Sorry (Poor) Kids: The Road From Rags To Riches No Longer Passes Through College

Tyler Durden's picture

... at least statistically speaking. Yes, outlier cases will always exist and there will always be a rags to Geology 101 to riches story somewhere, but as the following fascinating and very much damning (the entire higher learning industry of the US) diagram from Reuters demonstrates, colleges, in their once vaunted role of a "great equalizer for the classes" as defined over a century ago by Horace Mann, no longer exist.

The chart in question?

What does the above chart imply? Nothing more than that for the vast majority of people, college degrees are the modern-day equivalent of very, very expensive snake oil.

Yes: colleges are sold to you as the critical stepping stone on the path to wealth and prosperity, but sadly the empirical evidence demonstrates that when it comes to an actual, demonstrable income effect, only the wealthiest people actually benefit from a degree! The lowest fifth of household by income see their change in income decline by 10%, while the middle fifth sees an incremental 2.1% drop. Where do incomes rise? When you are already wealthy and belong to the highest fifth of households by income: there, going to college boosts your income by an additional 15.1%

And since for the great majority (excluding the richest of course), a college education is funded by even more implied poverty, i.e. debt, which is merely the opportunity cost of future income and wealth, the simply math works out as follows: college - a tool for making the rich richer, the poor poorer, and virtually everyone (excluding the richest, again, of course) a debt slave into a system that beguiles impressionable youths with dreams of money and power, and cheap low interest private and Federal student loans, only for the illusion to shatter upon graduation and all those wonderful jobs demanding a piece of paper procured in exchange for 4 years of debt-funded classes, turn out to have been a mirage all along...

In short: the only hope for a great many people is nothing but a debt trap.

From Reuters:

Just to stay even, poorer Americans need to obtain better credentials. But that points to another rich-poor divide in the United States. Educators call it the scholastic "achievement gap." It has been around forever, but it's getting wider. Lower-class children are getting better educations than before. But richer kids are outpacing their gains, which in turn is stoking the widening income gap.


"Now, we're in a situation where we need to educate everyone at the level of the elite in the past," said Paul Reville, Massachusetts secretary of education. "We don't have a system to do that."


It's an academic arms race, and it can be seen in the sharply contrasting fortunes of Weston, a booming Boston suburb, and the blue-collar community of Gardner, where a 20-foot-tall chair sits on Elm Street as a monument to the town's past as a furniture-manufacturing hub.


* * *


This correlation between educational attainment and financial fortune is clear statewide. In the bottom fifth of Massachusetts households, the average income dropped 9 percent in the past 20 years to $12,000. They fared worse despite a sizable gain in educational attainment: The share of people 25 and older in the group with a bachelor's degree rose to 18.5 percent from 11 percent.


The same thing happened to the middle fifth. Their average income slipped 2 percent to $63,000. The share of adults with a bachelor's rose to 43 percent from 29 percent.


But the top fifth saw their average income leap 17 percent, to $217,000, as their education levels soared far higher. Three-quarters had a bachelor's, up from half. Fully 50 percent had a post-graduate degree, up from a quarter.


* * *


"All the evidence shows that children born to two highly educated, high-income people tend to obtain the highest level of academic achievement," said Sum. "At the bottom, where the mom is not that well-educated and tends to have lower income, children tend to do worse."


* * *


Curtis Dorval, works at Walmart as well. When he was a senior at Gardner High School, Curtis was class president. He was accepted by Northeastern University, a private school in Boston.


But Northeastern cost $50,000 a year, which Curtis, then 17, felt he couldn't afford. Instead, he enrolled last year at the state-run University of Massachusetts Amherst, studying mechanical engineering. With the help of a scholarship for graduating in the top quarter of his class, Curtis paid $10,200 a year.


He got some help from his father, who had saved up $10,000 in stocks and bonds from his days in the hospital job. This summer, that money ran out and Curtis left UMass to enlist in the Air Force. He will serve as an airman - and hopes to use military benefits to pay for parttime university classes.


"The main reason was I needed a way to pay for college," he said.

Most don't go that route: most opt for cheap, low-rate debt. Debt which as of this moment, merely at the Federal level has by now surpassed $1 trillion, and which, as we reported first, and as subsequently was confirmed by the media, is seeing its delinquency rate explode, now that the clash between hope and the sad jobs reality is front and center for ever more once hopeful students.

Just like with the "gun-control" debate, there is no simple solution.

