An important question for individuals considering college is whether there is an earnings boost associated with a college degree. Economic returns on a two- or four-year degrees have generally been positive and often sizeable. However, the rising cost of college and recent declines in the real wages of college-educated workers1 have led students and families to rethink the value of a college degree.
A new national study sheds some light on the question.2 By examining individual lifetime earnings by education level, occupation, and demographic backgrounds, the study confirms the longstanding trend—more education pays and a college degree is critical to economic opportunity. Indeed, individuals with at least a bachelor’s degree earn, regardless of the occupation, significantly more over their lifetime than do those without.
It is important to note that while the absolute wages of college degree holders could fluctuate, the relative wage advantages of degree-holders over non-degree holders have grown significantly since the 1980s. This means that even with the recent decline in wages of college graduates, they can still expect to be far better off economically over their lifetimes than their non-college bound peers. Other highlights from the study:
- As of 2009, median lifetime earnings of those with no more than a bachelor’s degree are $2.27 million, 46 percent more than that earned by those holding some college credits without earning a degree ($1.55 million), or 76 percent higher than median earnings among high school graduates ($1.3 million)3.
- The difference in earnings is still growing between two- or four-year degree holders and non-degree holders. Since 1999, the premium of such degrees has grown from 75 to 84 percent, which translates to $2.8 million on average over a lifetime.
- Latinos and African Americans with master’s degrees earn less in their lifetimes than white workers with bachelor’s degrees. The median lifetime earnings of African Americans with bachelor’s degrees are lower by 20 percent than that earned by whites with the same level of degrees.
- Women earn, on average, 25 percent less than men at similar education levels. Across all industries, women with a PhD earn only slightly more than men who have attained no more than a bachelor’s degree ($2.8 vs. $2.6 million). Women with bachelor’s degrees earn nearly the same as men with associate degrees ($1.9 million).
1 Real wages of prime-age college-educated Americans declined during or after the two recent economic recessions. The wages declined between 2002 and 2003, but began rising again after 2003, before declining again with the 2007 recession. Source: The Georgetown University Center on Education and the Workforce, College is Still the Best Option, a paper downloadable from its website.
2 Carnevale, A.P., Rose, S.J., and Cheah, B., 2011, The College Payoff: Education, Occupation, Lifetime Earnings, Washington, D .C.: The Georgetown University C enter on Education and the Workforce.
3 All dollar references are in 2009 dollars.