By Michael Holzman, Schott Foundation for Public Education
The Chairman of the Federal Reserve Board, Dr. Benjamin S. Bernanke, said in a recent interview that rising economic inequality in the United States is “a very bad development . . . It’s creating two societies. And it’s based very much, I think, on educational differences . . . If you’re a college graduate, unemployment is 5 percent. If you’re a high school graduate, it’s 10 percent or more. It’s a very big difference” (New York Times, December 5, 2010).
Employment, as Chairman Bernanke pointed out, and consequently income and wealth, is highly correlated with education. Americans tell our census takers that 30% of White adults 25 years of age or older have finished college, as compared to 18% of Black adults and 13% of Hispanic adults. It is twice as likely that a White, non-Hispanic, adult will have finished college as a Black or Hispanic adult. The Schott Foundation’s Opportunity to Learn study has shown that those ratios begin at the k-12 level, where it is twice as likely that a White, non-Hispanic student will be in a good school as a Black or Hispanic student.
Half a chance in school leads to half a chance to graduate from college leads to twice the unemployment rate.
Two societies: The top ten percent of US wage earners received half the total non-capital-gains income in 2007. Disparities are even more extreme for wealth: In 2007 the wealthiest 1% of households owned 35% of all privately held wealth while the bottom 80% held only 15%. America being what it is, these inequities manifest by race and ethnicity. While the median annual household income in 2006 for White, non-Hispanic families was $50,000, for Black families was $30,000 and for Hispanic families was $35,000. Again, the situation is more extreme for wealth: Median household net worth (including the value of homes) in 2007 was $144,000 for White families and $9,000 for Black and Hispanic families. Excluding the value of homes, median household net worth was $44,000 for White families and negligible for Black and Hispanic families (Deohoff, 2010).