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<h1 itemprop="headline">Education, Earnings Inequality, and Future Social Security Benefits: A Microsimulation Analysis</h1>
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<div id="hByline">by <span itemprop="author">Patrick J. Purcell, Howard M. Iams, and Dave Shoffner</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr> 75, <abbr title="Number">No.</abbr> 3, 2015 (released August 2015)</div>
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<div id="breadcrumbs" itemscope itemtype="http://schema.org/BreadcrumbList">You are here: <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/" itemprop="item"><span itemprop="name">Social Security Administration</span></a><meta itemprop="position" content="1" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/policy/index.html" itemprop="item"><span itemprop="name">Research, Statistics & Policy Analysis</span></a><meta itemprop="position" content="2" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/policy/docs/ssb/index.html" itemprop="item"><span itemprop="name">Social Security Bulletin</span></a><meta itemprop="position" content="3" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="index.html" itemprop="item"><span itemprop="name"><abbr title="Volume">Vol.</abbr> 75, <abbr title="Number">No.</abbr> 3</span></a><meta itemprop="position" content="4" /></span></div>
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<p id="synopsis" itemprop="description">Over the last three decades, earnings have grown faster for college graduates than for workers without a <span class="nobr">4-year</span> college degree. Such wage-growth differentials could affect the Social Security benefits and other retirement income of future retirees. A Social Security Administration microsimulation model, Modeling Income in the Near Term (<abbr>MINT</abbr>), can estimate the distributional effects of Social Security reform proposals under alternative economic scenarios. We use <abbr>MINT</abbr> to estimate the effect of wage-growth differentials by educational attainment on the future earnings and Social Security benefits of individuals born during <span class="nobr">1965–1979,</span> sometimes referred to as “Generation X.” For those individuals, we find that different rates of wage growth by educational attainment would substantially increase the gap in annual earnings between college graduates and nongraduates. Differences in Social Security benefits would increase by a smaller proportion because of Social Security's <span class="nobr">long-term</span> averaging of earnings and its progressive benefit calculation formula. </p>
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<div class="eightypercent">
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<p>Patrick Purcell is with the Office of Retirement Policy (<abbr class="spell">ORP</abbr>), Office of Retirement and Disability Policy (<abbr class="spell">ORDP</abbr>), Social Security Administration (<abbr class="spell">SSA</abbr>). Howard Iams is with the Office of Research, Evaluation, and Statistics, <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>. Dave Shoffner is with <abbr class="spell">ORP</abbr>, <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>.</p>
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<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration.</p>
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</div>
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<h2>Introduction</h2>
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<div class="abbrtable">
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<table role="presentation">
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<caption>Selected Abbreviations</caption>
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<colgroup span="1" style="width:25%"></colgroup>
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<colgroup span="1"></colgroup>
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<tbody>
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<td><abbr>AIME</abbr></td>
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<td>average indexed monthly earnings</td>
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</tr>
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<td><abbr class="spell">AWI</abbr></td>
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<td>average wage index</td>
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</tr>
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<td><abbr class="spell">FRA</abbr></td>
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<td>full retirement age</td>
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</tr>
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<tr>
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<td><abbr>MINT</abbr></td>
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<td>Modeling Income in the Near Term</td>
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</tr>
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<tr>
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<td><abbr class="spell">PIA</abbr></td>
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<td>primary insurance amount</td>
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</tr>
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<td><abbr>SIPP</abbr></td>
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<td>Survey of Income and Program Participation</td>
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</tr>
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<tr>
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<td><abbr class="spell">SSA</abbr></td>
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<td>Social Security Administration</td>
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</tr>
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</tbody>
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</table>
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</div>
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<p>Social Security benefits are the most widely received source of income among Americans aged 65 or older, and they are the largest source of income for more than half of aged beneficiaries (Social Security Administration [<abbr class="spell">SSA</abbr>] 2014). In light of Social Security's importance to current and future retirees, economic trends that could affect workers' retirement benefits are of interest to <abbr class="spell">SSA</abbr>, Congress, and the public. One such trend is growing inequality in earnings.</p>
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<p>In general, Social Security benefits increase with career-average earnings, and earnings increase with education and work experience.<sup><a href="#mn1" id="mt1">1</a></sup> Many personal, social, and economic variables affect lifetime earnings, but social scientists have long recognized the central role played by educational attainment. More than a half-century ago, economists Jacob Mincer (1958) and Gary Becker (1964) proposed theories of human capital in which the knowledge, skills, and abilities acquired through formal education strongly influence both employment and earnings. Those theories continue to inform much research in economics, sociology, and public policy today.</p>
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<p>Economists and other social scientists typically are cautious about attributing causation to relationships that may be mere correlations. Nevertheless, the empirical evidence gathered over more than 50 years is so compelling that asserting a cause-and-effect relationship between education and earnings would likely encounter little disagreement among those who study labor markets (Card 1999, 2002; Heckman, Lochner, and Todd 2003).<sup><a href="#mn2" id="mt2">2</a></sup></p>
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<p>The rapidly rising cost of higher education might call into question whether attending college continues to be worth the expense. However, recent research suggests that earning a <span class="nobr">4-year</span> college degree remains a good investment for the average student. Researchers at the Federal Reserve Bank of San Francisco found that college graduates fully recoup the costs of higher education by age 40, on average; and that in inflation-adjusted terms, “a college graduate can expect to earn $830,800 more than a high school graduate over the course of a lifetime” (Daly and Bengali 2014). The authors found that the lifetime earnings premium for college graduates resulted not just from higher annual salaries, but also from lower rates of unemployment, even during times of recession. A separate analysis by researchers at the Federal Reserve Bank of New York found that the financial return of a college education “has remained high in spite of rising tuition and falling earnings because the wages of those without a college degree have also been falling, keeping the college wage premium near an <span class="nobr">all-time</span> high while reducing the opportunity cost of going to school” (Abel and Deitz 2014).</p>
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<p>If the earnings of college graduates rise more rapidly (or fall more slowly) than the earnings of workers without a <span class="nobr">4-year</span> degree, earnings inequality will increase—all else being equal. However, earnings inequality in itself is not necessarily bad. Indeed, if earning a college degree did not produce higher lifetime earnings for the typical graduate, acquiring a college degree would not be a worthwhile investment of time and money. In some respects, earnings inequality is like the extra weight that many of us carry around: What matters is how much you have, where you have it, and how fast it is growing.</p>
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<p>Abundant research indicates that the United States has more earnings inequality than other developed nations, that the inequality is evident throughout the earnings distribution (not just between the top 1 percent and everyone else), and that it has grown substantially in recent years (Bowlus and Robin 2004; Lemieux 2006; Goldin and Katz 2007; Autor, Katz, and Kearney 2008; Favreault 2009; Favreault and Haaga 2013; Autor 2014; Mitchell 2014). One dimension along which <abbr>U.S.</abbr> earnings inequality has grown is the difference in annual and lifetime earnings between workers with a <span class="nobr">4-year</span> college degree and those without (Abel and Deitz 2014; Daly and Bengali 2014; Pew Research Center 2014).</p>
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<p>Increasing earnings inequality could have implications for Social Security benefits and income disparity in retirement. Higher rates of earnings growth for college graduates compared with nongraduates would presumably increase income inequality among future retirees.<sup><a href="#mn3" id="mt3">3</a></sup> If the earnings of college nongraduates continue to grow more slowly than economywide earnings, those workers will be less able to save for retirement in <span class="nobr">401(k)</span> plans and other retirement accounts. In such a scenario, the role played by Social Security in helping lower-earning workers achieve an adequate standard of living in retirement would be even greater than it is today.</p>
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<p>The method established by Congress for calculating Social Security benefits indexes a worker's highest 35 years of annual earnings to the year the worker reaches age 60, with the index based on the growth in the national average wage. By design, the benefit formula replaces a higher percentage of career-average earnings for workers with low lifetime earnings than it does for workers with relatively high earnings. Together, these program characteristics distribute Social Security benefits more narrowly around the average benefit than annual earnings are distributed. In other words, there is less inequality in Social Security benefits than there is in earnings. Nevertheless, growing inequality in current earnings inevitably will result in greater inequality in future Social Security benefits. One of our goals is to illustrate the extent of that increase under two specific sets of economic assumptions.</p>
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<p>In this article, we present estimates of the impact of earnings growth differentials between college graduates and nongraduates on projected annual earnings and Social Security benefits. We aim to estimate how the disparity in real earnings growth between college graduates and nongraduates affects future annual earnings and Social Security benefits for persons born from 1965 through 1979, sometimes referred to as “Generation X.” Favreault (2009) estimated the retirement-income distributional effects of higher rates of earnings growth for <span class="nobr">high-wage</span> workers than for <span class="nobr">low-wage</span> workers. To the best of our knowledge, however, our analysis is the first attempt to estimate future Social Security benefits that accounts for the effects of earnings growth differentials between college graduates and nongraduates.</p>
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<h2>Data and Methodology</h2>
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<p>We developed our estimates using an <abbr class="spell">SSA</abbr> microsimulation model called Modeling Income in the Near Term (<abbr>MINT</abbr>). Microsimulation models are widely used by government agencies to analyze the distributional effects of public policy proposals. These models use information about a sample of “micro units” such as individuals, families, or households to estimate how changes in their circumstances, characteristics, or behavior will affect the entire population or a population subset such as workers or retirees. Smith and Favreault (2013a) observe that microlevel data “combined with detailed representations of program rules can inform policy by revealing interactions and trends that more aggregate analyses may fail to capture.”</p>
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<p><abbr class="spell">SSA</abbr> began developing <abbr>MINT</abbr> in the 1990s to estimate the future retirement income of current workers and the distributional effects of proposed Social Security reforms. <abbr class="spell">SSA</abbr> directed the development of <abbr>MINT</abbr> with assistance from the Brookings Institution, the <abbr>RAND</abbr> Corporation, and the Urban Institute. <abbr>MINT</abbr> can simulate the effects of a wide range of policy alternatives and economic scenarios on individual and family income by linking longitudinal survey data from the Census Bureau's Survey of Income and Program Participation (<abbr>SIPP</abbr>) to Social Security earnings records. <abbr>MINT</abbr> combines the rich social and demographic data available from the <abbr>SIPP</abbr> with the accuracy of <abbr class="spell">SSA</abbr>'s earnings records.</p>
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<p>The simulation results we present were produced using <abbr>MINT</abbr> version 7 (<abbr>MINT</abbr>7). <abbr>MINT</abbr>7 simulations start with a representative sample of the population aged 31 or older in 2010. The model matches records from the 2004 and 2008 panels of the <abbr>SIPP</abbr> to Social Security earnings records through 2010.<sup><a href="#mn4" id="mt4">4</a></sup> We restricted our analysis to individuals born from 1965 through 1979 whose records from the 2004 and 2008 panels of the <abbr>SIPP</abbr> were successfully matched to Social Security earnings records, a sample consisting of 23,868 persons. The <abbr>SIPP</abbr> data include the demographic characteristics of survey respondents during the period <span class="nobr">2004–2010,</span> when most members of Generation X were in their 30s and 40s.</p>
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<p>For each individual, <abbr>MINT</abbr> independently projects employment status, earnings, marital status, fertility, onset of disability, retirement status, and retirement income (Smith and Favreault 2013b). <abbr>MINT</abbr> projections account for the earnings distributions both within and between birth cohorts. In addition to earnings and Social Security benefits, <abbr>MINT</abbr> projects family income from sources such as interest, dividends, pensions, Supplemental Security Income payments, income from nonspouse coresident family members, noncash income, and imputed rental income.<sup><a href="#mn5" id="mt5">5</a></sup> The model projects the sources and amounts of retirement income from age 55 until the projected date of death, emigration, or nursing home entry.</p>
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<p>To simulate future employment and earnings, <abbr>MINT</abbr> requires detailed information about workers' past earnings, their marital and fertility histories, and other characteristics such as education and disability status. In addition, the model requires assumptions about future inflation and interest rates, wage growth, and trends in mortality and disability rates. <abbr>MINT</abbr>7 uses Social Security records through 2010 as its source information about workers' past earnings. It incorporates assumptions about future demographic and economic trends from the intermediate-cost projections presented in the <i>2012 Annual Report of the Board of Trustees of the Federal <span class="nobr">Old-Age</span> and Survivors Insurance and Federal Disability Insurance Trust Funds</i> (Board of Trustees 2012), hereafter called the <i>Trustees Report.</i> The <abbr>SIPP</abbr> provides data on the demographic traits of the <abbr>U.S.</abbr> population.<sup><a href="#mn6" id="mt6">6</a></sup></p>
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<p><abbr class="spell">SSA</abbr>'s Office of the Chief Actuary prepares annual estimates for the Board of Trustees of the revenues and expenditures of the Social Security trust funds over the next 75 years. <abbr>MINT</abbr>7 uses the projected interest rates, inflation rates, wage growth, and mortality and disability rates that appear in the <i>Trustees Report.</i> The Chief Actuary prepares these estimates under three sets of economic and demographic assumptions, referred to as the <span class="nobr">low-,</span> <span class="nobr">intermediate-,</span> and <span class="nobr">high-cost</span> scenarios.<sup><a href="#mn7" id="mt7">7</a></sup> The <i>Trustees Report</i> describes the intermediate-cost assumptions as reflecting the Trustees' best estimate of future experience, with the <span class="nobr">low-cost</span> and <span class="nobr">high-cost</span> alternative demographic and economic assumptions included “to show a wide range of possible outcomes, because assumptions related to these factors are subject to uncertainty” (Board of Trustees 2012, 35).</p>
