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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laughing_swordfish's picture

Why is it -

Jews are 2% of the US population but 30% of the top 1% of income earners and 60% of the top 1/10th of %?

Answer - financialization and influence.

"As always the wandering Jew will always the enemy of any nationally conscious people be, and one can co-operate with international Jewry as one "co-operates" with bubonic plague"  - Alfred Rosenberg, The Myth of the Twentieth Century

A principled effort to restructure the economy to INCLUDE the rest of us begins with a pricipled Jew hatred...


JOYFUL's picture

edit...another dup - reason - everything on the ZH site hangs, and it's impossible to know if a comment has been sent... it's getting harder and harder to get anything through this "Great China Firewall" I believe my experience here may be useful as precursor to the throttling of the western internet that will surely come along with this next post-election phase of taking away the right to self-defense.

Excerpted from conversation with VPN support yesterday:

"Since the recent crackdown on VPN providers in China, some of our customers are having intermittent connection problems. We are actively rolling out fixes. However, it is possible that these fixes also become blocked, in which case we'll respond with new solutions. It is a bit of a cat and mouse game."

Cat and mouse...get ready...Tom&Jerry goes livetime in Merika, as Unca Joe Lieberman & Co. work overtime to ensure public security.

Spastica Rex's picture

I'm a college educated (multiple times) former middle class poor person and I've told my kids to hold off on college until they've first learned a trade, even though I've already saved enough money to put them both through. It's their money and they'll make their own choices.

Shizzmoney's picture

A college degree is all a part of the corporate bribery. 

It protects monopolies, encourages more nepotism within organizations, and leaves millions of serfs, ahem, debt.

I have a job - albeit one that doesn't pay well.  It required a college degree.  I still got it.....why? I lied about having a college degree, and they didn't care (or didn't check) and hired me anyways.

I'm 30 and out of debt.  Will I make more money than a person with a degree? No.  

But will the majority of the little off what I make be shuttled off to a loan shark (Wall Street banks, Sallie Mae)? No...and you can argue with the exception of a few specialized degrees....the EV for all of these kids getting law degrees and masters in B.A. isn't worth the time with a) the job competition and b) stagnant wages and benefits (there's a reason people are clamouring to the government for health care relief).


sharky2003's picture

I had a revelation while in the shower a few weeks ago. 

I got played.

Here I was, all this time...thinking I was doing the right thing by getting an education, staying out of trouble, and getting a real-world-applicable job in order to have my chance at the American Dream, white picket fence and all.  

But then I read these articles about people on welfare using the money- MY MONEY the government took from me- to buy designer duds, and how the single mom with 2 brats earning 30k/yr essentially lives the same lifestyle as a family of 4 on 70k.

It pisses me off.

Why the fuck did I put in all that time and effort if I'm not really any better off than the high school drop out and her brood of illegitimate children? 

That is NOT the American Dream.

I got played. 

blunderdog's picture

No, you're just bitter and angry. 

If you really think being poor is so great, just go do it for awhile.  The idea that people on welfare are living the same lifestyle as someone earning $70K is completely false.

I don't usually make strong positivistic assertions like that without really good evidence, but I'm not about to mince words on this one:  completely false.

(The article you're referring to described one person in the UK.  You'll never be as successful as she was in maximizing her benefits from "the system.")

Yes_Questions's picture



Sharky: the government does not take your money to give it to welfare recipients and if you don't know why there is an IRS and FED, yes you've been played.  Time to also get educated.  Start with some Geography:

Bretton Woods

Jeckyll Island


Blunder:  Good fucking post, as per usual.

johnnynaps's picture

Hey, A few years back I was working 50 hours a week making $45k a year. My welfare subordinate was working 20 hours a week making $14k a year with free housing, $600 a month in foodstamps and free medical. She always seemed happy, especially after an 8500 dollar tax return. She fixed her car, got a new computer and a treadmill. 3 years later, my car still sits in the driveway! Just sayin!

GreatUncle's picture

Everybody so wants to believe that education for the masses was good for your children as told to you by your politicians.

Political double talk, keeps the unemployment figures down by all those in the 14 - 21 category still in education.

JR's picture

The ladders of upward mobility in the U.S.A. lead to nowhere because the international bankers have offshored Americans’ jobs in their power grab for a world monetary system and a "house of world order.”

During the years from 2002 to the end of 2011, “3.5 million middle class manufacturing jobs were lost.

“Over the entire nine years, only 48,000 new jobs were created for architects and engineers.” 

Writes Norman Augustine: “In a global, knowledge-driven economy there is a direct correlation between engineering education and innovation. Our success or failure as a nation will be measured by how well we do with the innovation agenda, and by how well we can advance medical research, create game-changing devices and improve the world.”

