The Impact of Low Income College Students on Inequality August 18, 2014 Joshua Miller Joshua Miller College is generally a good investment. On average, people who earn a four year degree go on to make almost twice as much as those with only a high school diploma. But while those future high earners are in college, they tend to be relatively poor (speaking from experience here). The relative poverty of college students has some big implications for how we look at inequality. We recently released a new report that takes a new look at the use of household income data and it’s implications for inequality. Incomes are Low in College Towns College towns are often home to the lowest-income places in the United States (table below). The Fifteen Lowest-Income Places in the United States Census Place Number of Households Median Household Income (2012 Dollars) Mean Household Income (2012 Dollars) Higher Education Boone, North Carolina 6221 $16,447 $33,173 Appalachian State University Carbondale, Illinois 9601 17743 36495 Southern Illinois University Athens, Ohio 6497 18428 41163 Ohio University East St. Louis, Illinois 10612 19278 27732 Statesboro, Georgia 9850 20751 32586 Georgia Southern University Opa-locka, Florida 5163 20757 30512 East Cleveland, Ohio 8074 20797 29280 Opelousas, Louisiana 6110 20983 33058 University CDP (Hillsborough County), Florida 16657 20992 28893 University of South Florida Selma, Alabama 7812 22076 40092 Milledgeville, Georgia 5839 23580 39824 Central Georgia Technical College, Georgia College, Georgia Military College Prichard, Alabama 8714 23726 32582 State College, Pennsylvania 12178 24104 45138 Pennsylvania State University Pullman, Washington 10151 24125 47808 Washington State University Oxford, Ohio 5730 24211 49458 Miami University Source: U.S. Census Bureau, American Community Survey (Selected Economic Characteristics, 5-year Estimates). Note: minimum 5,000 households. According to U.S. Census Bureau data, Hillsborough County, Florida (the home of the University of South Florida) has a median income of just over $20,000 a year. It would be very easy for the common observer to assume that the residents of Hillsborough County have a relatively low quality of life, when in fact they have a bright future. One example: If you observed the tax data for surgeons, you would find very high degrees of inequality. Through their twenties, surgeons are in medical school and earning very little. Whereas, in their prime, with a proven track record and solid experience, they can earn $400,000 or more. Economists and social scientists often consider low incomes as a sign of a lack of opportunity. Although that is sometimes very true, the opportunity costs of the situation must also be taken into account. Economist Alan Cole writes: “A reasonable person would not say a construction worker is clearly better off than a business school student. And yet, it is the latter who benefits from progressive income taxes and refundable tax credits at the expense of the former. Use data unreasonably and you will get unreasonable results.” The Growth in College Enrollment Not only do post-secondary students predictably skew overall income data, they do it at an accelerating rate. Over 20 million students are currently enrolled in post-secondary education. Since the late 1970s, we have seen post-secondary enrollment nearly double, from just over 10 million students to over 20 million students today. This growth in post-secondary enrollment must certainly be considered in any discussion of changes in inequality. To read the full report: click here Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for Federal Tax Policy Business Taxes Individual and Consumption Taxes