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<p>Economic projections in the <i>Trustees Report</i> include the real (inflation-adjusted) rate of growth in the national average wage index (<abbr class="spell">AWI</abbr>).<sup><a href="#mn8" id="mt8">8</a></sup> For the period <span class="nobr">2020–2050,</span> the intermediate-cost projection in the <i>2012 Trustees Report</i> assumes an average annual inflation rate of 2.8 percent and average annual real wage growth of 1.2 percent. The <span class="nobr">low-cost</span> scenario assumes 1.8 percent inflation and 1.8 percent real annual wage growth. The <span class="nobr">high-cost</span> scenario assumes 3.8 percent inflation and 0.6 percent real annual wage growth. <abbr>MINT</abbr>7 incorporates the intermediate-cost assumptions in its baseline simulation, and the low- and <span class="nobr">high-cost</span> scenarios establish suitable boundaries for assumptions that could be used in alternative simulations.</p>
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<p> <abbr>MINT</abbr> projects annual earnings in one of two ways, depending on the earner's age. For persons aged younger than 55, <abbr>MINT</abbr> matches the subject individual's earnings record with that of another individual who has similar characteristics but is 5 years older. The model splices the earnings from the older person's record onto that of the younger person, then wage-indexes annual earnings within each <span class="nobr">5-year</span> band to the <span class="nobr">5-year</span> period for which it has matched the person-records of the earnings “donor” and “recipient.” For persons aged 55 or older, <abbr>MINT</abbr> uses a multivariate regression equation to project earnings. In the baseline simulation, the <abbr class="spell">AWI</abbr> grows at the rate assumed under the intermediate-cost assumptions in the <i>Trustees Report.</i> We report the results of that simulation as well as those of an alternative scenario in which we assume the earnings of college graduates grow faster than the <abbr class="spell">AWI</abbr> and the earnings of workers without a college degree grow more slowly than the <abbr class="spell">AWI</abbr>.<sup><a href="#mn9" id="mt9">9</a></sup></p>
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<p>Although <abbr>MINT</abbr>7 includes all participants in the 2004 and 2008 panels of the <abbr>SIPP</abbr> who were born in the period <span class="nobr">1926–1979,</span> we restrict our analysis to persons born <span class="nobr">1965–1979,</span> or Generation X.<sup><a href="#mn10" id="mt10">10</a></sup> Those individuals were <span class="nobr">31–45</span> years old in 2010, and thus were still <span class="nobr">17–31</span> years away from first eligibility for Social Security retired-worker benefits at age 62. With a projection period of that length, alternative rates of earnings growth could have a substantial impact on our simulations of future earnings and Social Security benefits.</p>
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|
<p>In our baseline simulation, we project real earnings to grow at an annual rate of 1.2 percent. In our alternative simulation, we adjust future rates of earnings growth to reflect above-average growth rates for college graduates and below-average growth rates for workers without a <span class="nobr">4-year</span> college degree. We selected rates of growth for the two groups that maintain, when weighted by the 2010 distribution of earnings by educational attainment, the 1.2 percent overall average rate of real earnings growth that we assume in the baseline simulation. In both simulations, we assume a 2.8 percent annual rate of inflation, following the intermediate-cost projections in the <i>2012 Trustees Report.</i> In each simulation, we project earnings for members of the <span class="nobr">1965–1979</span> birth cohorts in 2011 and later. We present results for 2020 (at ages <span class="nobr">41–55),</span> 2030 (at ages <span class="nobr">51–65),</span> 2040 (at ages <span class="nobr">61–75),</span> and in 2050 (when the youngest members of these birth cohorts will attain age 71).</p>
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<p>For our analysis, we divide the population into two groups: those who have a <span class="nobr">4-year</span> college degree and those who do not. The first group includes individuals with advanced degrees as well as those with no more than a bachelor's degree. The second group comprises individuals who did not finish high school; high school graduates; and individuals with some college, including associate's degree holders. Using two broad education categories simplifies the presentation of our results without materially affecting the outcomes of our simulations.<sup><a href="#mn11" id="mt11">11</a></sup></p>
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<p>Although choosing alternative rates of earnings growth for college graduates and nongraduates is necessarily somewhat arbitrary, we establish several constraints to assure that the alternative rates we choose are reasonable. First, the rates must fall within the range of real earnings growth rates assumed in the <i>2012 Trustees Report</i> under the <span class="nobr">low-cost</span> projection (0.6 percent) and the <span class="nobr">high-cost</span> projection (1.8 percent). Second, we choose rates that, when weighted by the 2010 distribution of earnings between college graduates and nongraduates, would result in a weighted average annual growth rate of 1.2 percent for all workers in the <span class="nobr">1965–1979</span> birth cohorts—the same rate that we assume for all workers in the baseline simulation.<sup><a href="#mn12" id="mt12">12</a></sup> Consequently, any differences in real annual earnings between the baseline and alternative simulations can be attributed to differences in the rates of earnings growth between the two educational-attainment groups, and not to differences in the overall national average rate of earnings growth in the two simulations. Finally, from the possible combinations of earnings growth rates for college graduates and nongraduates that satisfy the first two conditions, we choose the two rates that, when rounded to the nearest 0.1 percent, would produce the greatest difference between college graduates and nongraduates.</p>
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<p>Because <abbr>MINT</abbr>7 includes actual earnings from Social Security records through 2010, the first year for which the model simulates earnings is 2011. Our alternative simulation differs from the baseline only in that for each year from 2011 forward, we apply annual rates of real wage growth of 1.6 percent and 0.7 percent, respectively, to the projected earnings of college graduates and nongraduates. We present projections of earnings covered by Social Security in 2020, 2030, 2040, and 2050—that is, after 10, 20, 30, and 40 years of different rates of wage growth for college graduates and nongraduates.<sup><a href="#mn13" id="mt13">13</a></sup> The model projects that by 2050, when the youngest members of Generation X will be 71 years old, only 21 percent of the surviving members of these cohorts will be working. Therefore, we focus our discussion on earnings in 2020, 2030, and 2040, for which the model projects employment rates of 82 percent, 72 percent, and 43 percent, respectively, for Generation X.</p>
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<h2>Simulation Results</h2>
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<p>In this section, we present model results for three related measures. First, we examine earnings. Then, we look at two primary components of the Social Security benefit calculation. Finally, we address Social Security benefits themselves.</p>
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<h3>Effect on Annual Earnings</h3>
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<p>Table 1 shows projected median earnings of college graduates and nongraduates in the baseline and alternative simulations, expressed as ratios of the national average wage. The ratios can be converted to 2012 dollars by multiplying each ratio by the national <abbr class="spell">AWI</abbr> for the appropriate year.<sup><a href="#mn14" id="mt14">14</a></sup> For example, under the baseline simulation, <abbr>MINT</abbr> projects the median earnings of college graduates in 2020 to be 1.38 times the real national average wage of $52,817—or $72,887—in 2012 dollars.<sup><a href="#mn15" id="mt15">15</a></sup> We focus on median earnings because mean earnings values are skewed by a relatively small percentage of workers with very high earnings. For example, among all workers born from 1965 through 1979, the top 1 percent of earners received 10 percent of all earnings in Social Security–covered employment in 2010. Median earnings—which represent the worker in the middle of the earnings distribution—are more representative of the earnings of the typical worker because the median is not skewed by outliers.</p>
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<div class="table" id="table1">
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<table>
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<caption><span class="tableNumber">Table 1. </span>Median earnings relative to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></caption>
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<colgroup span="1" style="width:27em"></colgroup>
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<colgroup span="4" style="width:5em"></colgroup>
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<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and sex</th>
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<th id="c2">2020</th>
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<th id="c3">2030</th>
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<th id="c4">2040</th>
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<th id="c5">2050</th>
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</tr>
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</thead>
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<tbody>
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<tr class="shaded">
|
|
<th class="stub0" id="r1" headers="c1">National <abbr class="spell">AWI</abbr> (in 2012 dollars)</th>
|
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<td headers="r1 c2">52,817</td>
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<td headers="r1 c3">58,674</td>
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<td headers="r1 c4">65,778</td>
|
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<td headers="r1 c5">73,438</td>
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</tr>
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<tr class="shaded">
|
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<th class="stub0" id="r2" headers="c1">Workers with earnings (%)</th>
|
|
<td headers="r2 c2">82</td>
|
|
<td headers="r2 c3">72</td>
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<td headers="r2 c4">43</td>
|
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<td headers="r2 c5">21</td>
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</tr>
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<tr>
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<td> </td>
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<th colspan="4" class="panelWithSub" id="r3">Baseline simulation</th>
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</tr>
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<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r4" headers="r3">Total</th>
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</tr>
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<tr>
|
|
<th class="stub0" id="r5" headers="r3 r4 c1">Ratio of median earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
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<td colspan="4"></td>
|
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</tr>
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<tr>
|
|
<th class="stub1" id="r6" headers="r3 r4 r5 c1">Graduates</th>
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<td headers="r3 r4 r5 r6 c2">1.38</td>
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|
<td headers="r3 r4 r5 r6 c3">1.37</td>
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|
<td headers="r3 r4 r5 r6 c4">0.84</td>
|
|
<td headers="r3 r4 r5 r6 c5">0.80</td>
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</tr>
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<tr>
|
|
<th class="stub1" id="r7" headers="r3 r4 r5 c1">Nongraduates</th>
|
|
<td headers="r3 r4 r5 r7 c2">0.69</td>
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|
<td headers="r3 r4 r5 r7 c3">0.64</td>
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|
<td headers="r3 r4 r5 r7 c4">0.45</td>
|
|
<td headers="r3 r4 r5 r7 c5">0.54</td>
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</tr>
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|
<tr>
|
|
<th class="stub0" id="r8" headers="r3 r4 c1">Ratio of college graduate-to-nongraduate median earnings</th>
|
|
<td headers="r3 r4 r8 c2">2.00</td>
|
|
<td headers="r3 r4 r8 c3">2.14</td>
|
|
<td headers="r3 r4 r8 c4">1.87</td>
|
|
<td headers="r3 r4 r8 c5">1.48</td>
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</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r9" headers="r3">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="r3 r9 c1">Ratio of median earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r3 r9 r10 c1">Graduates</th>
|
|
<td headers="r3 r9 r10 r11 c2">1.74</td>
|
|
<td headers="r3 r9 r10 r11 c3">1.72</td>
|
|
<td headers="r3 r9 r10 r11 c4">0.96</td>
|
|
<td headers="r3 r9 r10 r11 c5">0.88</td>
|
|
</tr>
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|
<tr>
|
|
<th class="stub1" id="r12" headers="r3 r9 r10 c1">Nongraduates</th>
|
|
<td headers="r3 r9 r10 r12 c2">0.83</td>
|
|
<td headers="r3 r9 r10 r12 c3">0.73</td>
|
|
<td headers="r3 r9 r10 r12 c4">0.49</td>
|
|
<td headers="r3 r9 r10 r12 c5">0.60</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r3 r9 c1">Ratio of college graduate-to-nongraduate median earnings</th>
|
|
<td headers="r3 r9 r13 c2">2.10</td>
|
|
<td headers="r3 r9 r13 c3">2.36</td>
|
|
<td headers="r3 r9 r13 c4">1.96</td>
|
|
<td headers="r3 r9 r13 c5">1.47</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r14" headers="r3">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r15" headers="r3 r14 c1">Ratio of median earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r3 r14 r15 c1">Graduates</th>
|
|
<td headers="r3 r14 r15 r16 c2">1.07</td>
|
|
<td headers="r3 r14 r15 r16 c3">1.09</td>
|
|
<td headers="r3 r14 r15 r16 c4">0.75</td>
|
|
<td headers="r3 r14 r15 r16 c5">0.74</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r3 r14 r15 c1">Nongraduates</th>
|
|
<td headers="r3 r14 r15 r17 c2">0.55</td>
|
|
<td headers="r3 r14 r15 r17 c3">0.55</td>
|
|
<td headers="r3 r14 r15 r17 c4">0.43</td>
|
|
<td headers="r3 r14 r15 r17 c5">0.43</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r18" headers="r3 r14 c1">Ratio of college graduate-to-nongraduate median earnings</th>
|
|
<td headers="r3 r14 r18 c2">1.95</td>
|
|
<td headers="r3 r14 r18 c3">1.98</td>
|
|
<td headers="r3 r14 r18 c4">1.74</td>
|
|
<td headers="r3 r14 r18 c5">1.72</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r19">Alternative simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r20" headers="r19">Total</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r21" headers="r19 r20 c1">Ratio of median earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r22" headers="r19 r20 r21 c1">Graduates</th>
|
|
<td headers="r19 r20 r21 r22 c2">1.43</td>
|
|
<td headers="r19 r20 r21 r22 c3">1.48</td>
|
|
<td headers="r19 r20 r21 r22 c4">0.95</td>
|
|
<td headers="r19 r20 r21 r22 c5">0.93</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r23" headers="r19 r20 r21 c1">Nongraduates</th>
|
|
<td headers="r19 r20 r21 r23 c2">0.66</td>
|
|
<td headers="r19 r20 r21 r23 c3">0.58</td>
|
|
<td headers="r19 r20 r21 r23 c4">0.39</td>
|
|
<td headers="r19 r20 r21 r23 c5">0.44</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r24" headers="r19 r20 c1">Ratio of college graduate-to-nongraduate median earnings</th>
|
|
<td headers="r19 r20 r24 c2">2.17</td>
|
|
<td headers="r19 r20 r24 c3">2.55</td>
|
|
<td headers="r19 r20 r24 c4">2.44</td>
|
|
<td headers="r19 r20 r24 c5">2.11</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r25" headers="r19 r20 c1">Difference from baseline projection of college graduate-to- nongraduate median-earnings ratio (%)</th>
|
|
<td headers="r19 r20 r25 c2">8.5</td>
|
|
<td headers="r19 r20 r25 c3">19.2</td>
|
|
<td headers="r19 r20 r25 c4">30.5</td>
|
|
<td headers="r19 r20 r25 c5">42.6</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r26" headers="r19">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r27" headers="r19 r26 c1">Ratio of median earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r28" headers="r19 r26 r27 c1">Graduates</th>
|
|
<td headers="r19 r26 r27 r28 c2">1.81</td>
|
|
<td headers="r19 r26 r27 r28 c3">1.86</td>
|
|
<td headers="r19 r26 r27 r28 c4">1.08</td>
|
|
<td headers="r19 r26 r27 r28 c5">1.03</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r29" headers="r19 r26 r27 c1">Nongraduates</th>
|
|
<td headers="r19 r26 r27 r29 c2">0.79</td>
|
|
<td headers="r19 r26 r27 r29 c3">0.66</td>
|
|
<td headers="r19 r26 r27 r29 c4">0.42</td>
|
|
<td headers="r19 r26 r27 r29 c5">0.49</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r30" headers="r19 r26 c1">Ratio of college graduate-to-nongraduate median earnings</th>
|
|
<td headers="r19 r26 r30 c2">2.29</td>
|
|
<td headers="r19 r26 r30 c3">2.82</td>
|
|
<td headers="r19 r26 r30 c4">2.57</td>
|
|
<td headers="r19 r26 r30 c5">2.10</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r31" headers="r19 r26 c1">Difference from baseline projection of college graduate-to- nongraduate median-earnings ratio (%)</th>
|
|
<td headers="r19 r26 r31 c2">9.0</td>
|
|
<td headers="r19 r26 r31 c3">19.5</td>
|
|
<td headers="r19 r26 r31 c4">31.1</td>
|
|
<td headers="r19 r26 r31 c5">42.9</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r32" headers="r19">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r33" headers="r19 r32 c1">Ratio of median earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r34" headers="r19 r32 r33 c1">Graduates</th>
|
|
<td headers="r19 r32 r33 r34 c2">1.12</td>
|
|
<td headers="r19 r32 r33 r34 c3">1.18</td>
|
|
<td headers="r19 r32 r33 r34 c4">0.84</td>
|
|
<td headers="r19 r32 r33 r34 c5">0.86</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r35" headers="r19 r32 r33 c1">Nongraduates</th>
|
|
<td headers="r19 r32 r33 r35 c2">0.53</td>
|
|
<td headers="r19 r32 r33 r35 c3">0.49</td>
|
|
<td headers="r19 r32 r33 r35 c4">0.37</td>
|
|
<td headers="r19 r32 r33 r35 c5">0.35</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r36" headers="r19 r32 c1">Ratio of college graduate-to-nongraduate median earnings</th>
|
|
<td headers="r19 r32 r36 c2">2.11</td>
|
|
<td headers="r19 r32 r36 c3">2.41</td>
|
|
<td headers="r19 r32 r36 c4">2.27</td>
|
|
<td headers="r19 r32 r36 c5">2.46</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r37" headers="r19 r32 c1">Difference from baseline projection of college graduate-to- nongraduate median-earnings ratio (%)</th>
|
|
<td headers="r19 r32 r37 c2">8.2</td>
|
|
<td headers="r19 r32 r37 c3">21.7</td>
|
|
<td headers="r19 r32 r37 c4">30.5</td>
|
|
<td headers="r19 r32 r37 c5">43.0</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="5">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="5">NOTES: "College" refers to <span class="nobr">4-year</span> institutions.