It was planned of course. Samuel P. Huntington, Micheal Crozier and Joji Watanuki wrote in 1975 in “The Crisis of Democracy”: “[T]o restore a more equitable relationship between government authority and popular control, [there must be] centralized economic and social planning…centralization of power within Congress…a program to lower the job expectations of those who receive a college education.”

Economist Paul Craig Roberts recently pointed out the results of that policy: “When jobs are moved offshore, consumers’ careers and incomes, the GDP and payroll and income tax base associated with those jobs, go with them.

At the same time, Augustine, who is a retired chairman and CEO of Lockheed Martin points out that already, 70% of engineers with PhD’s who graduate from U.S. universities are foreign-born. Increasingly, these talented individuals are not staying in the U.S – instead, they’re returning home, where they find greater opportunities.

Says Augustine: “We're falling behind.

“I’ve visited more than 100 countries in the past several years, meeting people from all walks of life, from impoverished children in India to heads of state. Almost every adult I’ve talked with in these countries shares a belief that the path to success is paved with science and engineering.

In fact, scientists and engineers are celebrities in most countries. They’re not seen as geeks or misfits, as they too often are in the U.S., but rather as society’s leaders and innovators. In China, eight of the top nine political posts are held by engineers. In the U.S., almost no engineers or scientists are engaged in high-level politics, and there is a virtual absence of engineers in our public policy debates.

“Why does this matter? Because if American students have a negative impression – or no impression at all – of science and engineering, then they’re hardly likely to choose them as professions.”

The statistics tell the story.

  • U.S. consumers spend significantly more on potato chips than the U.S. government devotes to energy R&D.
  • In 2009, for the first time, over half of U.S. patents were awarded to non-U.S. companies. (In 1997, a study of the inventors honored in the National Inventors Hall of Fame in Akron, Ohio, revealed that 91% of the world’s greatest inventors worked in America and only 9% in other countries.) 
  • China has replaced the U.S. as the world’s number one high-technology exporter.
  • Between 1996 and 1999, 157 new drugs were approved in the U.S.  Ten years later, that number had dropped to 74.

The World Economic Forum ranks the U.S. #48 in quality of math and science.

In short, the road from rags to riches no longer passes through America; it passes through the Fed.

JOYFUL's picture

If one were to build a case for the planned devolution of the Europoid peoples, and their subsequent recreation as a race of drone-like servants of the moneypower, berift of both soul and self-identity, they would need look no further than your extracts...

"a more equitable relationship between government authority and popular control, [there must be] centralized economic and social planning…centralization of power within Congress…a program to lower the job expectations of those who receive a college education.

So sayeth Huntington, a co-conspirator in the PNAC campaign to utilize Merika as global enforcer in the war against civilization East and West by the sionist entity. Put that quote together with this one:

"challenge regimes hostile to our interests and values" and "to accept responsibility for America's unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles". -  from

and you have it all mapped out...

our security, our prosperity, our principles...your wealth, your blood, your hard, goyish slaves, and you may be selected to enter the ranks of the kapo klass, enforcers of the will of your talmudist overlords!

pragmatic hobo's picture

gee ... I still remember when college was called "higher education", not "job training program".

blunderdog's picture

The majority of the ZH posting audience is not interested in education. 

PGR88's picture

Unlike knee-jerk leftists, they know that education comes in many forms.

blunderdog's picture

I guess you misunderstood the point in context.

Job training isn't "education." Education is about helping you understand and adapt to your world, not about earning money.

SmittyinLA's picture

Imagine the horror of passing an anti-discrimination law against college degree discrimination in employment.



dirtyfiles's picture

Look what all the "educated" did to the world
education has no value if you see it from the market perspective.We are heading back to the free market trade your skills formula not the classroom exam test Russian roulette.

blunderdog's picture

I don't think anyone really believes "college degrees" are going to somehow automatically lead to the highest incomes, but stating the opposite of that assertion isn't warranted either.  The information available today is only going to represent the results of degrees earned 20-30 years ago.

Look at how much has changed in 20 years.

One of the big problems with forming a contemporaneous picture of "reality" based on long-term statistical analysis is that relevant "real-world" details are rarely even recognized until well after the period you're trying to understand.

So today, we can easily claim that college degrees are not good predictors of long-term financial benefit, but what if they are good predictors of long-term happiness?  Or mental health?  Or satisfying social relationships?

Obviously education-level and earning potential just shouldn't be assumed to correlate.  We've known this for a long time, though.

Shizzmoney's picture

Obviously education-level and earning potential just shouldn't be assumed to correlate.  We've known this for a long time, though.

If we lived in a true free market system, it wouldn't.

