The Impact of Education on Wages
The data is clear that wages substantially increase with higher levels of education. The College Board’s Education Pays 2013 report states: “Median earnings of bachelor’s degree recipients with no advanced degree working full time in 2011 were $56,500, $21,100 more than median earnings of high school graduates. Individuals with some college but no degree earned 14% more than high school graduates working full time. Their median after-tax earnings were 13% higher.”
This difference in earnings is particularly stark when one looks at median earnings across all levels of educational attainment. 2013 data from the U.S. Bureau of Labor Statistics highlights median weekly earnings of American adults age 25 and older:
- Professional degree: $1,714
- Doctoral degree: $1,623
- Master’s degree: $1,329
- Bachelor’s degree: $1,108
- Associate’s degree: $777
- Some college, no degree: $727
- High school diploma: $651
- Less than high school diploma: $472
This differential translates into major long-term income advantages for those who complete a college degree. “Over a lifetime, the earnings of an associate’s degree recipient are roughly $170,000 higher than those of a high school graduate, while the earnings of a bachelor’s degree holder are $570,000 more than those of a high school graduate.”
In fact, according to one recent report, “higher education is one of the best investments an individual can make. . . . [T]he returns to earning an associate’s, professional, or bachelor’s degree exceed 15 percent, and even the average return to attending some college for those who do not earn a degree is 9 percent. In comparison, the average return to an investment in the stock market is a little over 5 percent; gold, ten-year Treasury bonds, T-bills, and housing are 3 percent or less.”
The financial return associated with postsecondary education and the gaps in earnings by education level are increasing with time. “The difference between median earnings for women ages 25 to 34 working full time year-round with a bachelor’s degree or higher and those in the same age range with high school diplomas rose from 43% in 1971 to 56% in 1991 and to 70% in 2011. The earnings premium for men rose from 25% in 1971 to 56% in 1991 and to 69% in 2011.”
Research indicates that the well-educated tend to congregate, which drives wages up. “The correlation is very strong and there are very large differences between median hourly wages in states with well-educated workforces and hourly wages in states with less-well-educated workforces (as measured by the share of workers who have at least a bachelor’s degree). In the 22 states with the least-educated workforces (30 percent or less with a bachelor’s degree or more education) [of which Utah is one], median wages hover around $15 an hour, the only exceptions being Alaska and Wyoming. In the three states where more than 40 percent of the population has a bachelor’s or more education, median wages are $19 to $20 an hour, nearly a third higher.”
This is an excerpt from Prosperity through Education: The Innovation, Accountability, and Investment Plan for Utah’s Future. Read the plan to learn more about how educational attainment levels impact household income, gross domestic product, unemployment and more.
 Baum, S. (2013), 5.
 Berger, N. (2013), 6.
 Baum, S., Ma., J., & Payea, K. (2013). Education pays 2013: The benefits of higher education for individuals and society. New York: The College Board, 5. Retrieved from http://trends.collegeboard.org/sites/default/files/education-pays-2013-full-report.pdf
 U.S. Bureau of Labor Statistics. (2014, March 24). Earnings and unemployment rates by educational attainment. Washington, D.C.: U.S. Bureau of Labor Statistics. Retrieved from http://www.bls.gov/emp/ep_chart_001.htm
 Greenstone, M., Looney, A., Patashnik, J., & Yu, M. (2013). Thirteen economic facts about social mobility and the role of education. The Hamilton Project, 16. Retrieved from http://www.hamiltonproject.org/files/downloads_and_links/THP_13EconFacts_FINAL.pdf