|
|
<div class="newNote">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="newNote">Projections are restricted to workers with covered earnings.</div>
|
|
</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>In the baseline simulation, the ratio of the median earnings of college graduates to the median earnings of nongraduates is projected to be 2.00 in 2020, 2.14 in 2030, and 1.87 in 2040.<sup><a href="#mn16" id="mt16">16</a></sup> In the alternative simulation, <abbr>MINT</abbr> projects this ratio to be 2.17 in 2020, 2.55 in 2030, and 2.44 in 2040. The ratio of the median earnings of college graduates to the median earnings of nongraduates in the alternative simulation is higher than that in the baseline simulation by 8.5 percent for 2020, 19.2 percent for 2030, and 30.5 percent for 2040.</p>
|
|
<p>Chart 1 illustrates how the gap in median earnings between college graduates and nongraduates widens in the alternative simulation compared with that of the baseline. The two solid lines show median earnings in the baseline simulation for college graduates (blue) and nongraduates (red). <abbr>MINT</abbr> projects the median earnings of college graduates to be 1.38 times the national average wage in 2020, compared with 0.69 times the average wage for nongraduates. In the alternative simulation (broken lines), the model projects relatively higher median earnings for college graduates in 2020, at 1.43 times the national average wage (blue), and relatively lower median earnings (0.66 times the average wage) for nongraduates (red).</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart1">
|
|
<div class="title">Chart 1.<br>Ratio of median earnings to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></div>
|
|
<div class="scrollChart"><img src="v75n3p15-chart01.gif" alt="Line chart with tabular version below." width="651" height="232" /></div>
|
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
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<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 1. </span>Ratio of median earnings to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></caption>
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|
<colgroup span="1" style="width:12em"></colgroup>
|
|
<colgroup span="4" style="width:5em"></colgroup>
|
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<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Educational attainment and simulation type</th>
|
|
<th scope="col">2020</th>
|
|
<th scope="col">2030</th>
|
|
<th scope="col">2040</th>
|
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<th scope="col">2050</th>
|
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</tr>
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</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Graduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Baseline</th>
|
|
<td>1.38</td>
|
|
<td>1.37</td>
|
|
<td>0.84</td>
|
|
<td>0.80</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Alternative</th>
|
|
<td>1.43</td>
|
|
<td>1.48</td>
|
|
<td>0.95</td>
|
|
<td>0.93</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Nongraduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Baseline</th>
|
|
<td>0.69</td>
|
|
<td>0.64</td>
|
|
<td>0.45</td>
|
|
<td>0.54</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Alternative</th>
|
|
<td>0.66</td>
|
|
<td>0.58</td>
|
|
<td>0.39</td>
|
|
<td>0.44</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="5"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</div>
|
|
<div class="note">NOTES: “College” refers to <span class="nobr">4-year</span> institutions.</div>
|
|
<div class="note">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="lastNote">Projections are restricted to workers with covered earnings.</div>
|
|
</div>
|
|
</div>
|
|
<p>Table 1 also shows the projected median earnings ratios by educational attainment separately for men and women. The projected median earnings of male college graduates exceed those of female college graduates in both the baseline and alternative simulations. Likewise, median male college nongraduates' earnings are projected to exceed median female nongraduates' earnings in all years under both simulations. Chart 2 presents projected median earnings by educational attainment for men and women, respectively, in the baseline and alternative simulations. Both charts also illustrate the extent to which the gap in median earnings between college graduates and nongraduates in the alternative simulation exceeds that of the baseline projection.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart2">
|
|
<div class="title">Chart 2.<br>Ratio of median earnings to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></div>
|
|
<div class="scrollChart"><img src="v75n3p15-chart02.gif" alt="Two line charts, one for men and one for women, with tabular version below." width="680" height="305" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 2. </span>Ratio of median earnings to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></caption>
|
|
<colgroup span="1" style="width:12em"></colgroup>
|
|
<colgroup span="4" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and simulation type</th>
|
|
<th id="c2">2020</th>
|
|
<th id="c3">2030</th>
|
|
<th id="c4">2040</th>
|
|
<th id="c5">2050</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panel" id="r1">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="r1 c1">Graduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r1 r2 c1">Baseline</th>
|
|
<td headers="r1 r2 r3 c2">1.74</td>
|
|
<td headers="r1 r2 r3 c3">1.72</td>
|
|
<td headers="r1 r2 r3 c4">0.96</td>
|
|
<td headers="r1 r2 r3 c5">0.88</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 r2 c1">Alternative</th>
|
|
<td headers="r1 r2 r4 c2">1.81</td>
|
|
<td headers="r1 r2 r4 c3">1.86</td>
|
|
<td headers="r1 r2 r4 c4">1.08</td>
|
|
<td headers="r1 r2 r4 c5">1.03</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="r1 c1">Nongraduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 r5 c1">Baseline</th>
|
|
<td headers="r1 r5 r6 c2">0.83</td>
|
|
<td headers="r1 r5 r6 c3">0.73</td>
|
|
<td headers="r1 r5 r6 c4">0.49</td>
|
|
<td headers="r1 r5 r6 c5">0.60</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 r5 c1">Alternative</th>
|
|
<td headers="r1 r5 r7 c2">0.79</td>
|
|
<td headers="r1 r5 r7 c3">0.66</td>
|
|
<td headers="r1 r5 r7 c4">0.42</td>
|
|
<td headers="r1 r5 r7 c5">0.49</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panel" id="r8">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r9" headers="r8 c1">Graduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r8 r9 c1">Baseline</th>
|
|
<td headers="r8 r9 r10 c2">1.07</td>
|
|
<td headers="r8 r9 r10 c3">1.09</td>
|
|
<td headers="r8 r9 r10 c4">0.75</td>
|
|
<td headers="r8 r9 r10 c5">0.74</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r8 r9 c1">Alternative</th>
|
|
<td headers="r8 r9 r11 c2">1.12</td>
|
|
<td headers="r8 r9 r11 c3">1.18</td>
|
|
<td headers="r8 r9 r11 c4">0.84</td>
|
|
<td headers="r8 r9 r11 c5">0.86</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r12" headers="r8 c1">Nongraduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r8 r12 c1">Baseline</th>
|
|
<td headers="r8 r12 r13 c2">0.55</td>
|
|
<td headers="r8 r12 r13 c3">0.55</td>
|
|
<td headers="r8 r12 r13 c4">0.43</td>
|
|
<td headers="r8 r12 r13 c5">0.43</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r8 r12 c1">Alternative</th>
|
|
<td headers="r8 r12 r14 c2">0.53</td>
|
|
<td headers="r8 r12 r14 c3">0.49</td>
|
|
<td headers="r8 r12 r14 c4">0.37</td>
|
|
<td headers="r8 r12 r14 c5">0.35</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="5"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</div>
|
|
<div class="note">NOTES: “College” refers to <span class="nobr">4-year</span> institutions.</div>
|
|
<div class="note">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="lastNote">Projections are restricted to workers with covered earnings.</div>
|
|
</div>
|
|
</div>
|
|
<p>Because the alternative simulation projects the same rates of earnings growth for college graduates and nongraduates regardless of sex, its gap in earnings between college graduates and nongraduates extends the baseline scenario's gap by roughly the same percentage for men and women; differences mainly reflect the effects of rounding. For example, Table 1 shows that for 2020, the ratio of the median earnings of male college graduates to nongraduates is 2.10 in the baseline simulation and 2.29 in the alternative simulation, a difference of 9.0 percent. Likewise, the ratio of the projected median earnings of female college graduates to nongraduates in 2020 is 1.95 in the baseline simulation and 2.11 in the alternative simulation, a difference of 8.2 percent. For 2030, the projected ratio of college graduate-to-nongraduate median earnings for men is 2.36 in the baseline simulation and 2.82 in the alternative simulation, a 19.5 percent difference. Among women, the corresponding ratios are 1.98 in the baseline and 2.41 in the alternative simulation, a 21.7 percent difference.</p>
|
|
<p>Faster earnings growth for college graduates would increase the difference in earnings not just for workers near the middle of the earnings distribution, but also for workers closer to the top or the bottom of the distribution. Table 2 shows earnings (relative to the national average wage) at the 75<sup>th</sup> percentile and the 25<sup>th</sup> percentile for college graduates and nongraduates under the baseline and alternative simulations. In the baseline simulation, <abbr>MINT</abbr> projects a college graduate with earnings at the 75<sup>th</sup> percentile (among college graduates) to have earnings equal to 2.26 times the national average wage in 2020. The model projects a college nongraduate with earnings at the 75<sup>th</sup> percentile (among workers without a college degree) to have earnings equal to 1.14 times the national average wage. Thus, at the 75<sup>th</sup> earnings percentiles of their respective educational-attainment groups, college graduates would earn almost twice as much as workers without a college degree. <abbr>MINT</abbr> projects this ratio to increase to 2.08 in 2030 and then fall to 1.95 in 2040. In the alternative simulation, the ratio of college graduate-to-nongraduate earnings at the 75<sup>th</sup> percentile is higher than the baseline ratio in all years of the simulation, increasing from 2.16 in 2020 to 2.47 in 2030 and 2.55 in 2040. These are differences from the baseline projection of 8.8 percent, 19.1 percent, and 30.7 percent, respectively. The first panel in Chart 3 illustrates the ratios of earnings to the national average wage for college graduates and nongraduates at their respective 75<sup>th</sup> earnings percentiles under the baseline and alternative simulations.</p>
|
|
<div class="table" id="table2">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 2. </span>Earnings at the 75th and 25th percentiles relative to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></caption>
|
|
<colgroup span="1" style="width:30em"></colgroup>
|
|
<colgroup span="4" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and earnings percentile</th>
|
|
<th id="c2">2020</th>
|
|
<th id="c3">2030</th>
|
|
<th id="c4">2040</th>
|
|
<th id="c5">2050</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr class="shaded">
|
|
<th class="stub0" id="r1" headers="c1">National <abbr class="spell">AWI</abbr> (in 2012 dollars)</th>
|
|
<td headers="r1 c2">52,817</td>
|
|
<td headers="r1 c3">58,674</td>
|
|
<td headers="r1 c4">65,778</td>
|
|
<td headers="r1 c5">73,438</td>
|
|
</tr>
|
|
<tr class="shaded">
|
|
<th class="stub0" id="r2" headers="c1">Workers with earnings (%)</th>
|
|
<td headers="r2 c2">82</td>
|
|
<td headers="r2 c3">72</td>
|
|
<td headers="r2 c4">43</td>
|
|
<td headers="r2 c5">21</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r3">Baseline simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r4" headers="r3">75th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="r3 r4 c1">Ratio of 75th-percentile earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r3 r4 r5 c1">Graduates</th>
|
|
<td headers="r3 r4 r5 r6 c2">2.26</td>
|
|
<td headers="r3 r4 r5 r6 c3">2.18</td>
|
|
<td headers="r3 r4 r5 r6 c4">1.49</td>
|
|
<td headers="r3 r4 r5 r6 c5">1.38</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r3 r4 r5 c1">Nongraduates</th>
|
|
<td headers="r3 r4 r5 r7 c2">1.14</td>
|
|
<td headers="r3 r4 r5 r7 c3">1.05</td>
|
|
<td headers="r3 r4 r5 r7 c4">0.76</td>
|
|
<td headers="r3 r4 r5 r7 c5">1.05</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r8" headers="r3 r4 c1">Ratio of college graduate-to-nongraduate 75th-percentile earnings</th>
|
|
<td headers="r3 r4 r8 c2">1.98</td>
|
|
<td headers="r3 r4 r8 c3">2.08</td>
|
|
<td headers="r3 r4 r8 c4">1.95</td>
|
|
<td headers="r3 r4 r8 c5">1.31</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r9" headers="r3">25th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="r3 r9 c1">Ratio of 25th-percentile earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r3 r9 r10 c1">Graduates</th>
|
|
<td headers="r3 r9 r10 r11 c2">0.69</td>
|
|
<td headers="r3 r9 r10 r11 c3">0.72</td>
|
|
<td headers="r3 r9 r10 r11 c4">0.42</td>
|
|
<td headers="r3 r9 r10 r11 c5">0.33</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r3 r9 r10 c1">Nongraduates</th>
|
|
<td headers="r3 r9 r10 r12 c2">0.34</td>
|
|
<td headers="r3 r9 r10 r12 c3">0.32</td>
|
|
<td headers="r3 r9 r10 r12 c4">0.20</td>
|
|
<td headers="r3 r9 r10 r12 c5">0.12</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r3 r9 c1">Ratio of college graduate-to-nongraduate 25th-percentile earnings</th>
|
|
<td headers="r3 r9 r13 c2">2.03</td>
|
|
<td headers="r3 r9 r13 c3">2.25</td>
|
|
<td headers="r3 r9 r13 c4">2.10</td>
|
|
<td headers="r3 r9 r13 c5">2.75</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r14">Alternative simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r15" headers="r14">75th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r16" headers="r14 r15 c1">Ratio of 75th-percentile earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r14 r15 r16 c1">Graduates</th>
|
|
<td headers="r14 r15 r16 r17 c2">2.35</td>
|
|
<td headers="r14 r15 r16 r17 c3">2.35</td>
|
|
<td headers="r14 r15 r16 r17 c4">1.68</td>
|
|
<td headers="r14 r15 r16 r17 c5">1.59</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r18" headers="r14 r15 r16 c1">Nongraduates</th>
|
|
<td headers="r14 r15 r16 r18 c2">1.09</td>
|
|
<td headers="r14 r15 r16 r18 c3">0.95</td>
|
|
<td headers="r14 r15 r16 r18 c4">0.66</td>
|
|
<td headers="r14 r15 r16 r18 c5">0.84</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r19" headers="r14 r15 c1">Ratio of college graduate-to-nongraduate 75th-percentile earnings</th>
|
|
<td headers="r14 r15 r19 c2">2.16</td>
|
|
<td headers="r14 r15 r19 c3">2.47</td>
|
|
<td headers="r14 r15 r19 c4">2.55</td>
|
|
<td headers="r14 r15 r19 c5">1.89</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r20" headers="r14 r15 c1">Difference from baseline projection of college graduate-to- nongraduate 75th-percentile earnings ratio (%)</th>
|
|
<td headers="r14 r15 r20 c2">8.8</td>
|
|
<td headers="r14 r15 r20 c3">19.1</td>
|
|
<td headers="r14 r15 r20 c4">30.7</td>
|
|
<td headers="r14 r15 r20 c5">44.0</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r21" headers="r14">25th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r22" headers="r14 r21 c1">Ratio of 25th-percentile earnings to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r23" headers="r14 r21 r22 c1">Graduates</th>
|
|
<td headers="r14 r21 r22 r23 c2">0.72</td>
|
|
<td headers="r14 r21 r22 r23 c3">0.78</td>
|
|
<td headers="r14 r21 r22 r23 c4">0.48</td>
|
|
<td headers="r14 r21 r22 r23 c5">0.39</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r24" headers="r14 r21 r22 c1">Nongraduates</th>
|
|
<td headers="r14 r21 r22 r24 c2">0.32</td>
|
|
<td headers="r14 r21 r22 r24 c3">0.29</td>
|
|
<td headers="r14 r21 r22 r24 c4">0.17</td>
|
|
<td headers="r14 r21 r22 r24 c5">0.09</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r25" headers="r14 r21 c1">Ratio of college graduate-to-nongraduate 25th-percentile earnings</th>
|
|
<td headers="r14 r21 r25 c2">2.25</td>
|
|
<td headers="r14 r21 r25 c3">2.69</td>
|
|
<td headers="r14 r21 r25 c4">2.82</td>
|
|
<td headers="r14 r21 r25 c5">4.33</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r26" headers="r14 r21 c1">Difference from baseline projection of college graduate-to- nongraduate 25th-percentile earnings ratio (%)</th>
|
|
<td headers="r14 r21 r26 c2">10.9</td>
|
|
<td headers="r14 r21 r26 c3">19.5</td>
|
|
<td headers="r14 r21 r26 c4">34.5</td>
|
|
<td headers="r14 r21 r26 c5">57.6</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="5">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="5">NOTES: "College" refers to <span class="nobr">4-year</span> institutions.
