My friend, Joe Piccirillo, posted this link from CNN Money about how we shouldn’t blame the 1% for being so rich. The reason rich people are rich is that they’re college educated and “doing the right things”.
If we all get a college education, we can make it into the 1%, right? Well, maybe. But then again, maybe not.
Taking the median income earned from high school, 2-year associate degree and 4-year bachelor degrees, we see a pretty interesting picture. Since 1990, median salaries across all education levels (black line) have not changed much (which you would expect as all numbers are adjusted to 2009 levels). While over a 4 year span post high school graduation, people who work straight out of high school (blue line) in 1990 made considerably less than people who have an associate degree (green line), and even less than those with bachelor’s degree (red line).
This stays true to the theory that more education improves your earning potential. However, this does not take into account the cost of said education. When you include the cost of 2-4 years of education against your earning potential after this four year time period, you have a completely different picture.
While in 1990, having a college education (either a bachelor’s degree or associate’s degree) was definitely an improvement over just a high school diploma, the story is completely different in 2010. There is almost no difference in getting a higher education degree versus just having a high school diploma, when you take into account the cost of tuition. Furthermore, this is an underestimate of the cost of education, as I don’t include peripheral costs of education (room and board, books, fraternity dues, etc.).
So, clearly having a college degree doesn’t make any difference anymore. Why are the 1% in the 1% then? My best guess is that they don’t have to pay for their education, as they have parents who can foot the bill. If you look at the first graph, it’s very clear that an education improves your overall earning power. However, that’s assuming you don’t have to pay for it. If you do, it almost makes no difference whether you have a degree or not. So, the only reason the 1% are in the 1% is that they’ve already been in the 1%. So, since it doesn’t look like education will help whatsoever, my suggestion on how to get into the 1%: Marry into it.