people receive social assistance, and their social assistance is far more generous.

What is interesting is that a core constituency of these anti-welfare initiatives are in fact society’s biggest welfare recipients: the elderly. We can illustrate that fact by digging into data from the Survey of Consumer Finances.1

Varieties of Welfare

Our first step involves asking, what is welfare? Here, it includes economic transfers from taxpayers to households that qualify for government programs designed to help families who do not earn enough money on their own. There are three major types of social payments programs in the US:

The Distribution of Social Spending, from Center on Budget and Policy Priorities
The Distribution of Social Spending, from Center on Budget and Policy Priorities

Many readers might object to the inclusion of Social Security as a type of welfare program, on the grounds that it is a system into which its recipients have paid. In fact, Social Security is a PAYGO system, in which today’s seniors’ checks are principally funded by the payroll deductions taken from the working populations’ paychecks. Today’s recipients’ payroll deductions were used to pay for the Social Security checks of those who were elderly during their working years. These are current transfers from the working to (largely) non-working population.

Program Costs

One way to gauge how much people are getting from these programs is to look at their costs. The figure to the left was taken from Center on Budget and Policy Priorities

Social Security is by far the most expensive, absorbing nearly one-quarter of the federal budget, along with a substantial part of state budgets. It roughly costs as much as all health care spending (post-Affordable Care Act) and more than double the amount of all remaining social safety net programs combined.

Number of Recipients

The figure below describes the percentage of households receiving any money from these three social payments programs:

g1

The number of people receiving all three types of assistance fell in numbers over the 1990s. In part, this was a byproduct of an extraordinarily long prosperity and strong labor markets. When jobs are bountiful and better paid, fewer people need public assistance.

Since 2001, America’s welfare system – at least the part of it that provides money to poor people – expanded considerably. Social Security recipients grew as a group since the mid-1990s. The proportion of households receiving welfare as cash payments (e.g., TANF, SNAP, traditional welfare checks) has grown steadily since 2001. Workers’ benefits have grown since the 2008 crisis.

Program Generosity

The figure below describes the median take from each of these three program types. This is the median receipts from each program type among all households receiving any money.

g2

The median take from Social Security is by far the biggest and fastest-rising. In 1992, it was just over $8100. By 2013, it stood at $16,740. Payments more than doubled, and did so at a time when incomes stagnated.

The take from workers’ programs also doubled, from $2,480 to $5,120.  This growth has been fueled by largely temporary expansions after the 2008 financial crisis (e.g., extending eligibility for Unemployment Insurance). Many of these program extensions have since expired, and they will probably be lower when the 2016 survey’s results are released.

Welfare, on the other hand, has not grown. In 1992, median welfare take stood at $2940. By 2013, it was $2,660.

Poor Young People Aren’t Major Social Assistance Recipients

America has a large welfare state, but it primarily serves the elderly. Social payments to the working age population and the poor are far less generous. Payments to the poor are low and have been shrinking, probably as a result of the political demonization of these programs.

In contrast, senior-targeted social programs have been generous. This generosity has been growing at a time when the government has been trying to cut other assistance programs.


  1. These analyses were aided by the excellent R resources made available by Anthony Damico

Does Crime Prevail in Big Liberal Cities?

Do liberal policies promote crime? Crime rates appear to be highest in America’s South, a conservative stronghold.

Rising crime is a theme that often emerges in this election.  Of course, this argument runs contrary to FBI crime statistics, which show that it has been declining for decades.  This fall is depicted in the below figure, taken from Gallup:

pewcrime
From Lydia Saad (2011)

Still, this line is used often in this election’s political discourse.

Portraying Democratic Strongholds as Plagued by Crime

Take this CNN interview of Newt Gingrich during the Republican National Convention.  It is an excerpt from a segment form John Oliver, which is certainly worth watching in its entirety:

Note that Gingrich cites large urban areas in regions that have proportionally more non-whites and tend to lean Democrat: Baltimore, Chicago, and Washington, DC.  Presumably, the underlying message is that these problems fester in there because liberal policies allow it to fester.  One might infer, by extension, that the solution is to implement conservative policies, which are taken to be the opposite of liberal policies.  Assume liberal policies promote crime, then conclude that their opposite discourages it.

Rates Are Often Higher in Smaller Metro Areas in Republican Strongholds

The problem is that most of the country’s areas that are most severely plagued are in America’s South, which is also the country’s conservative stronghold.  Moreover, crime appears to be a bigger problem in smaller metro areas, rather than the country’s biggest ones.

The interactive map below is constructed from the FBI’s UCR database. It shows the distribution of different crimes’ rates, the cities in which they are most common, and a map that describes how the incidence varies across the country’s metro areas.

Note that much of the Northeast has generally low rates, despite the region’s very large metro areas and their penchant for liberal policies.  If conservative policies  — like aggressive policing and highly punitive sentencing — were effective means to control crime, then wouldn’t conservative strongholds have lower rates?

Of course, all of this is simplistic.  A variety of factors shape these rates.  Many of high-crime areas have high poverty rates, for example.  However, if the causes of aggressive policing and sentencing do not determine crime rates, then why address the crime problem with them?