|
|
<div class="newNote">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="newNote">Projections are restricted to workers with covered earnings.</div>
|
|
</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart3">
|
|
<div class="title">Chart 3.<br>Ratio of 75th- and 25th-percentile earnings to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></div>
|
|
<div class="scrollChart"><img src="v75n3p15-chart03.gif" alt="Two line charts, one for 75th percentile and one for 25th percentile, with tabular version below." width="680" height="305" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 3. </span>Ratio of 75th- and 25th-percentile earnings to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2020–2050</span></caption>
|
|
<colgroup span="1" style="width:12em"></colgroup>
|
|
<colgroup span="4" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and simulation type</th>
|
|
<th id="c2">2020</th>
|
|
<th id="c3">2030</th>
|
|
<th id="c4">2040</th>
|
|
<th id="c5">2050</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panel" id="r1">75th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="r1 c1">Graduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r1 r2 c1">Baseline</th>
|
|
<td headers="r1 r2 r3 c2">2.26</td>
|
|
<td headers="r1 r2 r3 c3">2.18</td>
|
|
<td headers="r1 r2 r3 c4">1.49</td>
|
|
<td headers="r1 r2 r3 c5">1.38</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 r2 c1">Alternative</th>
|
|
<td headers="r1 r2 r4 c2">2.35</td>
|
|
<td headers="r1 r2 r4 c3">2.35</td>
|
|
<td headers="r1 r2 r4 c4">1.68</td>
|
|
<td headers="r1 r2 r4 c5">1.59</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="r1 c1">Nongraduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 r5 c1">Baseline</th>
|
|
<td headers="r1 r5 r6 c2">1.14</td>
|
|
<td headers="r1 r5 r6 c3">1.05</td>
|
|
<td headers="r1 r5 r6 c4">0.76</td>
|
|
<td headers="r1 r5 r6 c5">1.05</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 r5 c1">Alternative</th>
|
|
<td headers="r1 r5 r7 c2">1.09</td>
|
|
<td headers="r1 r5 r7 c3">0.95</td>
|
|
<td headers="r1 r5 r7 c4">0.66</td>
|
|
<td headers="r1 r5 r7 c5">0.84</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panel" id="r8">25th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r9" headers="r8 c1">Graduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r8 r9 c1">Baseline</th>
|
|
<td headers="r8 r9 r10 c2">0.69</td>
|
|
<td headers="r8 r9 r10 c3">0.72</td>
|
|
<td headers="r8 r9 r10 c4">0.42</td>
|
|
<td headers="r8 r9 r10 c5">0.33</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r8 r9 c1">Alternative</th>
|
|
<td headers="r8 r9 r11 c2">0.72</td>
|
|
<td headers="r8 r9 r11 c3">0.78</td>
|
|
<td headers="r8 r9 r11 c4">0.48</td>
|
|
<td headers="r8 r9 r11 c5">0.39</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r12" headers="r8 c1">Nongraduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r8 r12 c1">Baseline</th>
|
|
<td headers="r8 r12 r13 c2">0.34</td>
|
|
<td headers="r8 r12 r13 c3">0.32</td>
|
|
<td headers="r8 r12 r13 c4">0.20</td>
|
|
<td headers="r8 r12 r13 c5">0.12</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r8 r12 c1">Alternative</th>
|
|
<td headers="r8 r12 r14 c2">0.32</td>
|
|
<td headers="r8 r12 r14 c3">0.29</td>
|
|
<td headers="r8 r12 r14 c4">0.17</td>
|
|
<td headers="r8 r12 r14 c5">0.09</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="5"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</div>
|
|
<div class="note">NOTES: “College” refers to <span class="nobr">4-year</span> institutions.</div>
|
|
<div class="note">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="lastNote">Projections are restricted to workers with covered earnings.</div>
|
|
</div>
|
|
</div>
|
|
<p>Similar trends are projected for the ratio of the earnings of college graduates to those of nongraduates at the 25<sup>th</sup> earnings percentile. In the baseline simulation, <abbr>MINT</abbr> projects that a college graduate with earnings at the 25<sup>th</sup> percentile among college graduates will have earnings equal to 0.69 times the national average wage in 2020. The model projects that a nongraduate with earnings at the 25<sup>th</sup> percentile among nongraduates will have earnings equal to just 0.34 times the national average wage. Thus, among workers earning at the 25<sup>th</sup> percentile of their respective educational-attainment groups, college graduates would earn twice as much as nongraduates. As shown in Table 2, <abbr>MINT</abbr> projects that ratio to increase to 2.25 in 2030 and then fall slightly to 2.10 in 2040. In the alternative simulation, the ratio of college graduate-to-nongraduate earnings at the 25<sup>th</sup> percentile is projected to be 2.25 in 2020, 2.69 in 2030, and 2.82 in 2040. These are differences of 10.9 percent, 19.5 percent, and 34.5 percent, respectively, from the baseline-projected ratios. The second panel in Chart 3 illustrates the ratios of earnings to the national average wage for college graduates and nongraduates at their respective 25<sup>th</sup> percentiles under the baseline and alternative simulations.</p>
|
|
<h3>Effect on Components of the Social Security Benefit Calculation</h3>
|
|
<p>Social Security retired-worker benefit amounts are calculated using average indexed monthly earnings (<abbr>AIME</abbr>). Only earnings up to the maximum amount subject to Social Security payroll taxes each year are included in the <abbr>AIME</abbr> computation.<sup><a href="#mn17" id="mt17">17</a></sup> Amounts earned in years before reaching age 60 are indexed to growth in the national average wage, and earnings at age 60 and later are entered into the computation at their nominal values. <abbr>AIME</abbr> is computed by dividing the sum of the worker's 35 highest indexed annual earnings amounts by 420, the number of months in 35 years. Some workers have fewer than 35 years with covered earnings; the <abbr>AIME</abbr> calculation simply treats years with no covered earnings as zero-earnings years.</p>
|
|
<p>The worker's <abbr>AIME</abbr> is used to calculate the benefit to which he or she would be entitled at the age of eligibility for full benefits, the full retirement age (<abbr class="spell">FRA</abbr>).<sup><a href="#mn18" id="mt18">18</a></sup> This benefit is called the primary insurance amount (<abbr class="spell">PIA</abbr>). The monthly benefit a retired worker actually receives will be less than the <abbr class="spell">PIA</abbr> if he or she claims benefits before reaching the <abbr class="spell">FRA</abbr> and more than the <abbr class="spell">PIA</abbr> if he or she claims after reaching the <abbr class="spell">FRA</abbr>. The method prescribed by law for calculating the <abbr class="spell">PIA</abbr> is designed to replace a higher percentage of <abbr>AIME</abbr> for workers with low career-average earnings than it does for workers with above-average career earnings.<sup><a href="#mn19" id="mt19">19</a></sup> For example: For 2015, the <abbr class="spell">PIA</abbr> formula multiplies the first $826 of <abbr>AIME</abbr> by 0.90; each dollar of <abbr>AIME</abbr> from $827 to $4,980 is multiplied by 0.32, and the result is added to the product of the first computation; each dollar of <abbr>AIME</abbr> above $4,980 is multiplied by 0.15, and that result is added to the sum of the first two products.</p>
|
|
<p>Because <abbr>AIME</abbr> is a <span class="nobr">35-year</span> average that is wage-indexed to age 60, and because the <abbr class="spell">PIA</abbr> formula produces higher earnings replacement rates for workers with below-average career earnings, the alternative simulation's projections of median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> differ less from the baseline scenario than its median-earnings projections do. Table 3 shows the median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> for college graduates and nongraduates in the baseline and alternative simulations. <abbr>MINT</abbr> computes <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> as of the age at which the model simulates an individual's first Social Security benefit receipt. Because the people in our sample will receive their initial benefit in different years, we have indexed all <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> values in Table 3 to 2012 dollars.<sup><a href="#mn20" id="mt20">20</a></sup></p>
|
|
<div class="table" id="table3">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 3. </span>Median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> at age of entitlement (62) for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections (in 2012 dollars)</caption>
|
|
<colgroup span="1" style="width:28em"></colgroup>
|
|
<colgroup span="1" style="width:6em"></colgroup>
|
|
<colgroup span="1" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and sex</th>
|
|
<th id="c2"><abbr>AIME</abbr></th>
|
|
<th id="c3"><abbr class="spell">PIA</abbr></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="panelWithSub" id="r1">Baseline simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="subWithPanel" id="r2" headers="r1">Total</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r3" headers="r1 r2 c1">Median amount for college—</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 r2 r3 c1">Graduates</th>
|
|
<td headers="r1 r2 r3 r4 c2">6,010</td>
|
|
<td headers="r1 r2 r3 r4 c3">2,530</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 r2 r3 c1">Nongraduates</th>
|
|
<td headers="r1 r2 r3 r5 c2">3,220</td>
|
|
<td headers="r1 r2 r3 r5 c3">1,640</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r6" headers="r1 r2 c1">Ratio of college graduate-to-nongraduate median amount</th>
|
|
<td headers="r1 r2 r6 c2">1.87</td>
|
|
<td headers="r1 r2 r6 c3">1.54</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="subpanel" id="r7" headers="r1">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r8" headers="r1 r7 c1">Median amount for college—</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r9" headers="r1 r7 r8 c1">Graduates</th>
|
|
<td headers="r1 r7 r8 r9 c2">7,830</td>
|
|
<td headers="r1 r7 r8 r9 c3">2,880</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r1 r7 r8 c1">Nongraduates</th>
|
|
<td headers="r1 r7 r8 r10 c2">3,990</td>
|
|
<td headers="r1 r7 r8 r10 c3">1,880</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r11" headers="r1 r7 c1">Ratio of college graduate-to-nongraduate median amount</th>
|
|
<td headers="r1 r7 r11 c2">1.96</td>
|
|
<td headers="r1 r7 r11 c3">1.53</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="subpanel" id="r12" headers="r1">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r1 r12 c1">Median amount for college—</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r1 r12 r13 c1">Graduates</th>
|
|
<td headers="r1 r12 r13 r14 c2">4,610</td>
|
|
<td headers="r1 r12 r13 r14 c3">2,080</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r1 r12 r13 c1">Nongraduates</th>
|
|
<td headers="r1 r12 r13 r15 c2">2,540</td>
|
|
<td headers="r1 r12 r13 r15 c3">1,420</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r16" headers="r1 r12 c1">Ratio of college graduate-to-nongraduate median amount</th>
|
|
<td headers="r1 r12 r16 c2">1.81</td>
|
|
<td headers="r1 r12 r16 c3">1.46</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="panelWithSub" id="r17">Alternative simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="subWithPanel" id="r18" headers="r17">Total</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r19" headers="r17 r18 c1">Median amount for college—</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r20" headers="r17 r18 r19 c1">Graduates</th>
|
|
<td headers="r17 r18 r19 r20 c2">6,250</td>
|
|
<td headers="r17 r18 r19 r20 c3">2,590</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r21" headers="r17 r18 r19 c1">Nongraduates</th>
|
|
<td headers="r17 r18 r19 r21 c2">3,100</td>
|
|
<td headers="r17 r18 r19 r21 c3">1,600</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r22" headers="r17 r18 c1">Ratio of college graduate-to-nongraduate median amount</th>
|
|
<td headers="r17 r18 r22 c2">2.02</td>
|
|
<td headers="r17 r18 r22 c3">1.62</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r23" headers="r17 r18 c1">Difference from baseline projection of college graduate-to-nongraduate ratio (%)</th>
|
|
<td headers="r17 r18 r23 c2">8.0</td>
|
|
<td headers="r17 r18 r23 c3">4.9</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="subpanel" id="r24" headers="r17">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r25" headers="r17 r24 c1">Median amount for college—</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r26" headers="r17 r24 r25 c1">Graduates</th>
|
|
<td headers="r17 r24 r25 r26 c2">8,070</td>
|
|
<td headers="r17 r24 r25 r26 c3">2,910</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r27" headers="r17 r24 r25 c1">Nongraduates</th>
|
|
<td headers="r17 r24 r25 r27 c2">3,850</td>
|
|
<td headers="r17 r24 r25 r27 c3">1,830</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r28" headers="r17 r24 c1">Ratio of college graduate-to-nongraduate median amount</th>
|
|
<td headers="r17 r24 r28 c2">2.10</td>
|
|
<td headers="r17 r24 r28 c3">1.59</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r29" headers="r17 r24 c1">Difference from baseline projection of college graduate-to-nongraduate ratio (%)</th>
|
|
<td headers="r17 r24 r29 c2">6.8</td>
|
|
<td headers="r17 r24 r29 c3">3.8</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="2" class="subpanel" id="r30" headers="r17">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r31" headers="r17 r30 c1">Median amount for college—</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r32" headers="r17 r30 r31 c1">Graduates</th>
|
|
<td headers="r17 r30 r31 r32 c2">4,830</td>
|
|
<td headers="r17 r30 r31 r32 c3">2,150</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r33" headers="r17 r30 r31 c1">Nongraduates</th>
|
|
<td headers="r17 r30 r31 r33 c2">2,440</td>
|
|
<td headers="r17 r30 r31 r33 c3">1,390</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r34" headers="r17 r30 c1">Ratio of college graduate-to-nongraduate median amount</th>
|
|
<td headers="r17 r30 r34 c2">1.98</td>
|
|
<td headers="r17 r30 r34 c3">1.55</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r35" headers="r17 r30 c1">Difference from baseline projection of college graduate-to-nongraduate ratio (%)</th>
|
|
<td headers="r17 r30 r35 c2">9.1</td>
|
|
<td headers="r17 r30 r35 c3">5.6</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="3">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="3">NOTES: "College" refers to <span class="nobr">4-year</span> institutions.
