Pew Research: College education increases income potential

1 Oct

Moi wrote about the decision to go to college in Why go to college? Sam Davidson has written an interesting New York Times article, It’s the Economy: The Dwindling Power of a College Degree:

A general guideline these days is that people are rewarded when they can do things that take trained judgment and skill — things, in other words, that can’t be done by computers or lower-wage workers in other countries. Money now flows around the world so quickly, and technology changes so fast, that people who thought they were in high demand find themselves uprooted. Many newspaper reporters have learned that their work was subsidized, in part, by classified ads and now can’t survive the rise of Craigslist; computer programmers have found out that some smart young guys in India will do their jobs for much less. Meanwhile, China lends so much money to the United States that mortgage brokers and bond traders can become richer than they ever imagined for a few years and then, just as quickly, become broke and unemployed.
One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from nonelite schools. A bachelor’s degree on its own no longer conveys intelligence and capability. To get a good job, you have to have some special skill — charm, by the way, counts — that employers value. But there’s also a pretty good chance that by some point in the next few years, your boss will find that some new technology or some worker overseas can replace you.
Though it’s no guarantee, a B.A. or some kind of technical training is at least a prerequisite for a decent salary. It’s hard to see any great future for high-school dropouts or high-school graduates with no technical skills. They most often get jobs that require little judgment and minimal training, like stocking shelves, cooking burgers and cleaning offices. Employers generally see these unskilled workers as commodities — one is as good as any other — and thus each worker has very little bargaining power, especially now that unions are weaker. There are about 40 million of these low-skilled people in our work force. They’re vying for jobs that are likely to earn near the minimum wage with few or no benefits, and they have a high chance of being laid off many times in a career.

The societal push the last few years has been to have more kids go to college. Quite often schools are ranked on the percentage of kids that go directly to college from high school. So, counselors are following cultural cues they have received from administrators, parents, and the media.

Chris Stout lists Top Five Reasons to Go to College Stout places the emphasis on the college experience and the fact that college is not just a place for possible career training. Forbes. Com published Five Reasons Not to Go to College Some people discover their passion earlier in life than others.Forbes.Com addresses its comments at those folks. The calculation is that if one already knows what they want to do, college could be an unnecessary detour. A US News and World Report article estimated the value of a college degree

Amanda Paulson of the Christian Science Monitor wrote a great article, Does Everyone Need A College Degree? Maybe Not Says Harvard Study about a Harvard study.

A new report released by Harvard Wednesday states in some of the strongest terms yet that such a “college for all” emphasis may actually harm many American students – keeping them from having a smooth transition from adolescence to adulthood and a viable career.
“The American system for preparing young people to lead productive and prosperous lives as adults is clearly badly broken,” concludes the report, “Pathways to Prosperity” (pdf).

Marcus Wohlsen of AP has posted the article, Tech Mogul Pays Bright Minds Not to Go to College at Boston.Com. Wohlsen reports that tech tycoon Peter Thiel has set up a scholarship which two dozen gifted young people $100,000 not to go to college but to become entrepreneurs for the next two years.
Pew Research reported that college graduates make more income for a number of reasons.

Richard Fry wrote about the income potential of college graduates in The growing economic clout of the college educated:

For the first time on record, households headed by someone with at least a bachelor’s degree received nearly a majority (49.7%) of aggregate U.S. household income; nearly one out of every two dollars went to the college educated. In 2012 one-in-three households was college educated, so, put another way, half of the aggregate U.S. income goes to one third of the households.
In 1991 (the earliest year comparable figures are available) college-educated households only received 37% of the nation’s aggregate income. In 1991 about one-quarter of households (23%) were college educated.
The share of the income pie received by households with only a high school education or less fell 15 percentage points from 1991 to 2012. The share of household income going to households with some college (including those with an associate’s degree) increased modestly over the same period (23% to 25%).
Since educational attainment has risen and there are more college-educated households, one would expect the college educated to receive a growing share of the pie.
But the data clearly indicate that the growing economic fortunes of the college educated go beyond sheer numbers. College-educated households are the only households whose incomes have grown on a per household basis from 1991 to 2012. Household income increased 9% (from $92,289 to $100,637) for those whose highest education was a bachelor’s degree. Incomes were up 20% for households with professional degrees. In contrast, household incomes have declined for households who do not have at least a bachelor’s degree.
Before breaking down the nitty-gritty of the college-educated households’ income gain, it should be noted that a number of factors are likely at play in boosting the household incomes of the college educated relative to less-educated households. A primary factor is the better fortunes of the college educated in the labor market. The Georgetown Center on Education and the Workforce finds that college graduates earn nearly twice as much as workers with just a high school diploma.
But the household income differences between the college educated and lesser educated go beyond the labor market. College-educated households are more likely to be married and thus more likely to have secondary earners contributing to household income.

In addition, my research on “assortative mating” or “who marries whom” shows that married college-educated persons are more likely to have a college-educated spouse. Thus, they are more likely to have a spouse with high earnings. For example, in 2011, 75% of married men ages 30 to 44 who are college educated also have a college-educated wife. Among their married counterparts with a high school education, only 17% have a college-educated wife.
Between 1991 and 2012, the aggregate household income of college-educated households increased by $2.1 trillion according to the Census data. Over the same period, the share of all households who are college educated increased from 23% to 33%. How much of the $2.1 trillion income gain received by the college educated is due to growth in numbers versus growth in income per college-educated household? If the fraction of households who are college educated had remained constant at 23%, instead of rising to 33%, the income pie going to the college educated would only have grown by $0.8 trillion. So, over half of the income gain of the college educated is due growth in numbers. But a substantial portion reflects their improving income fortunes.

Whether a person chooses to attend a four year college after high school is a very personal decision and there is no one right answer. One thing the current economic climate has taught many is there are no guarantees in life, even with a college degree. The trades may offer some a means to earn a living and a fulfilling life.

A one-size-fits-all approach does not work.


1. A publication by the government Why Attend College? Is a good overview

2. Article in USA Today about gap year

3. Advantages of Going to a Vocational School

4. Accredidation Commission of Career Schools and Colleges of Technology

5. The Federal Trade Commission has Choosing A Career Or Vocational School

6. How to Choose The Best Trade School

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One Response to “Pew Research: College education increases income potential”


  1. “Everybody”- The Pact by Drs. Davis, Jenkins, and Hunt | dkelly2008 - October 2, 2013

    […] Pew Research: College education increases income potential ( […]

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