Americans enjoy some of the highest living standards for people around the globe, and on average, the living standards continue to rise. While the median household income continues to move pat $55,000, there is significant concern that the distribution of wealth across the nation is unfair. There are many factors playing a role in this inequity, but education plays a vital role in solving the dilemma.

The Basics of Income and Wealth

In the most basic terms, income is the amount of money that a household or individual has access to, either through employment, distribution, or other means. With this income, three fundamental things happen. People pay taxes, they save, and they buy goods and services. In general, the personal saving rate for the majority of Americans has dropped well below that of other nations. Saving, in order to build wealth, is an important part of financial planning. However, there is a correlation between the availability of funds for saving compared to the expenses of living and the limitations on income coming in. Income is often driving by career opportunities, with those who have gone on to college having a more promising salary outlook. Not everyone can afford college, creating another noticeable gap between income and wealth.

Not everyone has the funds to get into a major college or university, nor do all people have the desire or academic prowess to complete such a rigorous field of study. The end result of these decisions leads to financial disparities between college graduates and the rest of the workforce. For example, those with an MBA can pursue illustrious jobs in finance, management, or investment. You can learn more about the options for graduate students by simply reading through the job listings of major businesses or Fortune 500 companies. These career options will undoubtedly provide much higher salaries and benefits packages than the high school graduate working in retail. Both individuals have an income, but there is a greater probability of the MBA graduate accumulating more wealth than the other. If more wealth sounds like the way to go, then learn more about this online program for business students.

The Human Capital Investment

As seen, there is an undeniable relationship between income and education. However, for those that wish to make this relationship work in their favor, it takes a great deal of investment into human capital. This investment is just like any other investment. People do it to make money. Expenses to attend college are considered an investment in the future of an individual’s wages and opportunities. Highly skilled individuals are recognized as being more employable. The more employable someone is the better chance for earning a college wage premium. Earning more income makes it easier to save money, and by saving money, an individual is able to accumulate more wealth. Educated individuals also tend to make decisions that are financially sound and protect their wealth.

Access to education isn’t the only hurdle that needs to be addressed in the reckoning of income and wealth disparities. Education also needs to be more affordable, providing a more equitable chance for career hopes without a massive amount of student loan debt.