|
|
<div class="newNote">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="newNote">Projections are restricted to workers with covered earnings.</div>
|
|
</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>In the baseline simulation, the median <abbr>AIME</abbr> of college graduates is $6,010, or 1.87 times the median <abbr>AIME</abbr> of workers without a college degree ($3,220). In the alternative simulation, the median <abbr>AIME</abbr> of college graduates is $6,250, or 4.0 percent higher than the baseline value, while the median <abbr>AIME</abbr> of less-educated workers ($3,100) is 3.7 percent lower than the baseline. Consequently, the ratio of the college graduate-to-nongraduate median <abbr>AIME</abbr> is 1.87 in the baseline simulation and 2.02 in the alternative simulation, a difference of 8.0 percent. Because of the progressive <abbr class="spell">PIA</abbr> formula, the baseline simulation projects a median <abbr class="spell">PIA</abbr> of college graduates ($2,530) that is only 1.54 times that of workers without a college degree ($1,640). In the alternative simulation, the median <abbr class="spell">PIA</abbr> of college graduates ($2,590) is 2.4 percent higher than the baseline amount, and that of nongraduates ($1,600) is 2.4 percent lower than the baseline. The ratio of the median college graduate-to-nongraduate <abbr class="spell">PIA</abbr> is 1.54 in the baseline and 1.62 in the alternative simulation, a difference of 4.9 percent.</p>
|
|
<p>The differences between the baseline and alternative projections of median <abbr>AIME</abbr> are mostly smaller, on a percentage basis, than those for the earnings projections shown in <a href="#table1">Table 1</a>—whether for college graduates or nongraduates. The same is true for the differences between the baseline and alternative projections of median <abbr class="spell">PIA</abbr>. The <span class="nobr">long-term</span> average that is used to compute <abbr>AIME</abbr>, the indexing of prior earnings to the national average wage at the time a worker reaches age 60, and the progressive <abbr class="spell">PIA</abbr> formula combine to reduce the effect of annual earnings growth differentials between college graduates and nongraduates on their <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr>.</p>
|
|
<p>Table 3 also shows median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> separately for men and women. Median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> for male college graduates are higher than those for female college graduates in both the baseline and alternative simulations. Likewise, median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> are higher in both the baseline and alternative simulations for men without a college degree than for women without a college degree. These results reflect higher annual average earnings and more years with earnings for men than for women. The baseline differences in <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> between college graduates and nongraduates are higher among men than among women, reflecting a greater disparity in earnings among men. For men, the ratio of college graduate-to-nongraduate <abbr>AIME</abbr> in the baseline simulation is 1.96, while for women the ratio is 1.81. Among men, the baseline <abbr class="spell">PIA</abbr> for college graduates is 1.53 times the <abbr class="spell">PIA</abbr> for workers without a college degree. Among women, the baseline <abbr class="spell">PIA</abbr> ratio is 1.46.</p>
|
|
<p>Under the alternative simulation, the ratios of college graduate-to-nongraduate median <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> differ from the baseline more for women than for men. The <abbr>AIME</abbr> ratio for men is 2.10, or 6.8 percent higher than the baseline <abbr>AIME</abbr> ratio. The <abbr class="spell">PIA</abbr> ratio among men is 1.59, or 3.8 percent higher than the baseline ratio. Among women, the ratio of college graduate-to-nongraduate <abbr>AIME</abbr> is 1.98 in the alternative simulation, a difference of 9.1 percent from the baseline. The <abbr class="spell">PIA</abbr> ratio for women is 1.55, or 5.6 percent higher than the baseline ratio. The main reason the baseline and alternative college graduate-to-nongraduate <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> ratios differ less for men than for women is that in each year, more men have earnings over the maximum annual amount subject to Social Security payroll taxes, and amounts above the annual taxable maximum are not included in the <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> calculations. Therefore, less of the simulated faster increase in earnings for college graduates is accounted for in the calculation of <abbr>AIME</abbr> for male college graduates than it is in that for female college graduates.</p>
|
|
<h3>Effect on Social Security Benefits</h3>
|
|
<p>Table 4 shows projected Social Security benefits relative to the national average wage in 2030, 2040, 2050, and 2060 under both simulations.<sup><a href="#mn21" id="mt21">21</a></sup> These projections include auxiliary (spouse and survivor) benefits as well as retired-worker benefits. (All auxiliary benefits are based on the earnings of an insured worker.) For 2030, <abbr>MINT</abbr> projects that only 11 percent of the members of Generation X—the youngest of whom will be in their early 50s—will receive benefits that year. By 2040, however, members of the youngest cohort will have reached age 61, and <abbr>MINT</abbr> projects that 64 percent of the members of Generation X will be receiving benefits.</p>
|
|
<div class="table" id="table4">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 4. </span>Median Social Security benefit amounts relative to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></caption>
|
|
<colgroup span="1" style="width:27em"></colgroup>
|
|
<colgroup span="4" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and sex</th>
|
|
<th id="c2">2030</th>
|
|
<th id="c3">2040</th>
|
|
<th id="c4">2050</th>
|
|
<th id="c5">2060</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr class="shaded">
|
|
<th class="stub0" id="r1" headers="c1">National <abbr class="spell">AWI</abbr> (in 2012 dollars)</th>
|
|
<td headers="r1 c2">58,674</td>
|
|
<td headers="r1 c3">65,778</td>
|
|
<td headers="r1 c4">73,438</td>
|
|
<td headers="r1 c5">81,703</td>
|
|
</tr>
|
|
<tr class="shaded">
|
|
<th class="stub0" id="r2" headers="c1">Percentage receiving benefits <sup>a</sup></th>
|
|
<td headers="r2 c2">11</td>
|
|
<td headers="r2 c3">64</td>
|
|
<td headers="r2 c4">87</td>
|
|
<td headers="r2 c5">94</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r3">Baseline simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r4" headers="r3">Total</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="r3 r4 c1">Ratio of median benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r3 r4 r5 c1">Graduates</th>
|
|
<td headers="r3 r4 r5 r6 c2">0.27</td>
|
|
<td headers="r3 r4 r5 r6 c3">0.38</td>
|
|
<td headers="r3 r4 r5 r6 c4">0.39</td>
|
|
<td headers="r3 r4 r5 r6 c5">0.38</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r3 r4 r5 c1">Nongraduates</th>
|
|
<td headers="r3 r4 r5 r7 c2">0.21</td>
|
|
<td headers="r3 r4 r5 r7 c3">0.25</td>
|
|
<td headers="r3 r4 r5 r7 c4">0.26</td>
|
|
<td headers="r3 r4 r5 r7 c5">0.26</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r8" headers="r3 r4 c1">Ratio of college graduate-to-nongraduate median benefit</th>
|
|
<td headers="r3 r4 r8 c2">1.29</td>
|
|
<td headers="r3 r4 r8 c3">1.52</td>
|
|
<td headers="r3 r4 r8 c4">1.50</td>
|
|
<td headers="r3 r4 r8 c5">1.46</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r9" headers="r3">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="r3 r9 c1">Ratio of median benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r3 r9 r10 c1">Graduates</th>
|
|
<td headers="r3 r9 r10 r11 c2">0.31</td>
|
|
<td headers="r3 r9 r10 r11 c3">0.44</td>
|
|
<td headers="r3 r9 r10 r11 c4">0.44</td>
|
|
<td headers="r3 r9 r10 r11 c5">0.42</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r3 r9 r10 c1">Nongraduates</th>
|
|
<td headers="r3 r9 r10 r12 c2">0.24</td>
|
|
<td headers="r3 r9 r10 r12 c3">0.28</td>
|
|
<td headers="r3 r9 r10 r12 c4">0.29</td>
|
|
<td headers="r3 r9 r10 r12 c5">0.27</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r3 r9 c1">Ratio of college graduate-to-nongraduate median benefit</th>
|
|
<td headers="r3 r9 r13 c2">1.29</td>
|
|
<td headers="r3 r9 r13 c3">1.57</td>
|
|
<td headers="r3 r9 r13 c4">1.52</td>
|
|
<td headers="r3 r9 r13 c5">1.56</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r14" headers="r3">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r15" headers="r3 r14 c1">Ratio of median benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r3 r14 r15 c1">Graduates</th>
|
|
<td headers="r3 r14 r15 r16 c2">0.24</td>
|
|
<td headers="r3 r14 r15 r16 c3">0.33</td>
|
|
<td headers="r3 r14 r15 r16 c4">0.35</td>
|
|
<td headers="r3 r14 r15 r16 c5">0.35</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r3 r14 r15 c1">Nongraduates</th>
|
|
<td headers="r3 r14 r15 r17 c2">0.18</td>
|
|
<td headers="r3 r14 r15 r17 c3">0.22</td>
|
|
<td headers="r3 r14 r15 r17 c4">0.23</td>
|
|
<td headers="r3 r14 r15 r17 c5">0.24</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r18" headers="r3 r14 c1">Ratio of college graduate-to-nongraduate median benefit</th>
|
|
<td headers="r3 r14 r18 c2">1.33</td>
|
|
<td headers="r3 r14 r18 c3">1.50</td>
|
|
<td headers="r3 r14 r18 c4">1.52</td>
|
|
<td headers="r3 r14 r18 c5">1.46</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r19">Alternative simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r20" headers="r19">Total</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r21" headers="r19 r20 c1">Ratio of median benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r22" headers="r19 r20 r21 c1">Graduates</th>
|
|
<td headers="r19 r20 r21 r22 c2">0.27</td>
|
|
<td headers="r19 r20 r21 r22 c3">0.39</td>
|
|
<td headers="r19 r20 r21 r22 c4">0.40</td>
|
|
<td headers="r19 r20 r21 r22 c5">0.39</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r23" headers="r19 r20 r21 c1">Nongraduates</th>
|
|
<td headers="r19 r20 r21 r23 c2">0.21</td>
|
|
<td headers="r19 r20 r21 r23 c3">0.24</td>
|
|
<td headers="r19 r20 r21 r23 c4">0.25</td>
|
|
<td headers="r19 r20 r21 r23 c5">0.25</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r24" headers="r19 r20 c1">Ratio of college graduate-to-nongraduate median benefit</th>
|
|
<td headers="r19 r20 r24 c2">1.29</td>
|
|
<td headers="r19 r20 r24 c3">1.63</td>
|
|
<td headers="r19 r20 r24 c4">1.60</td>
|
|
<td headers="r19 r20 r24 c5">1.56</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r25" headers="r19 r20 c1">Difference from baseline projection of college graduate-to- nongraduate median-benefit ratio (%)</th>
|
|
<td headers="r19 r20 r25 c2">0.0</td>
|
|
<td headers="r19 r20 r25 c3">6.9</td>
|
|
<td headers="r19 r20 r25 c4">6.7</td>
|
|
<td headers="r19 r20 r25 c5">6.7</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r26" headers="r19">Men</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r27" headers="r19 r26 c1">Ratio of median benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r28" headers="r19 r26 r27 c1">Graduates</th>
|
|
<td headers="r19 r26 r27 r28 c2">0.31</td>
|
|
<td headers="r19 r26 r27 r28 c3">0.45</td>
|
|
<td headers="r19 r26 r27 r28 c4">0.45</td>
|
|
<td headers="r19 r26 r27 r28 c5">0.43</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r29" headers="r19 r26 r27 c1">Nongraduates</th>
|
|
<td headers="r19 r26 r27 r29 c2">0.24</td>
|
|
<td headers="r19 r26 r27 r29 c3">0.27</td>
|
|
<td headers="r19 r26 r27 r29 c4">0.27</td>
|
|
<td headers="r19 r26 r27 r29 c5">0.26</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r30" headers="r19 r26 c1">Ratio of college graduate-to-nongraduate median benefit</th>
|
|
<td headers="r19 r26 r30 c2">1.29</td>
|
|
<td headers="r19 r26 r30 c3">1.67</td>
|
|
<td headers="r19 r26 r30 c4">1.67</td>
|
|
<td headers="r19 r26 r30 c5">1.65</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r31" headers="r19 r26 c1">Difference from baseline projection of college graduate-to- nongraduate median-benefit ratio (%)</th>
|
|
<td headers="r19 r26 r31 c2">0.0</td>
|
|
<td headers="r19 r26 r31 c3">6.1</td>
|
|
<td headers="r19 r26 r31 c4">9.8</td>
|
|
<td headers="r19 r26 r31 c5">6.3</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r32" headers="r19">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r33" headers="r19 r32 c1">Ratio of median benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r34" headers="r19 r32 r33 c1">Graduates</th>
|
|
<td headers="r19 r32 r33 r34 c2">0.24</td>
|
|
<td headers="r19 r32 r33 r34 c3">0.34</td>
|
|
<td headers="r19 r32 r33 r34 c4">0.36</td>
|
|
<td headers="r19 r32 r33 r34 c5">0.36</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r35" headers="r19 r32 r33 c1">Nongraduates</th>
|
|
<td headers="r19 r32 r33 r35 c2">0.18</td>
|
|
<td headers="r19 r32 r33 r35 c3">0.22</td>
|
|
<td headers="r19 r32 r33 r35 c4">0.23</td>
|
|
<td headers="r19 r32 r33 r35 c5">0.23</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r36" headers="r19 r32 c1">Ratio of college graduate-to-nongraduate median benefit</th>
|
|
<td headers="r19 r32 r36 c2">1.33</td>
|
|
<td headers="r19 r32 r36 c3">1.55</td>
|
|
<td headers="r19 r32 r36 c4">1.57</td>
|
|
<td headers="r19 r32 r36 c5">1.57</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r37" headers="r19 r32 c1">Difference from baseline projection of college graduate-to- nongraduate median-benefit ratio (%)</th>
|
|
<td headers="r19 r32 r37 c2">0.0</td>
|
|
<td headers="r19 r32 r37 c3">3.0</td>
|
|
<td headers="r19 r32 r37 c4">2.9</td>
|
|
<td headers="r19 r32 r37 c5">7.3</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="5">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="5">NOTES: "College" refers to <span class="nobr">4-year</span> institutions.
