Blue-collar workers are making salary gains -- but don't cheer yet.

http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371806/inde
x.htm?section=money_topstories

(FORTUNE Magazine) - I have good news and bad news.
The good news is that income inequality in the U.S. -- after
30-plus years of steadily increasing -- may be decreasing. The
bad news is why that trend is reversing. It looks like another
lesson in how profoundly a globalizing economy is upending
what we thought we knew.

What could that trend reversal mean? The most obvious
explanation seems highly counterintuitive: The skill premium, the
extra value of higher education, must have declined after three
decades of growing. The Fed researchers didn't pursue that
line of thought, but economists Lawrence Mishel and Jared
Bernstein at the Economic Policy Institute did, and they found
supporting evidence in the new Economic Report of the
President, issued within days of the new Fed survey. It cited
Census Bureau data showing that the premium had indeed
fallen sharply between 2000 and 2004. The real annual
earnings of college graduates actually declined 5.2 percent,
while those of high school graduates, strangely enough, rose
1.6 percent.

The other main possibility is that something unexpected and
fundamental is changing in the way the U.S. economy rewards
education. We don't yet have complete data, but anyone with
his eyes open can see obvious possibilities. Just maybe the jobs
most threatened by outsourcing are no longer those of factory
workers with a high school education, as they have been for
decades, but those of college-educated desk workers.

Perhaps so many lower-skilled jobs have now left the U.S.--or
have been created elsewhere to begin with--that today's high
school grads are left doing jobs that cannot be easily
outsourced--driving trucks, stocking shelves, building houses,
and the like. So their pay is holding up.

College graduates, by contrast, look more outsourceable by
the day. New studies from the Kauffman Foundation and Duke
University show companies massively shifting high-skilled
work--research, development, engineering, even corporate
finance--from the U.S. to low-cost countries like India and
China. That trend sits like an anvil on the pay of many U.S.
college grads.

We need more evidence before concluding that we're at a
major turning point in the value of education to American
workers. But it certainly feels like one, based on what we can
observe. Higher education still confers an enormous economic
advantage. Just not as enormous as it used to be.

As for income inequality, pretty much everyone has always
hated it, and its growth was a certain cue for handwringing and
brow furrowing. Well, it's not growing anymore. Because our
best-educated workers are earning less, and the incentives for
higher education may thus be declining, the result could be a
more uniform--and lower--standard of living. Be careful what
you wish for.
________________________________________________

Bush selling out America.