We don't.....hence why these corrections, common place in simplier days, barely exist today (although not completely eliminated; see: Psy).

dirtyfiles's picture

but happiness is correlated with material success more then less

rosethorn's picture

"Obviously education-level and earning potential just shouldn't be assumed to correlate."


That is what colleges are selling, though; the concept that they do correlate.

Insideher Trading's picture

U.S education is very analogous to housing. Sound strange? Maybe not. If you consider the housing bubble the chief progenitor was a movement mainly led by politics to get everyone in a house, regardless if they could afford it or not. Today with education it is the same. If you have a pulse you can get a loan to get a degree. The great illusion of the liberal leaning equality movement has thrust us into this situation. Students who have no business attending higher education are granted loans to attain degrees that are worthless. The bi product of this equality movement has two venomous side effects: i. the quality of education becomes diluted as the supply of unqualified students creates a demand for the lowest common denominator of teachers; ii. it strips the supply of labor for other sectors of the economy. Why do you think there are plumbers making six figure incomes while the U.S trails the developed world in every educational metric available?

There is some twisted delusion Americans have chosen to adopt where everyone should be looked at as equal and instead of raising the bar we lower it to assuage the discomfort of accepting the fact...we're all not equal after all. Sorry to state the bloody obvious but we didn't all originate from the same gene pool. We are all born with different sets of strengths and weaknesses and this equality movement is a detriment to society as a whole. Perhaps if we didn't spend so much time trying main-stream people with mental illness we wouldn't end up with situations like the guy who thought he was Joker shooting up movie theaters, and the most recent tragedy in Newtown. Instead of focusing on the problem the reaction has been to focus on the symptom (gun related violence) How about we send the crazies to the padded room instead of taking away a legitimate form of self-protection from said nut bags?  To vilify and scapegoat the gun as a source of violence is to declare that pencils spell words wrong.

ClassicalLib17's picture

@insidehertrading,  I think you see the world as it is, simply.  +1  I learned something from your post, thank you

SilverFish's picture

Bottle rocket scientist degrees are worthless.

ADRtrader's picture

"This chart, I do not think it means what you think it means" -- Inigo Montoya


Over the last 21 years, the percentage of Americans with a college degree is up, while incomes are down among all but the top quintile.  So, we don't know from those stats whether college educations are generally unhelpful, or whether those without college educations are doing so poorly that they are dragging down the averages.

Stuck on Zero's picture

I'm starting a new degree program.  It confers a DPhD degree (Deeper PhD) after 39 years of college study.  I want to enlist at least 50 million Americans in this program.  The government will pay for all the room, board, and tuition and at the end of it all you'll rreceive your diploma and immediately go into retirement.


Brokenbroker's picture

I agree with the gist but the inference is alittle off the wealthy whi are going to college arent earning 15% more but the wealthy in general are earning 15% more for whatever reason. Could be that they own more stocks and in general salaries at the top are growing and it happens that more of them are going to college like more people in general are going to college. Basically the gist is correct as the lower classes are being duoed into overpayin for college and indebting themaelves in process. Those in the upper classes have a better chance to get something out of it and what they in general are likely to get salaries that have been getting better iver time. But it doesnt mean the added income goes only to the people who go to college. Or the income that has gotten worse for the lower classes is related to education. It just means the jobs at the lower end of the economy have gotten worse and it is getting harder to find good job for regular people regardless of their education. Basically they are competing with indian and chinese workers and individually they have to get education but as a society educating all these people only means that the value of an education is less. My dad got a degree and that was enough as many of his friends didnt. He could eventually become an executive in a company just by having a degree. Now everyone has a degree so it doesnt guarantee anything.

Aurora Ex Machina's picture

Sigh. Education isn't about projected earnings, it's about making a strata of society that's interesting to talk to, and makes life worth living. Culture, in other words, or if we're being erudite, a multiplicity within a multi-faceted topology.

If you want to be rich, that's an entirely different set of skills - what has happened, and what is broken is that paying out for an expensive MBA has lead to massive pay-offs and non-business types being allowed to run companies. MBA = snake oil, and full of trust-fund horrors who have less humanity than my big toe, and worse still, are given leave to apply badly-understood Masters level theories to major companies for short term gain, with no social or ethical interest in the long term game, and when they're fucking stupid.

The rest, well - the rest is something the business minded people want to spend their money on (and their wives, usually, but being modern, let's say partners, either sex included). If you cut that out, boy your retirement past 42 (hello GS!) is going to be one looooong, boooooring trip to hell.

The current YC culture (esp. in the Valley) about "making it big when you've dropped out of school" is a good model ~ until you realise, most of them have the social skills of a small llama and are completely inept at making societies. Hint: Look at Gate's wife - how the female saved the day there. Same with Zuck. There's a reason the Enlightenment worked. Or, as the Valley would say "Specialisation is for ants": that's fine, if all of the members of society are Renaissance folk, and multi-talented, and building a society (*cough* That'd be Anarcho-syndicalism, but I digress. *cough*).