|
|
<div class="newNote">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="newNote">Projections are restricted to workers with covered earnings.</div>
|
|
</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="5">a. Includes workers, spouses, and <span class="nobr">widow(er)s.</span></td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>In the baseline simulation, <abbr>MINT</abbr> projects the median Social Security benefit received in 2040, 2050, and 2060 by college graduates born <span class="nobr">1965–1979</span> to be equal to <span class="nobr">38–39</span> percent of the national average wage. The projected median benefit received by individuals without a college degree in those years is equal to <span class="nobr">25–26</span> percent of the national average wage. The projected ratios of college graduate-to-nongraduate median benefits are 1.52 in 2040, 1.50 in 2050, and 1.46 in 2060. In the alternative simulation, projected median benefits as a percentage of the average wage are 1 percentage point higher than the baseline projection in each of those years for college graduates and 1 percentage point lower for nongraduates. These alternative projections represent a difference from the baseline of less than 3 percent for college graduates and about minus 4 percent for beneficiaries without a college degree. As was the case with <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr>, the differences between the baseline and alternative projections of median benefits are smaller on a percentage basis than are the differences in the projected median earnings shown in <a href="#table1">Table 1</a>, both for college graduates and for nongraduates. Chart 4 illustrates how modestly the median benefits of college graduates and nongraduates differ between the baseline and alternative simulations.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart4">
|
|
<div class="title">Chart 4.<br>Ratio of median Social Security benefit amounts to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></div>
|
|
<div class="scrollChart"><img src="v75n3p15-chart04.gif" alt="Line chart with tabular version below." width="654" height="232" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 4. </span>Ratio of median Social Security benefit amounts to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></caption>
|
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<colgroup span="1" style="width:12em"></colgroup>
|
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<colgroup span="4" style="width:5em"></colgroup>
|
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<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and simulation type</th>
|
|
<th id="c2">2020</th>
|
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<th id="c3">2030</th>
|
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<th id="c4">2040</th>
|
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<th id="c5">2050</th>
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</tr>
|
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</thead>
|
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<tbody>
|
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<tr>
|
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<th class="stub0" id="r1" headers="c1">Graduate</th>
|
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<td colspan="4"></td>
|
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</tr>
|
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<tr>
|
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<th class="stub1" id="r2" headers="r1 c1">Baseline</th>
|
|
<td headers="r1 r2 c2">0.27</td>
|
|
<td headers="r1 r2 c3">0.38</td>
|
|
<td headers="r1 r2 c4">0.39</td>
|
|
<td headers="r1 r2 c5">0.38</td>
|
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</tr>
|
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<tr>
|
|
<th class="stub1" id="r3" headers="r1 c1">Alternative</th>
|
|
<td headers="r1 r3 c2">0.27</td>
|
|
<td headers="r1 r3 c3">0.39</td>
|
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<td headers="r1 r3 c4">0.40</td>
|
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<td headers="r1 r3 c5">0.39</td>
|
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</tr>
|
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<tr>
|
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<th class="stub0" id="r4" headers="c1">Nongraduate</th>
|
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<td colspan="4"></td>
|
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</tr>
|
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<tr>
|
|
<th class="stub1" id="r5" headers="r4 c1">Baseline</th>
|
|
<td headers="r4 r5 c2">0.21</td>
|
|
<td headers="r4 r5 c3">0.25</td>
|
|
<td headers="r4 r5 c4">0.26</td>
|
|
<td headers="r4 r5 c5">0.26</td>
|
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</tr>
|
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<tr>
|
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<th class="stub1" id="r6" headers="r4 c1">Alternative</th>
|
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<td headers="r4 r6 c2">0.21</td>
|
|
<td headers="r4 r6 c3">0.24</td>
|
|
<td headers="r4 r6 c4">0.25</td>
|
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<td headers="r4 r6 c5">0.25</td>
|
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</tr>
|
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</tbody>
|
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<tfoot>
|
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<tr>
|
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<td class="noNotes" colspan="5"> </td>
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</tr>
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</tfoot>
|
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</table>
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</div>
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<div class="firstNote">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</div>
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<div class="note">NOTES: “College” refers to <span class="nobr">4-year</span> institutions.</div>
|
|
<div class="note">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
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|
<div class="lastNote">Projections are restricted to workers with covered earnings.</div>
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</div>
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</div>
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<p>Table 4 also shows median-benefit ratios by college-graduate status separately for men and women. The median-benefit ratio of male college graduates exceeds that of female college graduates in both the baseline and alternative simulations, although the difference is projected to narrow from 2040 to 2060. Likewise, the median male college nongraduate's benefit ratio is projected to exceed the median female college nongraduate's benefit, with that difference also narrowing slightly over the projection period. The projected narrowing of the differences in benefits between men and women reflects <span class="nobr">long-term</span> trends of rising employment rates and earnings among women. As a percentage of the average wage, the median benefit for both male and female college graduates is projected to be 1 percentage point higher in the alternative simulation than in the baseline for <span class="nobr">2040–2060,</span> and the median benefit for male and female nongraduates is projected to be no more than 2 percentage points lower.</p>
|
|
<p>In the alternative simulation, the ratio of the median college graduate-to-nongraduate benefit increases slightly less rapidly from 2030 to 2050 for women than for men, mainly because the projected median benefit of male college nongraduates is 1 to 2 percentage points lower than that of the baseline projection while the projected median benefit of female nongraduates remains unchanged. The benefits of female college nongraduates would be less affected by slower earnings growth than would those of male nongraduates because of women's relatively lower benefit level in the baseline simulation. Chart 5 illustrates the projected median benefits by college-graduate status for men and women under both simulations.</p>
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<div class="chartCenter">
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<div class="chart700" id="chart5">
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<div class="title">Chart 5.<br>Ratio of median Social Security benefit amounts to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></div>
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<div class="scrollChart"><img src="v75n3p15-chart05.gif" alt="Two line charts, one for men and one for women, with tabular version below." width="680" height="305" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 5. </span>Ratio of median Social Security benefit amounts to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979,</span> by sex: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></caption>
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<colgroup span="1" style="width:12em"></colgroup>
|
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<colgroup span="4" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and simulation type</th>
|
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<th id="c2">2020</th>
|
|
<th id="c3">2030</th>
|
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<th id="c4">2040</th>
|
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<th id="c5">2050</th>
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</tr>
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</thead>
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<tbody>
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<tr>
|
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<td> </td>
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<th colspan="4" class="panel" id="r1">Men</th>
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</tr>
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<tr>
|
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<th class="stub0" id="r2" headers="r1 c1">Graduate</th>
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<td colspan="4"></td>
|
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</tr>
|
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<tr>
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<th class="stub1" id="r3" headers="r1 r2 c1">Baseline</th>
|
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<td headers="r1 r2 r3 c2">0.31</td>
|
|
<td headers="r1 r2 r3 c3">0.44</td>
|
|
<td headers="r1 r2 r3 c4">0.44</td>
|
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<td headers="r1 r2 r3 c5">0.42</td>
|
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</tr>
|
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<tr>
|
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<th class="stub1" id="r4" headers="r1 r2 c1">Alternative</th>
|
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<td headers="r1 r2 r4 c2">0.31</td>
|
|
<td headers="r1 r2 r4 c3">0.45</td>
|
|
<td headers="r1 r2 r4 c4">0.45</td>
|
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<td headers="r1 r2 r4 c5">0.43</td>
|
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</tr>
|
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<tr>
|
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<th class="stub0" id="r5" headers="r1 c1">Nongraduate</th>
|
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<td colspan="4"></td>
|
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</tr>
|
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<tr>
|
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<th class="stub1" id="r6" headers="r1 r5 c1">Baseline</th>
|
|
<td headers="r1 r5 r6 c2">0.24</td>
|
|
<td headers="r1 r5 r6 c3">0.28</td>
|
|
<td headers="r1 r5 r6 c4">0.29</td>
|
|
<td headers="r1 r5 r6 c5">0.27</td>
|
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</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 r5 c1">Alternative</th>
|
|
<td headers="r1 r5 r7 c2">0.24</td>
|
|
<td headers="r1 r5 r7 c3">0.27</td>
|
|
<td headers="r1 r5 r7 c4">0.27</td>
|
|
<td headers="r1 r5 r7 c5">0.26</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panel" id="r8">Women</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r9" headers="r8 c1">Graduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r8 r9 c1">Baseline</th>
|
|
<td headers="r8 r9 r10 c2">0.24</td>
|
|
<td headers="r8 r9 r10 c3">0.33</td>
|
|
<td headers="r8 r9 r10 c4">0.35</td>
|
|
<td headers="r8 r9 r10 c5">0.35</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r8 r9 c1">Alternative</th>
|
|
<td headers="r8 r9 r11 c2">0.24</td>
|
|
<td headers="r8 r9 r11 c3">0.34</td>
|
|
<td headers="r8 r9 r11 c4">0.36</td>
|
|
<td headers="r8 r9 r11 c5">0.36</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r12" headers="r8 c1">Nongraduate</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r8 r12 c1">Baseline</th>
|
|
<td headers="r8 r12 r13 c2">0.19</td>
|
|
<td headers="r8 r12 r13 c3">0.22</td>
|
|
<td headers="r8 r12 r13 c4">0.23</td>
|
|
<td headers="r8 r12 r13 c5">0.24</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r8 r12 c1">Alternative</th>
|
|
<td headers="r8 r12 r14 c2">0.18</td>
|
|
<td headers="r8 r12 r14 c3">0.22</td>
|
|
<td headers="r8 r12 r14 c4">0.23</td>
|
|
<td headers="r8 r12 r14 c5">0.23</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="5"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</div>
|
|
<div class="note">NOTES: “College” refers to <span class="nobr">4-year</span> institutions.</div>
|
|
<div class="note">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
|
|
<div class="lastNote">Projections are restricted to workers with covered earnings.</div>
|
|
</div>
|
|
</div>
|
|
<p>Table 5 shows projected benefits at the 75<sup>th</sup> and 25<sup>th</sup> percentiles relative to the national average wage for college graduates and nongraduates under the baseline and alternative simulations. As with median benefits, faster earnings growth for college graduates does not translate to an equivalent effect on benefits at the 75<sup>th</sup> and 25<sup>th</sup> percentiles. Compared with the baseline projection, benefits as a percentage of the average wage in the alternative simulation are about 1 percentage point higher for college graduates at both the 75<sup>th</sup> and 25<sup>th</sup> percentiles. The benefits projected in the alternative simulation are therefore about 2 percent higher than the baseline projection at the 75<sup>th</sup> percentile and 3 percent higher at the 25<sup>th</sup> percentile. Among beneficiaries without a college degree, projected benefits in the alternative simulation are <span class="nobr">1–2</span> percentage points lower than the baseline projections at the 75<sup>th</sup> percentile and no more than 1 percentage point lower at the 25<sup>th</sup> percentile. The benefits projected in the alternative simulation are thus about 3 percent lower than the baseline projections for those at the 75<sup>th</sup> percentile and <span class="nobr">0–5</span> percent lower for those at the 25<sup>th</sup> percentile. Chart 6 illustrates the benefit-to-average-wage ratios of college graduates and nongraduates at the 75<sup>th</sup> and 25<sup>th</sup> percentiles in the baseline and alternative simulations.</p>
|
|
<div class="table" id="table5">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 5. </span>Social Security benefit amounts at the 75th and 25th percentiles relative to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></caption>
|
|
<colgroup span="1" style="width:30em"></colgroup>
|
|
<colgroup span="4" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Educational attainment and sex</th>
|
|
<th id="c2">2030</th>
|
|
<th id="c3">2040</th>
|
|
<th id="c4">2050</th>
|
|
<th id="c5">2060</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr class="shaded">
|
|
<th class="stub0" id="r1" headers="c1">National <abbr class="spell">AWI</abbr> (in 2012 dollars)</th>
|
|
<td headers="r1 c2">58,674</td>
|
|
<td headers="r1 c3">65,778</td>
|
|
<td headers="r1 c4">73,438</td>
|
|
<td headers="r1 c5">81,703</td>
|
|
</tr>
|
|
<tr class="shaded">
|
|
<th class="stub0" id="r2" headers="c1">Percentage receiving benefits <sup>a</sup></th>
|
|
<td headers="r2 c2">11</td>
|
|
<td headers="r2 c3">64</td>
|
|
<td headers="r2 c4">87</td>
|
|
<td headers="r2 c5">94</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r3">Baseline simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r4" headers="r3">75th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="r3 r4 c1">Ratio of 75th-percentile benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r3 r4 r5 c1">Graduates</th>
|
|
<td headers="r3 r4 r5 r6 c2">0.38</td>
|
|
<td headers="r3 r4 r5 r6 c3">0.49</td>
|
|
<td headers="r3 r4 r5 r6 c4">0.48</td>
|
|
<td headers="r3 r4 r5 r6 c5">0.46</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r3 r4 r5 c1">Nongraduates</th>
|
|
<td headers="r3 r4 r5 r7 c2">0.28</td>
|
|
<td headers="r3 r4 r5 r7 c3">0.34</td>
|
|
<td headers="r3 r4 r5 r7 c4">0.35</td>
|
|
<td headers="r3 r4 r5 r7 c5">0.34</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r8" headers="r3 r4 c1">Ratio of college graduate-to-nongraduate 75th-percentile benefit</th>
|
|
<td headers="r3 r4 r8 c2">1.36</td>
|
|
<td headers="r3 r4 r8 c3">1.45</td>
|
|
<td headers="r3 r4 r8 c4">1.39</td>
|
|
<td headers="r3 r4 r8 c5">1.35</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r9" headers="r3">25th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="r3 r9 c1">Ratio of 25th-percentile benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r3 r9 r10 c1">Graduates</th>
