College, Algebra, Walmart, and the Middle Class

A recent article (warning: link to subscription site) by Anthony Carnevale in the Chronicle of Higher Education discussed how the American middle-middle class is disappearing. In other words, the American middle class is being split into two new classes.

...the middle class is sispersing into two equal and opposing streams: upwardly mobile college-educated haves and downwardly mobile non-college-educated have-nots.

Carnevale cites plenty of statistics to support this claim.

Between 1990 and 2004 average wages for people with college degrees have increased by more than $10,000 (in 2004 dollars), and the gap between average wages for people with only a high school education and people with a college degree has grown to $22,000 (or even $45,000 if the comparison is made to people with graduate degrees).

Moreover, the 2004 census showed that 95% of people with college degrees have employer-provided health-care coverage, compared to 77% of high-school graduates and 67% of high-school dropouts. (Jane Galt recently wrote about how providing health-care coverage is often a form of giving a raise, underappreciated by the employee.)

Finally, in 1967 50% of families headed by high-school dropouts and 70% of families headed by high-school graduates (without a college degree) were in the middle class. In 2004 those numbers dropped to 30% and 50%. Meanwhile, families headed by a college graduate rose from 22% to 36% of people in the top thirty percent of family incomes.

(As an aside: these statistics show why this graph is misleading. Inflation-adjusted middle class incomes have been declining because the constituency of the middle class is changing, and because middle-class workers are increasingly being given raises in the form of health-care coverage. Overall the economy has been doing well.)

Carnevale's article merely observes that according to the census statistics the middle class is bifurcating, and a college degree is the dominant factor for predicting which part someone is in. He does not explain why.

I'll post three related hypothesis, based purely on personal observations.

1. As middle-class jobs increasingly are sales or service (rather than manufacturing), employers value a college degree since it shows the person is to some extent a team player. At the very least, they have proved they can do what "bosses" want for a few years. They are also probably used to group projects, knowing when to ask for help, and communicating in ways other people understand even if that communication style is not the most natural for themselves.
2. Along with more teamwork, middle-class jobs are requiring more abstract thinking, so employers now have reason to value algebra experience as much as arithmetic skill. Percentages, ratios, and measurement conversions may be the most advanced math people use in daily life. But the ability to isolate x in the equation xy = xz + yz shows a level of abstract thinking not demonstrated by 5x = 3x + 15, which is considered relevant to many middle-class on-the-job decisions. (Thus the optional portfolios for my classes.)
   
3. The rise of the "Big 3" retailers (Costco, Walmart/Sam's Club, and Target) has changed the niche of small retail stores. No longer able to compete with selling to the poor or lower-middle class, smaller stores have had to adjust by targeting the upper-middle class. Those that have succeeded have improved their own incomes (for example, small coffee shops are enjoying how Starbucks has somehow made it quite natural to pay more than $2 for a cup of coffee). Those that failed to adapt went out of business, pushing their workers down from middle-middle class to lower-middle class.