The fact is, the opposite is true: you're breeding extremely retarded models, that wouldn't pass the 'gom jabbar'. And that's the "elite", for fucks sake, and no "Hipsters" don't count.


The reason? Hmm. Going to get messy, but let's just say: Everyone being equal is not synonymous with everyone having the same talents. The real problem is that you've created a monoculture, where only type will ever prevail, and then lacks the self-awareness to understand you need an ecosystem to hunt in. Worse yet, they're so basic, they can't even concieve of an advanced ecosystem. <<Hello John, how was Belieze? Or, hello Mr. "Using 50-year-old-Soviet-tech-to-get-to-space">> These are infantile dreams, really, from an infantilised culture.

And that infantilisation is largely due to... well. Domesticated animals are easy to control, and easier to milk, let's just say.


"Win or die". Doesn't work, unless you understand ecology. (And no, RAND, not your crappy 1950's models either).


darkpool2's picture

Basic education to University BA/BSc ,yes.....develop critical independent thinking, yes......develop street smarts, yes......strongly encourage entrepreneurial behavior, yes......discourage wage slave employment, yes.

Thats the formula in my book. I wont explain more, because if you dont understand the rest of the line of thinking, then you are beyond help anyway.

pashley1411's picture

I think people should step back a bit more and look at the bigger picture.   With some exceptions, college and degrees are just one aspect of the arms race it takes to earn a good income.  

The article hints at it; connections have always been and will always remain huge, exposure to technology (and the hotest/fastest technology at that), mobility to move opportunities, the capital to invest in a career field.   

ZH'ers should instinctively realize that any promise by a goverrnment agency to make the world a better place, especially a university, is just so much bs.     Yes, put a degree + connections + the rest together, and the future can look quite bright indeed.   But the government can't do anything except in the most ineffective manner and at the greatest cost.

ramacers's picture

somrthing to be said for the school of hard knocks.

PGR88's picture

Want to become rich?  learn to be an industrial electrician, or a commercial beekeeper, or a diesel mechanic.  Take responsibility and work hard.  

I guarantee you these things will be in demand regardless of how badly Bernanke screws this country.

Seasmoke's picture

+1 beekeeper. I would love to do that.

PGR88's picture

I know beekeepers with 50 employees and close to $10 million in sales....

shovelhead's picture

My son is an undergrad focused on medicine. I suggested radiology as a major over microbiology because in a situation where the money runs out and he can't go for MD, he can always use his Masters as a rad assistant and still pull over 100k yr.

I assume he'd rather look at pictures of assholes than stick his fingers in them.

I would.

harleyjohn45's picture

A good harley mechanic can do quite well, if he has his own shop.

Seasmoke's picture

No class in my entire life did I ever learn more than from a street corner.

harleyjohn45's picture

I had a hot water heater changed out yesterday,  water heater new was 411.00,  installation cost was 658.19.  It was a tough job and it took the plumber 6 hours total time.  Plumbing is damn good wages.

Yes_Questions's picture



I never met a poor one.  Same for Electricians.

Angus McHugepenis's picture

I have great respect for plumbers. Electricians, not so much. I am NOT an electrician but after 22 years I feel I know more about electricity than the average recent graduate from electricity college.

Electricians cause us more grief than landscapers. We would rather be delayed by 2 MONTHS because of a landscaper than get a 5 minute call from an electrician that doesn't know what they're doing. We've NEVER been called by a plumber asking which pipe goes where.

Husk-Erzulie's picture

Hey guys, (gals)

Ann Barnhardts' affect may turn some people off but for a down and dirty, easy to understand lesson in real political economy and a few belly laughs along the way (her description of bho at around 1:30 is priceless) you can't beat her.  Your grandmother can understand this (and it will piss her off).  Say what you want man; she's real, she's fired up, she's wicked smart, and there is something endearingly all american about her (she's practically channeling Dagny Taggert for chrissake).  This vid deserves way more than 6k views.

Husk appreciates all yer excellent links and is just payin it forward baby :-)

Yes_Questions's picture



So, the top fifth completed schooling that networked them into jobs designed to make incomes in lower 80% pay less. 

They were taught to steal?  

mkhs's picture

That and they inherited daddy's company.

icanhasbailout's picture

College taught me to smoke pot and get laid, and that was about the only worthwhile thing for the whole experience.


Monedas's picture

For a good government job .... black is OK .... parchment is so so !  

Monedas's picture

A low information person .... the new way of saying stupid !

Angus McHugepenis's picture

There's gotta be some material for a Monedas 1929 Comedy Jihad in there somewhere?

waiting... waiting...