Please turn on JavaScript

Brooks Wilson's Economics Blog: Glaeser on Earnings Gap

Tuesday, September 13, 2011

Glaeser on Earnings Gap

I read the following paragraph in Triumph of the City by Edward Glaeser and found two ideas that might interest my students. First, why did less-skilled workers in Cleveland and Detroit earn more than more-skilled workers in Boston and Minneapolis. Glaeser suggests that unionization of low-skilled workers is at least a partial explanation. Second, the earnings gap between skilled and unskilled workers has grown causing increased earnings inequality.  As you read the paragraph, ask yourself if, from a normative perspective, it is more fair that less skilled worker who organized through unions earned more than workers who increased their skills set.

The connection between urban skills and urban productivity has grown steadily stronger throughout the developed world since the 1970s. In those days, less-skilled places that were filled with highly paid, unionized factory workers often earned more than more-skilled areas. In 1970, per capita incomes were higher in industrial areas like Cleveland and Detroit than in better-educated metropolitan areas like Boston and Minneapolis. Over the past thirty years, however, the less-skilled manufacturing cities have faltered while the more-skilled idea-producing cities have thrived. In 1980, men with four years of college earned about 33 percent more than high school graduates, but by the mid-1990s, that earnings gap had increased to nearly 70 percent. Over the past thirty years, American society has become more unequal, partly because the marketplace increasingly rewards people with more skills.


  1. At times it is hard for me to process information in a normative perspective, partly because I do not tend to think like others! I do however think that the gap percentage increase over the years is due to the insistence of the economy promoting College will not go anywhere without an education...etc. Unions (impetus) were created in the one of many reconstruction periods to protect the workers ability to be compensated for work completed. Scenario: A 45 year old man working at the same distribution facility for 30 years and is unionized. A 22 year old man freshly graduated from college, applying for the same position as the 45 year old man. Who is more educated? A man with 30 years experience in the field, or someone who has just learned 4 years of text no experience? I think the roles of society play to forget those who built this world before our generations. Yes education is important in my generation , hence why I am taking this class... but it was not in their generation so now we ostracize, and say that their experience and labor is worth less? Think about it... this could be your dad, your grandfather, mother, or grandmother being forced to work harder for the ability to barely survive...

  2. in addition to my earlier comment I do not think it is fair in either case. I think a person should be compensated on the ability, experience, and their willingness to obtain the information needed to successfully complete the job required.

  3. shea brown15/9/11 9:31 AM

    I would have to agree with Dena. Society today has made it easier for kids right out of high school to go to college. Which I think is great and I think having a degree is something you should be proud of. Thats why I am going back to school, so I can show my girls that if I can do it anyone can. But at the same time it is just a certificate saying you know what you are doing, but some people still don't know when it comes to a particular job. Men and Women 30years ago did't need a college education to get a good job, and now in todays society it seems like they are being at fault. I would be upset if it was my mother or father who was not given the same opportunity as a younger person with a degree, when they have way more experience in that particular field.
    I would have to say tho that I do not think it is really fair either. Someone who has experience in a job should have the same equal opportunity as someone with a college education, and someone with a college education should not be turned down in some jobs because lack of experience. Thats what there are training classes for in most jobs today. The only thing that should matter is that the job is being done in a correct way, and that what ever the job may be, the costumers are satisfied.

  4. Randy Novak16/9/11 10:27 AM

    On the surface, I have to agree with the other comments on this post. Where I work, they push having a degree as a requirement for advancement. I have over 20 years of experience in my career field, but I will be unable to progress past a second tier management position without a degree. And it is usually the experienced guys who wind up training the new hired college grads. Another item the article doesn't seem to address is the hourly wage verse a salary wage. I made a lot more money when I was hourly as I got paid time and a half for any hour over 40 worked. As a salary employee, my hourly wage is slightly higher, but I do not get overtime until I reach a 48 hour platuea, and then it is just single hour pay at that point. In this instance, if money was the only driving factor in the short run, it would have been more beneficial to me not to be pursuing a degree. However, what I think is being overlooked is the big picture. The new college grad of today will someday have 10 years of experience and a degree. I think having the degree doesn't necessarily mean you "have learned", but demonstrates the ability "to learn." As many of you know, obtaining a degree takes time, effort and dedication. As the world is changing, especially in the technology world, employers are looking for individuals that adapt, problem solve, etc.

  5. I agree with most of the opinions stated here - what I dont agree with is the statement that a degree is just a piece of paper saying you know what youre doing. Randy said it well when he said that a degree means that you have the ability to learn. People work hard for their degrees, and yes the actual degree may be just a piece of paper, but the dedication and work that goes into that piece of paper goes way beyond that.

    With the way our society is now, I understand why we are all pushed to get an education, but I'm sure that at times it hurts our companies or individuals growth to write off a job candidate because they dont have a dgeree. I firmly believe in my education, and I can say that I respond well to my classes, but some people strive in other areas of their life and profession. A person with an Associates degree wont be given the same oppurtunities as someone with a Bachelors, but they may be innovative and intelligent enough to do the job just as well. I dont believe its the degree that predicts how well someone will do in a job, but how hard they are willing to work at it. A degree just proves that they have been willing to work hard at something.

  6. Fernando Zambrano2/10/11 7:02 PM

    I think it is less fair but i would also think the same if it were the other way around. First i would like to say that no matter how hard education is pushed, college is not for everyone. Therefore how well someone will do in a job or how much they should earn should not be based on a degree alone. True, those that earn a degree can be seen as hard workers who got out and wanted to better their skills/interests and were paid with a degree, that is why we say they EARNED their degree. But like i have said, there are also those who would like to do the same but simply just cannot. People learn in many different ways and not everybody can learn in a college or classroom setting. There are those that could possibly fail every class they take, but if put directly in their field of interest they can excel among others. Experience is a valuable thing that has been shun down by how much education someone has. But neither is greater than the other. Education is now one of the most powerful things out there today. As college is not for everyone, sometimes it is only so because a person is not willing to work hard. An education is not something that is easily acquired, it is an investment of many factors such as money and time the two main ones. That time spent studying and going to class could have been used to make money working in a full time job. So as we see, both experience and education are very valuable but one cannot be seen greater than the other.