Economic quickies for a Friday

The US created 180,000 new jobs in March of this year, for a total of around 455,000 new jobs since the beginning of 2007. As I've mentioned before, this represents 455,000 people whose incomes have gone from $0 to (let's assume) the median of around $37k per year. It is the equivalent of taking that many people out of poverty.

For each year that these people keep their jobs -- which is to say, every year that employment growth is zero or higher -- $16,000,000,000 of new wealth will be created.

You would be hard pressed to find a charity with that sort of performance, which is why I think job creation is the single greatest humanitarian effort we can make. Has the United Nations brought 400,000 people out of poverty since the beginning of the year?

As an example, the (Red) campaign -- probably the highest-profile charity campaign right now -- has raised only $18M in the year since it launched. That's one-tenth of one percent of the money created by these new jobs. If the celebrities involved truly cared about human suffereing, they would lend their images to the cause of, say, reducing the capital gains tax or agriculture subsidies that keep poor people poor. But that ain't sexy, yo.

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The biggest driver of inequality in this country is the education premium [pdf]. In a nutshell, higher levels of education result in higher pay, and that those with better educations are in increasing demand.

The recent news is that top colleges are seeing higher-than-ever applications, and thus are only able to admit a smaller percentage of applicants. Will this drive the education premium -- and therefore inequality -- higher?

Maybe:

The number of high school graduates has increased every year since 1996 as the children of the huge, post-World War II baby-boom generation passed through. During the same time, college applications soared as the economy increasingly rewarded higher education. Federal data in 2004 showed male college graduates earning 67 percent more and female graduates 68 percent more than those with only a high school diploma.

Or, maybe not:

The one bit of good news, often overlooked by worried families, is that there are still many more spots available nationwide than there are college students. Harvard, Yale and Princeton universities are accepting only about 10 percent of their applicants, but the average U.S. college accepts 70 percent.

Studies have shown that students with similar personal characteristics, such as persistence and charm, do just as well financially 20 years after college no matter whether they went to a well-known or little-known college.

So, going to a prestigious university may help in the short-term, but after you've been in the workforce for a while, it's your performance that matters. It also appears that the quality of applicants is increasing, which means that there are more well-prepared students in the world.

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Bruce Bartlett says we are all supply-siders now [h/t Mankiw]. Read the whole thing.

Comments

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Government spending is poverty. It is the destruction of wealth. Imagine a world of hungry people.