Does college pay off equally for the children of the rich and the poor?

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by Dirk Witteveen and Paul Attewell

As enrollments in the American secondary and post-secondary school system grew throughout the 20th century, so did the meritocratic ideal of social mobility. Most people came to believe that stable employment can be secured through hard work in school and by obtaining educational credentials – and to a large extent, this holds true. Both school performance and educational attainment are positively and strongly associated with better, safer, and higher-paying jobs. The more education, the better.

But meritocracy makes another promise: educational diplomas could erase the effect of parental class background on their offspring’s destiny in the labor market. Popular culture celebrates the idea that no matter what your parents do, graduating from college is your ticket into the middle class. So, the American higher educational system is proclaimed the “Great Equalizer,” with the bachelor’s degree as the ultimate vehicle for upward mobility.

Some sociological research published since the 1980s has confirmed that a college degree fulfills this promise, leading scholars to state that the chances of achieving economic success are independent of social background among those who attain a BA. In our study, recently published in Social Forces, we present analyses that challenge this upbeat conclusion.

The resources available in a students’ home have convincingly been associated with all kinds of educational outcomes. Partially driven by residential patterns, more affluent families can afford to enroll their children in better elementary schools and college-oriented high schools. On average, their children obtain higher grades and SAT scores, resulting in higher odds to enroll in college. This so-called class background effect on educational performance and attainment is well-established in academic research.

However, previous research had indicated that if lower-class students beat the odds and graduate with a bachelor’s degree, there is no observable difference in earnings between them and their higher-class counterparts in the labor market. A baccalaureate degree is thus considered to be the “silver bullet” for making it into the middle class.

If this were true, earnings differentials of bachelor’s degree holders shouldn’t be affected by parental income. We asked the question: does a BA degree yield the same individual-level pay-off in the labor market across different family backgrounds?

After examining the earnings of college graduates who obtained their BA in the 1990s and 2000s, we concluded that the pay-off does in fact, vary by family background. We found that ten years after graduating with a BA, individuals from lower-income families earned substantially less compared to graduates from middle- and upper-class families. We estimated this gap at almost 15 percent.

What about impacting factors like gender, race, college selectivity, and college major? These factors matter, in varying degrees, in explaining earnings inequality among college graduates in the US labor market. But even after adjusting for these effects, we still found strong class background differences.

Why does class background matter for the post-graduation careers? What is the mechanism that explains the sharp earnings inequality by family background?

Sociological research has documented how, even before graduation, students from wealthier backgrounds can spend more time on extracurricular activities like unpaid internships, while their peers may need to take on a side-job to afford tuition. Upper-class families also tend to use their own professional social networks to steer graduates into higher-paying sectors of the labor market. Moreover, upon graduation, more affluent parents simply have more financial resources to help their children “bridge” the time from college to a first job. For instance, by setting them up in apartments in large cities or paying their expenses while they search for a good job.

To see how this social and cultural “capital” might influence offspring’s earnings in the labor market, we asked an additional question: is the earnings gap between college graduates from different class backgrounds the result of higher-class graduates ending up in a different and higher-paying sector of the labor market than graduates from low-income families? Or are graduates from lower-class and higher-class backgrounds rewarded differently within the same labor market niche? (A niche is an occupation within a specific industry.)

It turns out that there is much more within-niche inequality than between-niche inequality. So, graduates from different class backgrounds may make quite similar career decisions, but their earnings differ even when they hold jobs in the same occupation and industry. How could such differences in pay come about? One explanation is that parental bridging allows graduates from more affluent families to take their time when looking for a job and so can make their way into better-paying firms, while graduates from lower-income backgrounds have to immediately find work, and therefore are likely to accept relatively lower-paid jobs, even within the same industry.

A second possibility, which is consistent with prior research on discrimination in hiring, would follow if those who hire are biased in favor of graduates from more affluent families, perhaps impressed by their polished manners or appearance, or by their resumes showing internships, foreign travel, and the like. So when there is competition for a job opening, applicants from higher class backgrounds may tend to beat out those from poorer families.

In conclusion, contrary to earlier findings, we found that the income level of one’s parents does matter for college graduates’ earnings levels.

Our results should not be confused, however, with the (false) take-away that undertaking college is not worth it for lower-class students. It is. High school graduates and college attendees who do not finish a degree make substantially less than college graduates throughout their careers, regardless of class background. But what we particularly care about is whether BA degrees are class equalizers. As we’ve found, a bachelor’s degree undoubtedly has some equalizing effect, but it alone does not erase the influence of family background on career earnings.

Dirk Witteveen is a PhD candidate in Sociology and Paul Attewell is Professor of Sociology, both at the City University of New York, The Graduate Center. This post summarizes findings from “Family Background and Earnings Inequality among College Graduates” in Social Forces.

Image: greymatters via pixabay