STRATEGIC

90 Strategic Choices for a Turbulent World: In Pursuit of Security and Opportunity
For those who are working, however, the wage premium for college
graduates has soared, particularly since 2000. 59 Between 2000 and
2009, a person with a bachelor’s degree earned 127 percent of what
a person without a high school diploma did, and a person with an
advanced degree made 187 percent more. This wage gap became even
steeper after the Great Recession. 60 The trend toward income inequality
was accentuated by the notable growth in so-called “superstar
earners.” This refers to the top 0.1 percent of earners in the United
States, whose share in the population quadrupled between 1976 and
2012, from 2 percent to 8 percent. 61 This trend, which is also seen
in other advanced economies, is partly explained by technology and
globalization, but other factors are also believed to be at play. In the
United States, a range of extended poverty programs have cushioned
the effects of inequality; while the official poverty rate has increased
since 2000, tax credits and transfer payments kept the real poverty rate
from rising. 62 The increase in child poverty rates has become a major
concern, as the rate for children under six years of age, which had fallen
to 17.8 percent in 2000, was 23.5 percent in 2014. 63 Parental income is
strongly correlated with the scholastic achievement of children. 64 How-
59 The wage premium—the extra amount that college-educated workers earned compared
with non–college-educated workers, after controlling for experience and gender—averaged
around 50 percent between 1963 and the early 1980s but then rose sharply through 2012 to
peak at nearly 100 percent. Charles I. Jones, The Facts of Economic Growth, Cambridge, Mass.:
National Bureau of Economic Research, NBER Working Paper No. 21142, 2015, p. 17.
60 Shatz, 2016, pp. 18–19.
61 Francisco Perez-Arce et al., Inequality and Opportunity: The Relationship Between Income
Inequality and Intergenerational Transmission of Income, Santa Monica, Calif.: RAND Corporation,
RR-1509-RC, 2016, pp. 54–55.
62 Perez-Arce et al., 2016, pp. 19–20.
63 U.S. Census Bureau, “Historical Poverty Tables: People and Families—1959 to 2015,” web
page, Table 20, “Poverty Status of Related Children Under 6 Years of Age,” September 2016a.
64 The gap between the test scores of the poorest and richest 10 percent of the U.S. population
among students born in 2000 was 75 percent wider than among students born in 1943.
Edward Alden and Rebecca Strauss, How America Stacks Up: Economic Competitiveness and
U.S. Foreign Policy, New York: Council on Foreign Relations, 2016.