Tanner Skenderian, president of this year's Weston High graduating class, joked in a speech about her town's hyper-competitive students. "Welcome to Weston, where third graders take AP Physics, middle-school students sleep for 42 minutes a night, and the most competitive race run by the 2012 boys state champion track team was the race to get the cookies in the cafeteria," she said.


Competition in high school was fierce. In one advanced placement physics class, she said, six of the 12 students were the children of professors at MIT, America's premier science university.


But Tanner thrived there. She also found school to be a source of support after her father died while she was in middle school. This fall, she headed to Harvard, after spending the summer interning at the governor's office. Given the job market, she said she may apply to business or law school after graduating.


Weston, in short, gave her an education that raises her odds of joining her mother - who owns a marketing and event-planning company - at the top of America's economic ladder. 


"We're very fortunate that we're rather affluent," she said. "We have more opportunities, more technology, more classes and more teachers."

And that's just it: if you are affluent, if you had opportunities, you will still and always be successful, and college will merely emphasize this. For everyone else, degrees are rapidly converting into an almost instantly amortizing piece of paper paid for with tens of thousands of student debt which, incidentally, is non-dischargeable.

Unfortunately, and just like with "gun-control", the fundamental issue at hand is not education, not even the pursuit of the American Dream (or lack thereof), but the gradual realization that the myth of American exceptionalism is just that. And in a world as globalized and interconnected as ours, breaking from the middle (or, heaven-forbid) lower classes, into the upper strata os society is becoming virtually impossible.

It goes without saying that any society in which class mobility is shunted, and in which classes (already engaged in class warfare based on wealth, sex, race, religion, background, job, or any other vertical that served America so well during its "melting pot" days) are denied even the ability to dream and hope of improving their lives through hard work (either current, or deferred - and prepaid for by student loans) is one whose days are numbered.

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hedgeless_horseman's picture



I'm teaching my kids to understand value in the form of entrepreneurship, while providing them with book after book after book that they use to educate themselves.

I hope you are around to hire them when the time comes, because other employers and professional licensing boards may not see things your way.

Harbanger's picture

Professional licensing boards have become another money racket, ask any professional who now has to take regular continuing education classes.

Missiondweller's picture

Tell me about it. I took my CFP courses through the local college but realized it was nothing but a marketing conduit for Kaplan/Schesser.

NotApplicable's picture

They are going to hire themselves. Besides, those "employers" of which you speak are either going to be either direct government jobs, or indirect government jobs via some contractor, and my kids are well aware of the futility of self-enslavement under the guise of earning a living in this fashion.

As for licensing boards, well, those will be the driver of the real economy, the black market. IMO, the future will look very little like the facade of the past. Rather than "getting ahead" via the rat-race trap, people will prosper by appearing too poor to support the state (or any other robbers).

(Oh, and I did not junk you.)


Rearranging Deckchairs's picture

You're right about the only decent jobs being government. I made it to the second round for a county job that only required a bachelor's. Needless to say my professional advanced degree and specific experience with the issues they deal with should have made me a top candidate. Made it to second round interviews final 150. When there are 30 spots for 3,000 applicants though nepotism and preferences for prior gov't workers ( I actually had a prior govt job it just was with my city not my county d'oh) make it tough for anyone without connections.

I might try for it again next year as there don't seem to be a whole lot of other jobs with benefits with an actual career track enabling increased earnings. A buddy of mine who applied with me got a spot and told me that a majority of the people had applied for several years in a row.




Harbanger's picture

My grandfather told me there was a time not too long ago in the US when Govt jobs were basically for losers that couldn't make it in the real world.  Then again, this is not the real world.

Rearranging Deckchairs's picture

Yeah well I was raised that they make less money than the private sector. But I have to tell you that if there aren't any private sector professional jobs and there are a few public sector jobs then they make more.

I don't relish having to be a government parasite but the health insurance premiums and care costs only go in one direction. I have freedom and am self employed currently. I don't make tons but I don't commute, have my dog in the office, have my weekends free and only answer to clients who are temporary instead of a constant boss. But with the health insurance increases and the increase in the cost of care in general I can see the writing on the wall best to get myself a good 35 hr a week government job with health insurance included or my standard of living will plummet. 



otto skorzeny's picture

I make $500/hr pimping out my mom on the internet

mkhs's picture

Sounds great, what's the link?

mercenaryomics's picture

My Grandfather told me the dollar used to be - get this - pegged to gold! Bernanke assured us gold is just some silly "tradition."