|
|
<td headers="r3 r9 r10 r11 c2">0.18</td>
|
|
<td headers="r3 r9 r10 r11 c3">0.27</td>
|
|
<td headers="r3 r9 r10 r11 c4">0.29</td>
|
|
<td headers="r3 r9 r10 r11 c5">0.28</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r3 r9 r10 c1">Nongraduates</th>
|
|
<td headers="r3 r9 r10 r12 c2">0.15</td>
|
|
<td headers="r3 r9 r10 r12 c3">0.18</td>
|
|
<td headers="r3 r9 r10 r12 c4">0.19</td>
|
|
<td headers="r3 r9 r10 r12 c5">0.19</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r3 r9 c1">Ratio of college graduate-to-nongraduate 25th-percentile benefit</th>
|
|
<td headers="r3 r9 r13 c2">1.20</td>
|
|
<td headers="r3 r9 r13 c3">1.50</td>
|
|
<td headers="r3 r9 r13 c4">1.50</td>
|
|
<td headers="r3 r9 r13 c5">1.47</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="panelWithSub" id="r14">Alternative simulation</th>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subWithPanel" id="r15" headers="r14">75th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r16" headers="r14 r15 c1">Ratio of 75th-percentile benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r14 r15 r16 c1">College degree</th>
|
|
<td headers="r14 r15 r16 r17 c2">0.38</td>
|
|
<td headers="r14 r15 r16 r17 c3">0.50</td>
|
|
<td headers="r14 r15 r16 r17 c4">0.49</td>
|
|
<td headers="r14 r15 r16 r17 c5">0.47</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r18" headers="r14 r15 r16 c1">No college degree</th>
|
|
<td headers="r14 r15 r16 r18 c2">0.28</td>
|
|
<td headers="r14 r15 r16 r18 c3">0.33</td>
|
|
<td headers="r14 r15 r16 r18 c4">0.33</td>
|
|
<td headers="r14 r15 r16 r18 c5">0.32</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r19" headers="r14 r15 c1">Ratio of college graduate-to-nongraduate 75th-percentile benefit</th>
|
|
<td headers="r14 r15 r19 c2">1.36</td>
|
|
<td headers="r14 r15 r19 c3">1.51</td>
|
|
<td headers="r14 r15 r19 c4">1.47</td>
|
|
<td headers="r14 r15 r19 c5">1.45</td>
|
|
</tr>
|
|
<tr class="topPad1 italic">
|
|
<th class="stub0" id="r20" headers="r14 r15 c1">Difference from baseline projection of college graduate-to- nongraduate 75th-percentile benefit ratio (%)</th>
|
|
<td headers="r14 r15 r20 c2">0.0</td>
|
|
<td headers="r14 r15 r20 c3">4.1</td>
|
|
<td headers="r14 r15 r20 c4">5.9</td>
|
|
<td headers="r14 r15 r20 c5">7.1</td>
|
|
</tr>
|
|
<tr>
|
|
<td> </td>
|
|
<th colspan="4" class="subpanel" id="r21" headers="r14">25th percentile</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r22" headers="r14 r21 c1">Ratio of 25th-percentile benefit to national <abbr class="spell">AWI</abbr> for college—</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r23" headers="r14 r21 r22 c1">College degree</th>
|
|
<td headers="r14 r21 r22 r23 c2">0.18</td>
|
|
<td headers="r14 r21 r22 r23 c3">0.27</td>
|
|
<td headers="r14 r21 r22 r23 c4">0.30</td>
|
|
<td headers="r14 r21 r22 r23 c5">0.29</td>
|
|
</tr>
|
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<tr>
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<th class="stub1" id="r24" headers="r14 r21 r22 c1">No college degree</th>
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<td headers="r14 r21 r22 r24 c2">0.15</td>
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<td headers="r14 r21 r22 r24 c3">0.18</td>
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<td headers="r14 r21 r22 r24 c4">0.19</td>
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<td headers="r14 r21 r22 r24 c5">0.18</td>
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</tr>
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<tr>
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<th class="stub0" id="r25" headers="r14 r21 c1">Ratio of college graduate-to-nongraduate 25th-percentile benefit</th>
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<td headers="r14 r21 r25 c2">1.20</td>
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<td headers="r14 r21 r25 c3">1.53</td>
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<td headers="r14 r21 r25 c4">1.60</td>
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<td headers="r14 r21 r25 c5">1.57</td>
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</tr>
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<tr class="topPad1 italic">
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<th class="stub0" id="r26" headers="r14 r21 c1">Difference from baseline projection of college graduate-to- nongraduate 25th-percentile benefit ratio (%)</th>
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<td headers="r14 r21 r26 c2">0.0</td>
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<td headers="r14 r21 r26 c3">2.3</td>
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<td headers="r14 r21 r26 c4">6.5</td>
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<td headers="r14 r21 r26 c5">6.7</td>
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</tr>
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</tbody>
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<tfoot>
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<tr>
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<td class="firstNote" colspan="5">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</td>
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</tr>
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<tr>
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<td class="note" colspan="5">NOTES: "College" refers to <span class="nobr">4-year</span> institutions.
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<div class="newNote">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
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<div class="newNote">Projections are restricted to workers with covered earnings.</div>
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</td>
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</tr>
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<tr>
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<td class="lastNote" colspan="5">a. Includes workers, spouses, and <span class="nobr">widow(er)s.</span></td>
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</tr>
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</tfoot>
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</table>
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</div>
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<div class="chartCenter">
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<div class="chart700" id="chart6">
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<div class="title">Chart 6.<br>Ratio of 75th- and 25th-percentile Social Security benefit amounts to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></div>
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<div class="scrollChart"><img src="v75n3p15-chart06.gif" alt="Two line charts, one for 75th percentile and one for 25th percentile, with tabular version below." width="680" height="305" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 6. </span>Ratio of 75th- and 25th-percentile Social Security benefit amounts to the national <abbr class="spell">AWI</abbr> for college graduates and nongraduates born <span class="nobr">1965–1979</span>: Baseline and alternative projections, decennially <span class="nobr">2030–2060</span></caption>
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<colgroup span="1" style="width:12em"></colgroup>
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<colgroup span="4" style="width:5em"></colgroup>
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<thead>
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<tr>
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<th class="stubHeading" id="c1">Educational attainment and simulation type</th>
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<th id="c2">2020</th>
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<th id="c3">2030</th>
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<th id="c4">2040</th>
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<th id="c5">2050</th>
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</tr>
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</thead>
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<tbody>
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<tr>
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<td> </td>
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<th colspan="4" class="panel" id="r1">75th percentile</th>
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</tr>
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<tr>
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<th class="stub0" id="r2" headers="r1 c1">Graduate</th>
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<td colspan="4"></td>
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</tr>
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<tr>
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<th class="stub1" id="r3" headers="r1 r2 c1">Baseline</th>
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<td headers="r1 r2 r3 c2">0.39</td>
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<td headers="r1 r2 r3 c3">0.49</td>
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<td headers="r1 r2 r3 c4">0.48</td>
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<td headers="r1 r2 r3 c5">0.46</td>
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</tr>
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<tr>
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<th class="stub1" id="r4" headers="r1 r2 c1">Alternative</th>
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<td headers="r1 r2 r4 c2">0.38</td>
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<td headers="r1 r2 r4 c3">0.50</td>
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<td headers="r1 r2 r4 c4">0.49</td>
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<td headers="r1 r2 r4 c5">0.47</td>
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</tr>
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<tr>
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<th class="stub0" id="r5" headers="r1 c1">Nongraduate</th>
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<td colspan="4"></td>
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</tr>
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<tr>
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<th class="stub1" id="r6" headers="r1 r5 c1">Baseline</th>
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<td headers="r1 r5 r6 c2">0.29</td>
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<td headers="r1 r5 r6 c3">0.34</td>
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<td headers="r1 r5 r6 c4">0.35</td>
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<td headers="r1 r5 r6 c5">0.34</td>
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</tr>
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<tr>
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<th class="stub1" id="r7" headers="r1 r5 c1">Alternative</th>
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<td headers="r1 r5 r7 c2">0.28</td>
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<td headers="r1 r5 r7 c3">0.33</td>
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<td headers="r1 r5 r7 c4">0.33</td>
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<td headers="r1 r5 r7 c5">0.32</td>
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</tr>
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<tr>
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<td> </td>
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<th colspan="4" class="panel" id="r8">25th percentile</th>
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</tr>
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<tr>
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<th class="stub0" id="r9" headers="r8 c1">Graduate</th>
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<td colspan="4"></td>
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</tr>
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<tr>
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<th class="stub1" id="r10" headers="r8 r9 c1">Baseline</th>
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|
<td headers="r8 r9 r10 c2">0.18</td>
|
|
<td headers="r8 r9 r10 c3">0.27</td>
|
|
<td headers="r8 r9 r10 c4">0.29</td>
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<td headers="r8 r9 r10 c5">0.28</td>
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</tr>
|
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<tr>
|
|
<th class="stub1" id="r11" headers="r8 r9 c1">Alternative</th>
|
|
<td headers="r8 r9 r11 c2">0.18</td>
|
|
<td headers="r8 r9 r11 c3">0.27</td>
|
|
<td headers="r8 r9 r11 c4">0.30</td>
|
|
<td headers="r8 r9 r11 c5">0.29</td>
|
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</tr>
|
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<tr>
|
|
<th class="stub0" id="r12" headers="r8 c1">Nongraduate</th>
|
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<td colspan="4"></td>
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</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r8 r12 c1">Baseline</th>
|
|
<td headers="r8 r12 r13 c2">0.15</td>
|
|
<td headers="r8 r12 r13 c3">0.18</td>
|
|
<td headers="r8 r12 r13 c4">0.19</td>
|
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<td headers="r8 r12 r13 c5">0.19</td>
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</tr>
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|
<tr>
|
|
<th class="stub1" id="r14" headers="r8 r12 c1">Alternative</th>
|
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<td headers="r8 r12 r14 c2">0.15</td>
|
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<td headers="r8 r12 r14 c3">0.18</td>
|
|
<td headers="r8 r12 r14 c4">0.19</td>
|
|
<td headers="r8 r12 r14 c5">0.18</td>
|
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</tr>
|
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</tbody>
|
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<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="5"> </td>
|
|
</tr>
|
|
</tfoot>
|
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</table>
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</div>
|
|
<div class="firstNote">SOURCE: Authors' calculations using <abbr>MINT</abbr>7.</div>
|
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<div class="note">NOTES: “College” refers to <span class="nobr">4-year</span> institutions.</div>
|
|
<div class="note">The baseline simulation assumes that the <abbr class="spell">AWI</abbr> grows at 1.2 percent per year for all workers. The alternative simulation assumes annual <abbr class="spell">AWI</abbr> growth rates of 1.6 percent for college graduates and 0.7 percent for nongraduates.</div>
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<div class="lastNote">Projections are restricted to workers with covered earnings.</div>
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</div>
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</div>
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<h2>Summary and Conclusion</h2>
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<p>In our simulations, we estimate the impact on projected earnings and Social Security benefits of different rates of earnings growth for college graduates and nongraduates born <span class="nobr">1965–1979,</span> the cohorts known as Generation X. We estimate the effect on future annual earnings, career-average earnings, and Social Security benefits if the real earnings of college graduates grow by 1.6 percent per year and the real earnings of college nongraduates grow by 0.7 percent per year through 2050. When weighted by the distribution of earnings across educational-attainment levels in 2010, those growth rates are consistent with the overall national average real wage growth rate of 1.2 percent, as assumed in the intermediate-cost projections of income and expenditures from the Social Security trust funds in the <i>2012 Trustees Report.</i></p>
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<p>Compared with the baseline simulation, a real rate of earnings growth for college graduates that continually exceeds the rate for nongraduates would obviously lead to substantially greater differences in annual earnings between the two groups. By 2030, the twentieth year of our simulation, the projected median annual earnings of college graduates would be about 8 percent higher than those projected in the baseline, while the earnings of nongraduates would be 9 percent lower. The ratio of the median earnings of college graduates to the median earnings of nongraduates in 2030 is 2.14 in the baseline scenario and 2.55 in the alternative simulation, a difference of 19 percent. In other words, a typical college nongraduate would earn about 47 percent as much as the typical college graduate under the baseline scenario (1/2.14), but only 39 percent as much under the alternative scenario (1/2.55). </p>
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<p>The difference in projected Social Security benefits between college graduates and nongraduates in our alternative simulation is less pronounced than the difference in their projected annual earnings. From the baseline simulation to the alternative scenario, median <abbr>AIME</abbr> differs by 4.0 percent for college graduates and by minus 3.7 percent for workers without a college degree. The ratio of the median <abbr>AIME</abbr> of college graduates to the median <abbr>AIME</abbr> of nongraduates differs by 8.0 percent. Median <abbr class="spell">PIA</abbr> values differ even less than median <abbr>AIME</abbr> values in the alternative simulation, by only 2.4 percent for college graduates and by minus 2.4 percent for nongraduates. The ratio of the median <abbr class="spell">PIA</abbr> of college graduates to the median <abbr class="spell">PIA</abbr> of nongraduates is 4.9 percent higher in the alternative simulation than in the baseline scenario.</p>
