In a previous post we detailed that Michigan has a two-tier labor market. One for those with a B.A. or more and the other for those without a B.A. The B.A. labor market is dominated by jobs that pay middle class wages for a household of three. The non B.A. labor market is dominated by jobs that pay less than what a household of three needs to be lower middle class.
That description of the labor market is an analysis of payroll jobs only, where wages are calculated for full-time, year-round workers only. And where education requirement is what is required by an occupation, not the education attainment of each worker.
So that raises the question “how much do workers actually earn in that two-tier labor market?” Where some work less than full time, while other work more than full time. Some work more than one job. Some work in gig jobs, some are self employed. Some earn overtime pay and others get bonuses from work.
The Census Bureau publishes a table of cash earnings from all work that allow us to answer the “how much do workers earn” question. We looked at data for U.S. workers ages 25-64. We looked at anyone who worked in the strong 2019 economy and for those who worked full time, year round. We used $47,500 as the lower middle class and $70,000 as the upper middle class thresholds.
Although this is national data, because we are using thresholds close to our Michigan middle class thresholds we are are quite confident that the finding below are representative of Michigan workers as well as U.S. workers.
The headline is that one half all those who worked at all in the strong 2019 economy earned less that what is needed for a household of three to be lower middle class. Even more concerning, is that two thirds of those without a B.A. who worked at all in the strong 2019 economy earned less that what is needed for a household of three to be lower middle class
More specifically, here is what we found in terms of how many workers earned less than our $47,500 lower middle class three person household threshold:
- For all 135 million workers 50 percent had cash work earning of less than $47,500; for the 105 million full time, year round workers 41 percent had cash work earning of less than $47,500.
- For those with a high school degree it is 67 and 60 percent
- For those with some college, no degree it is 60 and 50 percent
- For those with an Associate degree it is 54 and 45 percent
- For those with a B.A. and more it is 30 and 22 percent
Here is what we found in terms of how many workers earned more than our $70,000 three person household upper class threshold:
- For all 135 million workers 30 percent had cash work earning of more than $70,000; for the 105 million full time, year round workers 36 percent had cash work earning of more than $70,000
- For those with a high school degree it is 14 and 17 percent
- For those with some college, no degree it is 20 and 25 percent
- For those with an Associate degree it is 23 and 27 percent
- For those with a B.A. and more it is 48 and 55 percent
Finally, since conventional wisdom has it that there are lots of jobs that pay six figures that don’t require a B.A. here is the reality of how many workers in 2019 had cash earnings from all jobs of at least $100,000. As you can see those earning six figures overwhelmingly have a B.A. or more:
- 21 million out of 135 million (16 percent) Americans who worked in 2019 had cash earning from work of at least $100,000.
- Of the 21 million 16 million (76 percent) had a B.A.
- 28 percent of workers with a B.A. had cash earning from work of at least $100,000.
- Six percent of workers without a B.A. had cash earning from work of at least $100,000.
The data are confirming of the reality that Michigan has a two-tier labor market. One where the dividing line is whether someone has a B.A. or not. It is not that you can’t earn a middle class wage if you don’t have a four-year degree. One third of workers without a B.A. made at least $47,500. Nor is having a B.A. a guarantee of earning a middle class wage. Three out of ten workers with a B.A. made less than $47,500.
That said the reality is that the most reliable path to a middle class wage is by having a B.A. or more. It is what gets you into the higher wage tier of Michigan’s two-tier labor market.
