Rising inequality in the distribution of income is a major challenge facing our nation. By almost any measure, income inequality has worsened since 1980.
It is not just a national issue, however. Increasingly, it is hitting closer to home. In 1990, household income in Orange County was 7.5 times greater in the 90th as compared to the 10th percentile. But by 2014, that ratio increased to 10, pointing to greater inequality between rich and poor. The only other counties in the nation to see income disparity widen even more were San Francisco, San Jose and Fairfield County in Connecticut.
There are many reasons for growing income disparity, but undoubtedly differences in educational outcomes are a major part of it. In their book, “The Race between Education and Technology,” Claudia Goldin and Lawrence F. Katz of Harvard University provide evidence that 60 to 70 percent of increasing inequality is explained by the difference in earnings for college versus high school graduates.
A 2014 Federal Reserve Board of San Francisco study, for example, determined that the annual earnings premium of a college grad over a high school grad is about $29,000. That gap has increased over time. Through a retirement age of 67, the average annual premium of graduating college results in an inflation-adjusted lifetime earnings premium of $930,000 for each grad, discounted to the present. The gap widens even more over the course of a person’s life.
In Orange County, only 35.6 percent of Hispanic students graduating high school in 2015-16 had completed the “A-G” high school course requirements for entry into the University of California or Cal State University systems, compared to 77.1 percent of Asian and 59.0 percent of white, non-Hispanic students. This lower A-G completion rate for Hispanic students means fewer will graduate from college, thereby reducing their future income stream. This suggests that inequality in income distribution also follows closely along racial/ethnic…