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How Education Impacts Income

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The pattern is simple and it has held true year after year after year: the more education you have, the more you earn in the workforce. Parsing statistics, the numbers are persuasive. Earnings increase at each and every level of education, and according to the National Center for Education Statistics, these earning increases apply to statistical subgroups of males, females, Blacks, Whites, Hispanics, and Asians. (Note that while all subgroups show increases at each educational level, earnings figures differ within each subgroup. For instance, median earnings for women are consistently lower than median earnings for men.) Education also reinforces job security: the higher the level of education, the lower the rate of unemployment. Findings from the U.S. Bureau of Labor Statistics are based on full-time wage and salary workers over the age of 25.

  • Median Weekly Earnings, Annual Averages 2008. The Bureau of Labor Statistics notes that those with career training and certification land near the college graduates in terms of weekly earnings.
    Highest Level of Education * Median Weekly Earnings *
    Doctoral Degree $1,561
    Professional Degree $1,531
    Master's Degree $1,233
    Bachelor's Degree $1,012
    Associate Degree $757
    Some College $699
    High School Diploma $618
    Less Than a High School Diploma $453

    * U.S. Bureau of Labor Statistics, Current Population Survey, 2008.

  • Median Earnings By Level of Education, as estimated by the U.S. Census Bureau using population sets of workers over the age of 25 from the years 2006-2008.
    Highest Level of Education * Estimate of Median Earnings *
    Graduate or Professional Degree $63,174
    Bachelor's Degree $47,853
    Associate Degree or Some College $33,838
    High School Diploma or Equivalent $27,448
    Less Than a High School Diploma $19,989

    * U.S. Census Bureau, 2006-2008 American Community Survey 3-Year Estimates.

  • For sake of comparison: Median Earnings by Level of Education, as estimated by the U.S. Census Bureau from data taken back in the 2000 census, for full-time workers from ages 21-64.
    Highest Level of Education * Median Earnings *
    Graduate or Professional Degree $55,242
    Bachelor's Degree $42,877
    Associate Degree $31,988
    High School Diploma or Equivalent $27,351
    Less Than a High School Diploma $21,322

    * U.S. Census Bureau, Housing & Household Statistics Division, Sept 2009.

  • Unemployment Rate By Education Level, Annual Averages 2008. The Digest of Educational Statistics shows the same pattern for at least three years prior 2007, 2006, and 2005. In December 2009, unemployment rates skewed higher given the the economy, from 5% for those with bachelor's degrees and higher to 15.3% for workers without even an high school diploma.
    Highest Level of Education * Unemployment Rate *
    Doctoral Degree 2.0
    Professional Degree 1.7
    Master's Degree 2.4
    Bachelor's Degree 2.8
    Associate Degree 3.7
    Some College 5.1
    High School Diploma or Equivalent 5.7
    Less Than a High School Diploma 9.0

    * U.S. Bureau of Labor Statistics, Current Population Survey, 2008.

Exceptions exist, of course. With no more than a high school graduation, someone worked his way up the ladder and runs the company now. A college dropout found success and profit in running her own business. Despite a master's, someone is struggling to make ends meet, and that doctorate will pay off some day, but some day never seems to come. In some cases, the earnings are high but so are the payments for college loans. Of course, exceptions exist.

Yet, it behooves you to pay attention to the general trend. Education has a direct impact on income and for reasons that are rather plain. Hiring practices in some industries and companies are built around prerequisite education. Salary increases often depend on competitive offers and degrees lend a competitive edge. Higher education is a cultural indicator. It can be proof positive that you are intelligent, focused, ambitious, hardworking, and worth more of the payroll.

Sources:
  • "Education Pays...", Bureau of Labor Statistics Employment Projections, December 22, 2009 (http://www.bls.gov/emp/ep_chart_001.htm)
  • Table A-4: Employment Status of the Civilian Population 25 Years and Over by Educational Attainment, Bureau of Labor Statistics, January 8, 2010 (http://www.bls.gov/news.release/empsit.t04.htm)
  • Median Earnings in the Last 12 Months (In 2008 Inflation-Adjusted Dollars), U.S. Census Bureau (http://factfinder.census.gov/servlet/DTTable?_bm=y&-geo_id=01000US&-ds_name=ACS_2008_3YR_G00_&-mt_name=ACS_2008_3YR_G2000_B20004)
  • Earnings By Occupation & Education, U.S. Census Bureau (http://www.census.gov/hhes/www/income/earnings/call1usboth.html)
  • U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics (http://nces.ed.gov/programs/digest/2008menu_tables.asp)
  • U.S. Department of Education, National Center for Education Statistics. (2008). The Condition of Education 2008 (NCES 2008–031), Indicator 20 (http://nces.ed.gov/fastfacts/display.asp?id=77)

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