Some ‘rules’ on the relationship between a college degree and earnings

by Grace

Georgetown University Center on Education and the Workforce recently published a study titled “The College Payoff” outlining four rules that inform the relationship between education level and income.

1.  The basic rule is that more education correlates with higher earnings.

With median earnings of $56,700 ($27.26 per hour), or $2.3 million over a lifetime, Bachelor’s degree holders earn 31 percent more than workers with an Associate’s degree and 74 percent more than those with just a high school diploma.

Beyond simple education level, three more rules offer additional details.

2.  College majors matter.

Earnings today, then, are driven by a combination of educational attainment and occupation. some occupational clusters pay better than others — for example, the STEM occupations earn much more than teachers, regardless of educational attainment. in fact, an engineer with some college/no degree or a postsecondary certificate can earn more than a teacher with a Bachelor’s degree.

3.  Degree levels matter within individual occupations.

The next rule seems to say that race/ethnicity and gender “cause” lower earnings, but I did not find that claim supported in the report.  Would the authors say that being born Asian is a determinant for a person’s higher income?

4.  Race/ethnicity and gender are wild cards that matter more than education or occupation in determining earnings.

Women earn less than men, even when they work the same number of hours — a gap that persists across all levels of educational attainment. In fact, women with a Bachelor’s degree earn about as much as men with some college education but no degree. On average, to earn as much as men with a Bachelor’s degree, women must obtain a Doctoral degree.

Similar gaps also exist by race and ethnicity. African-americans and Latinos earn less than their White counterparts, even among the most highly-educated workers. African-americans and Latinos with master’s degrees don’t exceed the median lifetime earnings of Whites with Bachelor’s degrees. However, at the graduate degree level, Asians make more than all other races/ethnicities, including Whites.

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4 Responses to “Some ‘rules’ on the relationship between a college degree and earnings”

  1. Thanks! I’ll read it, but my first thought is that the individuals who self-select for vocational training might be more likely to possess negative traits that generally hurt them in the workforce, including less ability to adapt. So how much impact does the educational track vs other factors? I guess that’s similar to saying that the correlation between education level and earnings may have more to do with the individuals who have the ability to complete a college degree.

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  2. Race and gender do seem to be causative in American society. The mechanism is not entirely clear, but prejudice and social expectations seem to form a big part of it.

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  3. “Race and gender do seem to be causative in American society.”

    They may seem to be, but I think it’s a matter of opinion as to whether they actually are. This may start to get too deep into politics or semantics, but I see the core cause as deeper than race. In any case, I’m not sure what the latest research says about this.

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