It has been a widely-held belief that the more education one has, the greater the salary earnings over one’s lifetime. Then we heard statistics arguing that the Master’s degree was the new Bachelors, and without one you could not compete in today’s market. A new study released by the Census Bureau of the United States claims that both beliefs are correct. Indeed, the single greatest determiner of workers’ salary earnings is their education level.
Most studies around this are synthetic. That is, they “predict” a salary given the education level, and are not the actual money people have earned. Some are then cross-correlated with race and gender, and an estimated lifetime earning is produced.
However, this study looked at longitudinal data and came up with some interesting things. First, in the last 70 years, we have gone from having 23% of the population hold High School diplomas, to just over 80% holding them. Second, those with Bachelors degree have not risen at the same rate, with less than 5% in 1940 to just over 25% today, and only 10% of the population has an advanced degree, with high concentrations in some areas (say, Palo Alto, CA). Higher degree communities share attributes such as: being close to a major university, research center, center of high-tech industry or research and a large city.
Based on an analysis of 2006 to 2008 data, census researchers found that the difference in annual earnings between getting a professional degree, such as a master’s or doctoral degree, and dropping out of high school was about $72,000, five times the $13,000 annual wage difference between genders.
However, the value of the dollar for the bachelor’s degree is dropping still. A study from the Economic Policy Institute reports for new college grads: “after gains in the 1980s and particularly in the 1990s, hourly wages for young college-educated men in 2000 were $22.75, but that dropped by almost a full dollar to $21.77 by 2010. For young college-educated women, hourly wages fell from $19.38 to $18.43 over the same period. Now, with unemployment expected to remain above 8% well into 2014, it will likely be many years before young college graduates — or any workers — see substantial wage growth.”
The fact that we still have about 20% of our population who do not have a high school diploma, for one reason or another, is a little frightening.
Photo credit: epSOS.de