The Real Earnings Gap Between US College Graduates and Non-Graduates
While most people with college degrees earn higher salaries than their counterparts without degrees, the situation is more nuanced than commonly portrayed. Let’s delve into the intricacies of this earnings gap and its implications.
The Persistent Earnings Gap
The widely cited statistic that college graduates earn substantially more than non-graduates holds some truth. On average, individuals with a Bachelor's degree can expect to earn significantly more throughout their careers. According to many studies, college graduates can earn over $1 million more than high school graduates over their lifetimes. However, this generalization often overlooks the considerable variation within this group and the limitations of the information.
Major Differences by Field of Study
It’s important to recognize that not all college majors lead to the same financial outcomes. For instance, those pursuing degrees in STEM (Science, Technology, Engineering, and Mathematics), business, or law often see higher earnings compared to graduates of less lucrative fields such as art history or studio art. Additionally, careers in skilled trades, such as electricians, plumbers, and brickmasons, frequently offer competitive salaries that surpass those of college graduates from less robust institutions or those who majored in low-paying subjects.
Underemployment Among College Grads
Despite the high salaries attributed to college graduates, numerous graduates find themselves in underemployed positions, often making less than what is considered a "college salary." According to a report by the National Center for Education Statistics, about 40% of recent graduates are underemployed. This means that a significant portion of college graduates are either not working in their chosen field or working in roles that do not require a college degree.
Breakdown of College Grad Outcomes
Consider the following statistics from the education sector:
Enrollment to Graduation Rates: For every twelve students enrolling in college: 5 drop out before graduation. 3 graduate but end up underemployed. 4 graduate and secure well-paying jobs.These numbers highlight the challenges faced by many college graduates, especially those who pursue degrees from lower-tier institutions or choosing less lucrative fields. The data suggest that the educational system may not be effectively preparing a substantial portion of its graduates for the job market.
Contacting Top Universities
Research indicates that some college graduates from prestigious institutions can achieve remarkable financial success. A notable study by Raj Chetty, now at Harvard, found that 20 out of 100 Ivy League graduates succeeded in the top 630,000 within 15 years of graduation. However, this doesn’t mean that the majority of graduates experience similar outcomes.
According to a report by the Government Accountability Office (GAO), about 21% of recent college graduates are earning what is colloquially referred to as "chickenfeed" – salaries in the range of $12-16 per hour. This highlights the significant income disparity within the college graduate population.
The Skewed Salary Distribution
The earnings distribution among college graduates is highly skewed, meaning that a small percentage of graduates make an exceptionally high income, while the majority experience lower earnings. This uneven distribution can be misleading and overlooks the struggles of many graduates.
Conclusion: The Complex Nature of the Earnings Gap
In summary, while college graduates often enjoy higher earning potential than non-graduates, the situation is more complex than a simple average suggests. The earnings gap can vary significantly based on factors such as the field of study, the quality of the institution, and whether graduates secure well-paying jobs.
For those considering higher education, it’s essential to weigh the benefits and drawbacks carefully, considering not just the average figures but also the specific outcomes for the field of study they are pursuing.