Education Matters: Earnings by Educational Attainment Over Three Decades

Order Code 95-1081 E Updated November 17, 2004 CRS Report for Congress Received through the CRS Web Education Matters: Earnings by Educational Attainment Over Three Decades Linda Levine Specialist in Labor Economics Domestic Social Policy Division The amount of education that individuals accumulate has an important influence on their experience in the labor market. Workers with more years of education typically encounter less unemployment. Conversely, as educational attainment increases, earnings typically rise. These relationships have held up over time, and in some periods, have intensified. College graduates’ earnings grew so much more rapidly than those of less educated workers during the 1980s, for example, that it prompted ongoing interest in the extent of wage inequality among U.S. workers.1 Workers with a bachelor’s degree are much better off today, compared to less educated workers, than they were some three decades ago. As shown in Table 1, the average wage advantage of male college graduates over male high school graduates grew from about 50% in the latter half of the 1970s to at least 90% thus far in the current decade. The average premium paid to female college over female high school graduates similarly increased, going from about 40% to about 80% during the same period. Workers with the least education generally have experienced the slowest wage growth. This has been particularly true for men. Weakness in comparatively high-paid male-dominated industries in which many jobs typically require 12 or fewer years of schooling (e.g., manufacturing) likely explains some of the relatively meager wage gains among less educated men. Over the years, women’s wages have increased to a much greater degree than men’s wages at each educational level. Nonetheless, men who lack high school diplomas continue to earn slightly more than female high school graduates and slightly less than women who have some postsecondary education.2 These one-year earnings differences by education level are estimated to produce markedly wider disparities over an individual’s working life. Among full-time year-round 1 For information on wage inequality see CRS Report RL31616, The Distribution of Earnings of Wage and Salary Workers in the United States, 1994-2002, by Gerald Mayer. 2 For information on the gender wage gap see CRS Report 98-273, The Gender Wage Gap and Pay Equity: Is Comparable Worth the Next Step?, by Linda Levine. Congressional Research Service ˜ The Library of Congress CRS-2 workers, high school dropouts might have average earnings totaling $1.0 million (in 1999 dollars) over a 40-year working life; high school graduates, $1.2 million; those with some college or an associate’s degree, $1.5-$1.6 million; and college graduates, $2.1 million.3 Table 1. Mean Earnings of Workers 18 Years or Older by Highest Level of Educational Attainment Y e a r High Not a High Some Not a school Some high school college or Bachelor’s high graduate college or Bachelor’s Degree school school graduate Assoc. (or Assoc. Degree only graduate (or equiv.) Degree graduate equiv.) Degree only Male 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 1975 21,447 22,091 21,508 21,007 18,855 19,155 19,574 17,826 16,747 16,633 14,946 14,747 15,056 14,991 14,727 14,551 14,544 13,703 13,124 12,775 12,052 11,513 11,668 11,042 10,628 9,894 8,939 8,522 7,843 33,265 32,673 32,363 31,446 30,414 28,742 28,307 27,642 26,333 25,038 23,973 22,811 22,663 22,378 22,508 21,481 20,364 19,453 18,575 18,016 16,728 16,160 15,900 15,002 14,317 13,188 12,092 11,189 10,475 38,451 38,377 37,428 37,373 35,326 34,179 32,641 31,426 29,851 27,636 26,614 25,366 25,345 26,120 25,555 23,827 22,781 21,784 20,698 18,863 18,052 17,108 16,870 15,871 14,716 13,382 12,393 11,376 10,805 Female 63,084 63,503 63,354 62,609 57,706 55,057 50,056 46,702 46,111 46,278 43,499 40,039 38,484 38,901 38,692 35,906 33,677 33,376 31,433 29,203 27,239 25,758 24,353 23,340 21,482 19,861 18,187 16,714 15,758 14,214 13,459 14,523 12,739 12,145 11,353 10,725 10,421 9,790 9,189 9,462 9,248 8,818 8,808 8,268 7,711 7,504 7,109 6,874 6,644 6,292 5,932 5,673 5,263 4,840 4,397 4,032 3,723 3,438 21,659 21,141 20,489 19,162 18,092 17,898 16,906 16,161 15,970 14,955 14,446 14,073 13,523 12,986 12,468 11,857 11,309 10,606 10,115 9,561 9,147 8,715 8,063 7,423 6,741 6,192 5,624 5,240 4,802 24,848 23,905 24,268 22,779 21,644 21,056 19,856 18,933 17,962 16,928 16,555 15,922 15,643 15,002 14,688 14,009 13,158 12,029 11,504 10,614 9,981 9,348 8,811 8,256 7,190 6,441 5,856 5,301 5,109 38,448 37,909 36,913 35,328 32,546 31,452 30,119 28,701 26,841 26,483 25,232 23,991 22,802 21,933 21,089 19,216 18,217 17,623 16,114 14,865 13,808 12,511 11,384 10,628 9,474 8,408 7,923 7,383 6,963 Source: Created by the Congressional Research Service from U.S. Bureau of the Census data. 3 U.S. Census Bureau, The Big Payoff: Educational Attainment and Synthetic Estimates of WorkLife Earnings, P23-210, July 2002.