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|
<p>Earnings growth differentials between college graduates and nongraduates produce comparatively smaller differences in Social Security benefits because of the methods prescribed under the Social Security Act to determine a worker's <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr>. In particular, the indexing of past earnings to the wage levels in place when the worker attains age 60 and the progressive formula used to calculate the <abbr class="spell">PIA</abbr> moderate the effects of low career-average earnings on Social Security benefits. In the <abbr>MINT</abbr> simulations of slower earnings growth for workers without a college degree, that group's Social Security benefits fall both in absolute terms and relative to the benefits of college graduates; however, the gap in Social Security benefits does not increase as much as the gap in annual earnings. From these results, we can infer that even if earnings inequality continues to increase, inequality in Social Security benefits, and thus in total retirement income, will not increase at the same rate.</p>
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|
<p>Over time, if the earnings of college nongraduates continue to grow more slowly than the national average wage, their relative standard of living will decline and they will be less able to save for retirement. A reduction in retirement saving would increase the importance of Social Security income in retirement. Of course, the preferred outcome would be robust earnings growth across the earnings distribution and improved employment opportunities for workers of all skill and education levels. Although a discussion of the public policies that could contribute to that outcome is beyond the scope of this article, such a discussion can benefit from estimates of the effect of earnings inequality on retirement income, which <abbr>MINT</abbr> and other microsimulation models are ideally suited to provide.</p>
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<div id="notes">
|
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<h2>Notes</h2>
|
|
<p> <a href="#mt1" id="mn1">1</a> Social Security benefits are a concave piecewise linear function of average indexed monthly earnings calculated using the highest 35 years of covered earnings, capped at the annual maximum taxable earnings amount. We summarize the benefit calculation procedure later; for complete information, see <abbr class="spell">SSA</abbr> (2015).</p>
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<p> <a href="#mt2" id="mn2">2</a> Although we concede the central influence of education on lifetime earnings, we believe that few social scientists would minimize the importance of other personal characteristics such as innate ability, perseverance, and social skills. Nor would many, we believe, deny the critical importance of luck.</p>
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|
<p> <a href="#mt3" id="mn3">3</a> Throughout the article, we assign all levels of educational attainment to one of two broad categories. We refer to all individuals who have earned a <span class="nobr">4-year</span> college degree, including those with graduate degrees of any level, as college graduates. We refer to all others, including high school graduates with no postsecondary education, those with some college but no degree, and those with <span class="nobr">2-year</span> degrees or technical certificates—as well as high school dropouts— collectively as college nongraduates. An analysis using four educational-attainment categories produced broadly similar results.</p>
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<p> <a href="#mt4" id="mn4">4</a> For the 2004 <abbr>SIPP</abbr> panel, 88 percent of survey records were matched to their Social Security earnings records. The match rate for the 2008 panel was more than 90 percent.</p>
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|
<p> <a href="#mt5" id="mn5">5</a> Imputed rental income is the return that homeowners receive from owning instead of renting, minus costs of homeownership. <abbr>MINT</abbr>7 estimates it as a 3.0 percent annual real return on home equity.</p>
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|
<p> <a href="#mt6" id="mn6">6</a> The <abbr>SIPP</abbr> represents the civilian noninstitutionalized resident population of the 50 states and the District of Columbia. It does not include residents of nursing homes or prisons, military personnel living on base, or residents of <abbr>U.S.</abbr> territories. Because the Social Security area population includes those groups, it is about 3.0 percent to 3.5 percent larger than the <abbr>SIPP</abbr> population. For further information about the <abbr>SIPP</abbr>, see <a href="https://www.census.gov/programs-surveys/sipp.html">http://www.census.gov/sipp/</a>.</p>
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|
<p> <a href="#mt7" id="mn7">7</a> The <span class="nobr">low-,</span> <span class="nobr">intermediate-,</span> and <span class="nobr">high-cost</span> scenarios are sometimes referred to as alternative <abbr title="one">I</abbr>, alternative <abbr title="two">II</abbr>, and alternative <abbr title="three">III</abbr>, respectively.</p>
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|
<p> <a href="#mt8" id="mn8">8</a> The national <abbr class="spell">AWI</abbr> is based on wages subject to federal income taxes and contributions to deferred compensation plans. It includes earnings in covered and noncovered employment, below and above the annual maximum amount subject to Social Security payroll taxes.</p>
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|
<p> <a href="#mt9" id="mn9">9</a> In our alternative simulation, we do not adjust earnings by educational attainment until after any model-projected changes in marital status, onset of disability, retirement, and Social Security claiming. Therefore, the earnings adjustments do not affect the model's projections of those events, which are unchanged from the baseline simulation.</p>
|
|
<p><a href="#mt10" id="mn10">10</a> <abbr>MINT</abbr>7 can project income through 2099 by simulating <span class="nobr">post-1979</span> birth cohorts and immigrants. Our simulations included only persons born before 1980 who participated in the <abbr>SIPP</abbr> in 2004 or 2008, representing the civilian noninstitutional resident <abbr>U.S.</abbr> population aged 31 or older in 2010.</p>
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|
<p><a href="#mt11" id="mn11">11</a> Historically, the earnings of workers with advanced degrees have grown more rapidly than the earnings of those who have only <span class="nobr">4-year</span> degrees, and the earnings of workers with some college have grown faster than the earnings of workers who never attended college. Nevertheless, our objective is to estimate the effect of earnings growth differentials on future Social Security benefits, not to estimate the future rates of earnings growth by education. Therefore, assigning average rates of earnings growth to each of two educational groups is sufficient for our purpose.</p>
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|
<p><a href="#mt12" id="mn12">12</a> According to the <abbr>SIPP</abbr>, in 2010, 32 percent of people born <span class="nobr">1965–1979</span> had earned a <span class="nobr">4-year</span> college degree and 68 percent had not; however, the college graduates received 52 percent of that population's earnings while the nongraduates received 48 percent.</p>
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<p><a href="#mt13" id="mn13">13</a> We focus on covered earnings because they are the earnings on which Social Security benefits are based.</p>
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<p><a href="#mt14" id="mn14">14</a> In this article, we use “average wage” and “<abbr class="spell">AWI</abbr>” interchangeably, although the two are not technically identical. Unlike an index that expresses the value for a given year as a ratio or percentage of the value for a reference year, the <abbr class="spell">AWI</abbr> expresses values as earnings levels. <abbr class="spell">AWI</abbr> values closely approximate, but do not precisely match, actual average wages. For further details, see <a href="/OACT/COLA/AWI.html">http://www.socialsecurity.gov/<abbr title="O ACT">OACT</abbr>/<abbr>COLA</abbr>/<abbr class="spell">AWI</abbr>.html</a>.</p>
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<p><a href="#mt15" id="mn15">15</a> All tables present data only for individuals projected to have positive earnings in the given year.</p>
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<p><a href="#mt16" id="mn16">16</a> Within each educational-attainment category, the trend in the ratio of median earnings to <abbr class="spell">AWI</abbr> over time reflects interactions between employment rates, hours of work, and hourly earnings at each age among workers in each annual birth cohort.</p>
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<p><a href="#mt17" id="mn17">17</a> See maximum taxable earnings amounts for 1937 to 2014 at <a href="/benefits/retirement/planner/maxtax.html">http://www.socialsecurity.gov/planners/maxtax.htm</a>.</p>
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<p><a href="#mt18" id="mn18">18</a> As legislated in 1983, an individual's <abbr class="spell">FRA</abbr> depends on his or her year of birth; for example, for individuals reaching <abbr class="spell">FRA</abbr> in 2015, it is 66. For a list of <abbr class="spell">FRA</abbr>s, see <a href="/benefits/retirement/planner/agereduction.html">http://www.socialsecurity.gov/planners/retire/retirechart.html</a>.</p>
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<p><a href="#mt19" id="mn19">19</a> The formulas for calculating both <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> are established in law by Congress at 42 <abbr>U.S.C.</abbr> §415. See <a href="https://www.law.cornell.edu/uscode/text/42/415">http://www.law.cornell.edu/uscode/text/42/415</a>.</p>
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<p><a href="#mt20" id="mn20">20</a> To isolate the effects of the simulations on retired workers, we included <abbr>AIME</abbr> and <abbr class="spell">PIA</abbr> projections in <a href="#table3">Table 3</a> only for individuals claiming Social Security benefits at age 62 or older. Because we adjusted earnings by educational attainment after the model-simulated retirement decision, mean and median claiming ages were the same in both simulations.</p>
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<p><a href="#mt21" id="mn21">21</a> Both the baseline and alternative simulations reflect <i>scheduled benefits</i> under current law. The <i>2012 Trustees Report</i> estimates that the Social Security trust funds will be depleted in 2033. Absent remedial action by Congress in the interim, Social Security tax revenue will be sufficient to pay about 75 percent of scheduled benefits after the trust funds are depleted. Favreault (2009) discusses how different rates of wage growth might affect the trust fund balances.</p>
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</div>
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<div id="references">
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<h2>References</h2>
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<p>Abel, Jaison R., and Richard Deitz. 2014. “Do the Benefits of College Still Outweigh the Costs?” <i>Federal Reserve Bank of New York Current Issues in Economics and Finance</i> 20(3).</p>
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<p>Autor, David H. 2014. “Skills, Education, and the Rise of Earnings Inequality Among the 'Other 99 Percent'.” <i>Science</i> 344(6186): <span class="nobr">843–851.</span></p>
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<p>Autor, David H., Lawrence F. Katz, and Melissa S. Kearney. 2008. “Trends in <abbr>U.S.</abbr> Wage Inequality: Revising the Revisionists.” <i>The Review of Economics and Statistics</i> 90(2): <span class="nobr">300–323.</span></p>
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<p>Becker, Gary S. 1964. <i>Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education.</i> Chicago, <abbr title="Illinois">IL</abbr>: University of Chicago Press.</p>
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<p>[Board of Trustees] Board of Trustees of the Federal <span class="nobr">Old-Age</span> and Survivors Insurance and Federal Disability Insurance Trust Funds. 2012. <i>The 2012 Annual Report of the Board of Trustees of the Federal <span class="nobr">Old-Age</span> and Survivors Insurance and Federal Disability Insurance Trust Funds.</i> Washington, <abbr class="spell">DC</abbr>: Government Printing Office. <a href="/oact/tr/2012/tr2012.pdf">http://www.socialsecurity.gov/oact/tr/2012/tr2012.pdf</a>.</p>
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<p>Bowlus, Audra J., and <span class="nobr">Jean-Marc</span> Robin. 2004. “Twenty Years of Rising Inequality in <abbr>U.S.</abbr> Lifetime Labour Income Values.” <i>The Review of Economic Studies</i> 71(3): <span class="nobr">709–742.</span></p>
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<p>Card, David. 1999. “The Causal Effect of Education on Earnings.” In <i>Handbook of Labor Economics</i>, Volume 3A, chapter 30, edited by Orley C. Ashenfelter and David Card, <span class="nobr">1801–1863.</span> Amsterdam: Elsevier Science <abbr>B.V.</abbr></p>
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<p>———. 2002. “Education Matters.” <i>Milken Institute Review</i> 4th Quarter 2002: <span class="nobr">73–77.</span></p>
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<p>Daly, Mary C., and Leila Bengali. 2014. “Is It Still Worth Going to College?” Federal Reserve Bank of San Francisco Economic Letter <span class="nobr">2014-13.</span></p>
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<p>Favreault, Melissa M. 2009. “Rising Tides and Retirement: The Aggregate and Distributional Effects of Differential Wage Growth on Social Security.” Washington, <abbr class="spell">DC</abbr>: Urban Institute.</p>
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<p>Favreault, Melissa M., and Owen G. Haaga. 2013. “Validating Longitudinal Earnings in Dynamic Microsimulation Models: The Role of Outliers.” <abbr class="spell">CRR</abbr> Working Paper <abbr title="Number">No.</abbr> <span class="nobr">2013-19.</span> Chestnut Hill, <abbr title="Massachusetts">MA</abbr>: Center for Retirement Research at Boston College.</p>
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<p>Goldin, Claudia, and Lawrence F. Katz. 2007. “Long-Run Changes in the <abbr>U.S.</abbr> Wage Structure: Narrowing, Widening, Polarizing.” <abbr class="spell">NBER</abbr> Working Paper <abbr title="Number">No.</abbr> 13568. Cambridge, <abbr title="Massachusetts">MA</abbr>: National Bureau of Economic Research.</p>
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<p>Heckman, James J., Lance J. Lochner, and Petra E. Todd. 2003. “Fifty Years of Mincer Earnings Regressions.” <abbr class="spell">NBER</abbr> Working Paper <abbr title="Number">No.</abbr> 9732. Cambridge, <abbr title="Massachusetts">MA</abbr>: National Bureau of Economic Research.</p>
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<p>Lemieux, Thomas. 2006. “Postsecondary Education and Increasing Wage Inequality.” <i>The American Economic Review</i> 96(2): <span class="nobr">195–199.</span></p>
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<p>Mincer, Jacob. 1958. “Investment in Human Capital and Personal Income Distribution.” <i>Journal of Political Economy</i> 66(4): <span class="nobr">281–302.</span></p>
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<p>Mitchell, Josh. 2014. <i>Educational Attainment and Earnings Inequality Among <abbr class="spell">US</abbr>-Born Men: A Lifetime Perspective.</i> Washington, <abbr class="spell">DC</abbr>: Urban Institute.</p>
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<p>Pew Research Center. 2014. <i>The Rising Cost of</i> Not <i>Going to College.</i> <a href="https://www.pewresearch.org/social-trends/2014/02/11/the-rising-cost-of-not-going-to-college/">http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/</a>.</p>
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<p>Smith, Karen E. and Melissa M. Favreault. 2013a. <i>A Primer on Modeling Income in the Near Term, Version 7.</i> Washington, <abbr class="spell">DC</abbr>: Urban Institute.</p>
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<p>———. 2013b. <i>Modeling Income in the Near Term, Version 7: Final Report.</i> Washington, <abbr class="spell">DC</abbr>: Urban Institute.</p>
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<p>[<abbr class="spell">SSA</abbr>] Social Security Administration. 2014. <i>Income of the Aged Chartbook, 2012</i>. <abbr class="spell">SSA</abbr> Publication <abbr title="Number">No.</abbr> <span class="nobr">13-11727.</span> Washington, <abbr class="spell">DC</abbr>: <abbr class="spell">SSA</abbr>. <a href="/policy/docs/chartbooks/income_aged/2012/index.html">http://www.socialsecurity.gov/policy/docs/chartbooks/income_aged/2012/index.html</a>.</p>
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<p>———. 2015. “Your Retirement Benefit: How It Is Figured.” <abbr class="spell">SSA</abbr> Publication <abbr title="Number">No.</abbr> <span class="nobr">05-10070.</span> <a href="/pubs/EN-05-10070.pdf">http://www.socialsecurity.gov/pubs/<abbr class="spell">EN</abbr>-05-10070.pdf</a>.</p>
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