We've since shipped GPa out to a home after Bernanke said it wouldn't cost anything since he's going to just the print medicare payments next year anyway. 

Freddie's picture

 ...US when Govt jobs were basically for losers that couldn't make it in the real world. 

Now it is just for corrupt losers.

brettd's picture

"Connections" are highly overrated.  

Your "pal" may get you in the door---maybe even to meet the family....

But they'll remember your good sides...and your bad sides.

No "pal" will go to the mat for you (however funny and charming)

if you're not going to advance their cause.

are we there yet's picture

Puts a whole new twist to the term 'gold diggers' for women who seek a diamond diploma in college.

Never One Roach's picture

I am still optimistic at earning $125k per annum with my Basket Weaving (graduate) degree from Western Upstate Arkadelphia Junior College to repay my $85,000 'higher education' student loans.

Winston Churchill's picture

Hope thats underwater basket weaving.

I hear thats where the money is.

grunk's picture

Learn to weld.

The Gooch's picture

Learn to think while you're welding.

yabyum's picture

Get a two year RN from a community college (low cost).

Harbanger's picture

Maybe there was some money in it before they socialized healthcare.  Not so much in the future.

pursueliberty's picture

Not exactly true, but I don't see wages falling in the field like some others.

I'm a RN, no longer working as one, but do maintain my hours of CE.  I was debating on a masters in mental health/admin or going the self employed practitioner route.  I once met a employee of a state psych ward who was making almost six figures in a area where that buys a nice life, a good benis to boot.


There is a existing shortage of RNs in this country that will only get worse over the next 20 years, with or without dropping wages.  It isn't like they are overpaid now by any means.

Harbanger's picture

One day you'll be talking about the good ole days...Ever hear of the Medicare Payment Advisory Commission? The wages of all people in the medical arena will become a national budget issue. 

blunderdog's picture

If you can't beat 'em, join 'em.  Obviously since most of the economy is in the shitter, you should just go into a government-subsidized industry.

What could possibly go wrong?

Harbanger's picture

The Govt is so indebted, it can't subsidized itself right now but for monopoly money. 

brettd's picture

And do some plumbing on the weekends (golden time!)

otto skorzeny's picture

the companies that are clamoring for welders around here are only paying 11 or 12 bucks an hour and they bitch one wants to do it-i've done it and it's not too fun

The Gooch's picture

An eleven dollar an hour welder will give you an eleven dollar an hour weld.

That (in the parlance of our times) gives us twice as many employed welders!- Paul Krugman

NotApplicable's picture

I'd guess that many companies at this point could care less, as they're merely trying to survive in a world filled with capital destruction.

A.k.a. the "fish rots from the head down."

knowless's picture

I'm a welder, i work in that pay range, im in my mid twenties, we compete with china to supply parts to union facilities where assembly jobs probably make twice what i do starting(in the same city that i live in..). trust me, labor that cheap (here or China, only barely gives a shit.

You most definitely get what you pay for.

I would not buy a car made between 2009-now if i was looking for something that wasnt horrible.

Fuck apostrophes.

knowless's picture

That's not to say i would discourage the path, but jobs are tight, and in right to work states the unions might not let you in, definitely a craps shoot with some companies, it becomes the revolving door temp shtick quick if you can't find a shop you can work with.

Harbanger's picture

Jobs are tight but there's work out there if you're self employed.  I worked a couple of summers for a local ironworker who basically just had a pickup truck with a welder, a torch and some tools.  He was busy all the time making railings and iron repairs.  I don't know how much he made but I know his wife stayed home with his kids, he had a nice house and he always had a wad of cash on him.

BooMushroom's picture

Being paid in cash without invoices or paper trails is always a good way to go.

blunderdog's picture

This is the essence of the commoditization of labor or skill-set. 

ANYONE can learn to weld.  Thus your ability to demand a premium for that skill is very limited--there's virtually no barrier to entry to the market for a motivated laborer.

In theory, welders who are highly expert SHOULD be able to demand higher wages, but that's only true when the consumers are prepared to pay more for the labor than they would for the  repair or replacement of unsatisfactory work.

What would have to change in the way most business is conducted to return meaningful long-term future value to QUALITY?

NotApplicable's picture

As always, unsound money undermines ANY system it infiltrates. The recent article by William Black lays that out completely. An honest business cannot compete, and is either destroyed by the crooks, or has to join in the game in order to survive.

