Economic Value of Higher Education
Is attending college worth the cost and effort? Most people agree that it’s worth it. Today, nearly 9 out of 10 people earn high school diplomas, and nearly 6 out of 10 high school graduates enroll in college immediately after high school. People enroll in college for various reasons. One of the prime motivations for college is the hope of obtaining a high paying job following graduation.
This following information demonstrates the economic benefits of obtaining a high school or college degree. It examines the link between higher education and increased earnings and shows how this has evolved through the recent years. Likewise, it will illustrate projected estimated earnings during the course of one’s working life for different levels of education.
However, these estimates are not conclusive since there are many factors affecting salaries. Projected salary information is based on information accumulated during the Current Population Survey (CPS). The projected earnings determined from this survey were collected a year prior to their release and information about ethnicity, sex, work experience, and degree levels were collected.
Education and Earnings
During 2000, nearly 8 out of 10 adults 25 years of age or older possessed a high school diploma in the United States. Just under 30 percent of Americans obtained bachelor’s or graduate degrees. These stats represented the highest graduation rates at the time. For comparison, during 1975, a little more than 60 percent of American adults successfully completed high school, while 14 percent of Americans earned at least a bachelor’s degree. The increasing percentage of people completing school can be attributed to the more educated, younger workforce filling the positions of less educated, retiring workers. Since education has become more important for more Americans, workers will seek higher paying jobs.
Earning Increase With Education Level
Individuals between the ages of 25 through 64 employed during any period when this study was conducted averaged $34,700 annually. Those never completing high school averaged $18,900, while those with high school diplomas or equivalents averaged $25,900 annually. Those graduating with bachelor’s degrees averaged nearly $45,400, while those successfully completing graduate programs averaged $99,300 annually. Therefore, there is a correlation between increased earnings and higher education levels.
Another factor affecting wages is work experience. Full-time workers employed year-round usually earn higher wages than part-time and seasonal workers. When this survey was conducted, over 70 percent of workers were employed full-time. Full-time employment rates vary among different groups. For example, people with college degrees are more likely to be employed full-time than those without high school diplomas. More men are employed than women since many women stay home and raise children. No matter a worker’s experience, individuals with more education usually earn higher annual salaries.
To gain a more accurate understanding of the labor market without demographic biases, it’s best to evaluate the earnings projections derived from the year-round full-time workers statistics. During 1999, high school graduates earned 0.7 times more than their peers without high school diplomas.
This trend of higher wages correlating with higher education is best understood by examining the increasing demand for skilled workers in the workforce. During the 70’s, wages for college graduates stagnated because of the oversupply of educated workers in the workforce. However, technological improvements during the recent years have created a huge demand for workers with specialized training and skills. This has increased wages for educated workers. The trend has been the opposite for less educated workers. Since labor unions are not as influential as they were in the past, wages for individuals without high school and college education have decreased.
Earnings differences by educational attainment compound over one’s lifetime.
Estimated lifetime earnings between workers with varying levels of education provide a clear indication of the wage discrepancies between workers with college educations and those without them.
According to lifetime earnings projections, full-time workers with only a high school degree are projected to earn nearly $1.2 million dollars through the course of a 40 year career. The same projections for those without high school degrees neared $1 million dollars. Workers who earned some college credit but did not graduate are projected to earn $1.5 million dollars through the course of a 40 year career, while graduates from associate’s programs will earn about $1.6 million dollars. Those who completed four year or graduate programs are projected to earn the most during a 40 year career. Graduates of bachelor’s programs are projected to earn near $2.1 million dollars, while those with master’s degrees are estimated to make just over $2.5 million dollars. It’s projected that individuals with PhDs will earn about $3.4 million dollars during their careers, and professionals, lawyers or doctors, for example, are projected to make about $4.4 million.
What this research has shown is that workers with higher levels of education usually earn more during their working lives than workers with less education. Therefore, investing in education usually pays off later in life in the form of higher wages.
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