It’s worthwhile to place this analysis within the context of a larger debate about the labor market and why it’s not delivering broad-based wage growth to the people who comprise it. Since 2000,median wages have stagnated and the labor market participation rate has fallen, as have the rates of job-to-job mobility and household and small business formation. Young workers are not climbingthe job ladder to the middle class. The share of national income earned by workers declined. Over an even longer timeframe, wages have not kept pace with worker productivity.
All of these phenomena suggest that the labor market isn’t working for most employees—problems that aren’t confined to those without a college education—and that suggests the problem isn’t that too few people have college degrees. Rather than focus on education attainment as the solution to inequality, it’s time for policy-makers to move on from the race between education and technology and focus on our stagnant labor market. As Summers said, “the core problem is that there aren’t enough jobs.” The key to reducing inequality is more jobs and a higher demand for labor. In the absence of more jobs, heroic assumptions about educational improvement are likely to deliver only modest economic benefits.