Mickey Kaus’s Important Chart

by Ramesh Ponnuru

Senator Mike Lee’s Joint Economic Committee staff has produced a new report about the decline of “associational life” in America. (Robert VerBruggen has written about the report for NRO, as have I for Bloomberg View.) Mickey Kaus says the report is all well and good, but should not distract us from the hard material facts disclosed in what he calls “the most important chart around when it comes to explaining contemporary politics.”

The chart shows trends in wages for Americans in different educationally-defined groups from 1973 to 2005. People with college and advanced degrees are doing significantly better than they were then, people with “some college” (they attended but didn’t get degrees) are doing roughly the same as they did then, and people without high-school diplomas are doing significantly worse. The gap between the wages of the most- and least-schooled Americans has therefore widened a lot.

Kaus argues that these “vicious class divisions” may play a role in the decline in social capital the report documents. He also says the chart strengthens the case for reducing low-skilled immigration, which may—here he cites a 1996 article by the Harvard labor economist George Borjas—explain as much as a third of “the recent decline in the relative wages of less-educated native workers.”

I agree with Kaus on many of these points: Economic outcomes are diverging based on education, that divergence is politically important, it may well be lurking behind the trends in voluntary associations, and low-skilled immigration should be curtailed, in part to raise wages at the bottom of the labor market.

But I think the picture in the chart is, happily, overdrawn. First, I strongly suspect that it’s using too high an estimate of inflation—which wouldn’t change the size of the gap, but would make everyone’s results look worse. Second, there’s a problem of composition worth keeping in mind. It was much more common to be a high-school dropout in 1973 than in 2005. We would expect the later group of high-school dropouts, a more distinctive part of the population, to have a worse relative economic standing just because of that change in volume.

Less happily, I think Kaus overestimates how much difference reducing low-skilled immigration can make to this picture. Borjas’s most recent research concludes that immigration has reduced the earnings of high-school dropouts and college graduates while raising that of people with only high-school diplomas. The latter group is one that (as his chart shows) has been doing reasonably well, and the former group is only 11 percent of the over-25 population.

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