I remember watching the NASDAQ bubble occur at the same time as corporate profits shifted to the financial sector (even for non-financial firms!).  When a company can earn more from selling bonds and front-running Ben with the money than they can from operating their owm core business, well, that's major fucking trouble.

Quality is only valued in a world with scarce captial. Otherwise, it's all about getting in on the flow.

The Gooch's picture

Anyone can learn to weld, but not anyone can do it WELL.

You are absolutely correct on long-term QUALITY.

"At the peak of Tool/Die/Moldmaking circa 1999 ish the workload shifted... the "repairs" became more prevalent than the "production" of tooling - and quality materials. (i.e. tooling steel, mold steel) We were repairing tolerances in the tenths on shit made in China with what looked like files and carpenter squares-  for less than what would have been making it right the first time". -The Gooch. ©2001 

Planned obsolescence of craftsmen.

Toolmakers, bitchez.


brettd's picture

Find people who produce quality and thru them you will find the people who want and will pay for quality.

It might be an artist--- engineering firm---stock car racing team--- with very specific needs.

And "quality" might not mean how pretty your weld may have to do with lots of other things:

Your attitude.  Punctuality. Honesty.  Flexability. Creativity.  Availability (I'll be here in 30 minutes...)

TuPhat's picture

That's what I did.  Took night classes at the high school after I graduated.  Got a job as a welder that payed my college expenses.  Graduated high school in 1970.  I think it might not work out quite so well now but my son is Working at Walmart and going to Texas A&M in engineering.  I do help him some but he won't be deep in debt when he graduates this spring.  His prospects for getting a job however Don't look that great.

Citxmech's picture

When I first went to college, the biggest expense was the income I couldn't earn while I was in class.  Now, it's so damn expensive, it takes multiple years of working a good job to pay back each year of school.

FWIW, I got a LibArts BA, and then went back and got AS at a techical school (A&P lic.).  Allowed me to get ahead of all the book-smart kids, because I could do things with my hands, and put me ahead of all the JC kids because I could I could read and communicate with management.  Worked really well until I went back again for grad school.  Now I'm white-collar (which is good especially as I get older) but the debt burden has made my take-home almost a wash from before.  

I don't envy the dilemma kids face nowadays. 

otto skorzeny's picture

more like the road from rags to even more tattered rags

Vashta Nerada's picture

I think the future value of a degree is highly correlated to the major selected.  I tend to think that a baccalaureate in either Central African Rhythmic Studies or Wymyns' Issues of the 21st Century would be harder to monetize.

A. Magnus's picture

The whole point of college is for the spawn of the elite to learn how to glad hand and pickle puff their way into good 'business deals' through the fraternity system. In my college the frat guys would have whole file cabinets full of old exams taken by their brethren which were available for cannibalization come term paper time. They literally barely showed up to class except to get their barely passing finals cobbled together by plagiarism accepted by the academic 'authorities.'

And people wonder why this country's going down the shitter...

Rainman's picture

Didn't by any chance go to Penn, didja ?

A. Magnus's picture

Nope, Rochester Institute of Technology...

Seasmoke's picture

Same for me , but I learned to be buddies with them and yet never joined. So i didnt have to funnel a keg or jerkoff in a circle. Find the loopholes is the key to getting ahead.

Boy I miss those days of knowing the test before I walked into the class. Hardest thing was to decide how many to get wrong. Second hardest was should I be second or third person finished.

Dr. Engali's picture

It's all by design. Uncle Sam will have plenty of debt serfs to choose from when they gear up for the next war. Have a 30 year college debt? Enlist now and we will forgive it after a four year tour of the desert.  They better be signing up for the Air force now before the only thing left is being a grunt in the infantry.

Sovereignbeing's picture

For the creative mind there are always options. If the debt accrued is too much, the former student can take his diploma to some foreign country and not return to pay the debt back. To sign up as a slave for the military industrial complex would be the last thing I would think of.

Chappy's picture

Does this hold true for real degrees?  If you get an engineering degree or other techincal, don 't your income prospects go up?

carlnpa's picture

Real degrees used to pay real good money.

That's gone now, we polluted the workforce with millions of H1B workers from foreign countries.  Supposedly well educated at 1/3 the cost of home grown scientists and engineers.

The whole business class has screwed the middle class for the past 25 years in every position imaginable.

H1B continues today, its illegal, abused and very common.

spinone's picture

H1B visa holders education is for shit.  They need constant handholding and supervision, and are no match for an educated american.