The richest one-fifth of American households makes more than half of the country’s income. The poorest one-fifth makes less than four percent. Have American colleges played a role in the country’s widening income inequality? The Chronicle’s Maya Iskandarani sat down with Charles Clotfelter, Z. Smith Reynolds professor of public policy studies and author of a new book, "Unequal Colleges in the Age of Disparity," to find out. This interview has been edited and condensed for clarity.
The Chronicle: Why did you write this book? What are its main points?
Charles Clotfelter: I wanted to find out what the market for college looked like over a long period. Why? Because our economy has been experiencing a tremendous increase in income inequality. I wanted to know—what was the role of colleges in this? Had they made for more equality, more opportunity, as a lot of people would think college ought to? Or had the colleges, in fact, made things worse?
TC: What do you mean by ‘market’?
CC: The market is a service that firms like Duke University offer. Customers like you come in and they consume this service. One of the unusual aspects of this particular industry is that the customers—you—are also one of the most important inputs to production. So, imagine you were going to go to a gym to get in good shape. If you don't exert yourself, you're not going to get anything out of it. In the same way, the customers of colleges are also doing a lot of the heavy lifting.
Footnote—since about 1980, the income distribution in this country has gotten more unequal. The share of total income consumed by the top one-fifth of households has been going up and up and up. The share that's been consumed by everybody else has been going down.
TC: How do you know?
CC: There are numerous studies and government statistics that tell us. Every year there's a new report. The richest one-fifth of American households in 1970 made 43 percent of all income. In 2016, they made 52 percent. The bottom one-fifth made 4.1 percent. Now, they make 3.1 percent. So, in the backdrop, we’ve got these colleges. Colleges, at an individual level, help the girl from Queens who never had experience with affluent people go to Princeton and one day become a justice of the Supreme Court. If you look at [Associate Justice of the Supreme Court] Sonia Sotomayor’s autobiography, you’ll be able to see what an important role Princeton was in her success. So, college can have that effect. What I wanted to find out was, did it?
TC: Did it?
CC: The evidence would suggest otherwise. The difference in the income of the students that go to the most selective colleges went up at a rate far beyond that of the income of students at less selective public institutions, for example. The percentage who went to private schools went up. The percentage whose parents have graduate degrees went up.
TC: So your conclusion, explicitly, was?
CC: [It] was that there was a divergence of incomes between the most selective and the least selective colleges. That was one conclusion. There was a report done in 1980 by the chancellor at Duke University. He was really worried that Duke was going to fall behind the public institutions, so he recommended several cuts. As it turned out, the next 30 years were nothing but boom times for the Dukes of the world. Inequality turned out to be good for Duke, ironically. Even though its professors were decrying the increase in inequality, the University was doing better.
TC: Why?
CC: There are a couple reasons. The rich were getting richer. The most affluent one-fifth? Their incomes were going up really fast. Number one, that gave them enough money to buy not only good real estate and nice cars but also to pay the rising tuition of the most selective colleges. Second—they were giving contributions. People at the very top were giving donations to universities. Places like Duke and Harvard [University], [the University of] Chicago and [the University of] Miami, got a wealth of new donations that allowed them to build new buildings and pay their professors more. And the endowments for these private universities did very well.
TC: Did you conclude, then, that colleges exacerbated inequality or benefited from it?
CC: The second. But I think that nobody at these universities wanted this to happen; it just happened. There may be ways in which college made things more unequal. If the graduates of the most selective colleges married people they went to college with, both of whom are doing very well, you have power couples. That might have—and probably did—contribute to the inequality.
There is a drive to recruit low-income students, and it's sincere. Places like Duke have bent over backwards to try to diversify their student bodies. Despite all those efforts, the average income of their students continues to rise faster than at most schools.
TC: Why is that average going up, and should Duke and other colleges do something to change that?
CC: We have a big system in which the brightest students get matched to the colleges with the most resources. For these brightest students, it's like a marriage made in heaven, because they really benefit from all of the professors, the labs, the resources. The question is, does that make sense for society at large?
You could argue that the inequality doesn't need to be quite as severe as it is. Maybe the economy, maybe society as a whole might do better with a little more equality. So you ask, what can the colleges do? They're already opening their doors to racial minorities and looking for first-generation students. They can do more of that. There are rural areas and smaller cities that usually aren't touched by admissions fairs. That could be something. Places like Duke could give less preference to sons and daughters of alumni, but that's a policy that Duke has followed. It has good reasons for doing that.
TC: How do we fix this problem, and is it fixable?
CC: It's kind of hard to fix, because it's not one little thing that's made it happen. What's made it happen is a change in the whole economy that's really shifted the distribution of income. That's one major force. The second [is] public policies. State governments are cutting back on aid that they give to state colleges. Well, that's going to create some inequality. Something else that's encouraged this is competition among colleges, aided by U.S. News and World Report. Now it's easy for you, as a consumer of colleges, to get online or buy a book and find out how Amherst and Harvey Mudd and Northwestern compare, whereas before, you had to go to the library and look for some books.
The urge to be ranked high has caused universities, especially ones below the very top, to give out more merit scholarships. That is, “we want you, because you've got a good academic profile and we would like to have you in our class. It would make us look better in U.S. News, so we're going to cut our price to you.” But they do that irrespective of your financial need. What that’s done is exacerbate the income inequality that's already there.
TC: But didn't you just explain that this person is being recruited regardless of their income?
CC: If you've got good grades, it's probably the case that you wouldn't need aid. A college that may be down in the 70th percentile is taking its finite amount of aid and, rather than giving it on the basis of financial need, trying to get those best students without necessarily looking at need. So, have colleges exacerbated the income inequality in the country? I can't answer that. It’s too hard a question. There are too many variables out there. What I can say in this book is this—if they had been increasing equality, would we observe the things that we observed? And the answer is no.
TC: What are future directions? Do you foresee this inequality continuing to increase?
CC: A lot of this has to do with national policy. Since about 1980, about the time when income inequality started, the tax policy in the federal government has been to reduce the top marginal tax rates on the very wealthy. We’re seeing the same thing in the most recent proposals. So, do I see in those kinds of policies any promise to change underlying causes of the inequality in colleges? No.
TC: Anything more to add?
CC: One of the best, most successful exports that we have in this country is higher education. At the very top, you can't beat American colleges and universities. The concern is that there's a soft underbelly that might not be so good.
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