College degrees boost earnings--even for jobs that don't require them
A college degree pays off, even for many occupations that don't require one, according to a new study that breaks down earnings in different fields among those with postsecondary educations and those without.
"Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses," writes David Leonhardt, citing the study in a New York Times opinion piece on the value of a four-year education.
For decades, U.S. colleges and universities have not turned out enough graduates to meet the needs of employers looking to fill the ranks of a professionalizing workforce, according to a new study.
The supply-demand imbalance in the college-educated labor force has become so severe that the pool will need to grow by 20 million additional postsecondary-educated workers by 2025 in order to bring the market back to equilibrium, according to a report released Monday by the Georgetown University Center on Education and the Workforce.
Failing to close the gap could have dire economic consequences, warn the authors of the study, "The Undereducated American" (available in PDF format here). They estimate that adding 20 million postsecondary workers over currently projected rates would increase GDP by $500 million, create more than $100 billion in tax revenues and help roll back the rise in income inequality.
Don't stop believin': College-educated workforce in high demand
The report comes at a time when the value of a four-year degree is being debated among education experts, policy makers, academia and working class families as tuition and student debt continue to increase amid a tight job market and on the heels of a recession. As the article by Leonhardt points out, there are still benefits to postsecondary education, and the Georgetown report echoes this position.
"The demand for college-educated workers is growing much faster than the supply," Anthony Carnevale, director of the center and a co-author of the report, said in a statement. "In recession and recovery, we remain fixated on the high school jobs that are lost and not coming back. We are hurtling into a future dominated by college-level jobs, unprepared."
Carnevale and his co-author, Stephen Rose, a senior economist at the center, contend that meeting the demand for educated workers will be critical to preserving U.S. competitiveness in the global economy. Income inequality will play a key role. The authors argue in an economic analysis that at current graduation rates, the imbalance in the earning power of college-educated workers and those who have only completed high school will balloon to 96 percent, up from 74 percent today.
But the addition of the 20 million recommended postsecondary jobs would raise wages for all groups, including a disproportionate increase for high-school-educated workers, they argue. By the authors' numbers, correcting the supply-demand imbalance in the workforce would narrow the income disparity between college-educated and high-school-educated workers to 46 percent.
The authors estimate that adding the recommended postsecondary jobs would raise wages for workers with a high school diploma by 24 percent, wages for associate's degree holders by 15 percent, and bump up wages for workers with bachelor's degrees by 6 percent. The researchers explain that padding the ranks of college-educated workers would mean that their average wages would continue to rise, but would increase more slowly, while sustained increases in wages for high-school-educated workers would narrow the gap.
That would reverse a decades-long trend of widening inequality among wages, a trend that has been fueled by a spike in the earning power of college-educated workers, even those who go into a field that does not necessarily require a bachelor's degree.
"As a result of our failure to keep up with the demand for college-educated workers, we have lost our number one global position in college graduates and have become the number one industrialized nation in income inequality," Rose said.
The authors suggest that the figure of 20 million postsecondary workers could include 15 million bachelor's degree holders, 4 million non-degree holders who have some postsecondary instruction, and 1 million associate's degree holders. They note that the roughly 500,000 students who graduate in the top half of their high school class each year but do not go on to college could go a long way toward making up the shortfall.
The authors also point out that the addition of 20 million postsecondary workers by 2025 would meet the goal President Obama set of leading the world in the proportion of college graduates in the workforce, a key pillar of his education agenda.