by Guy Tauer, Oregon Employment Dept.
One of the mantras heard in job search classes or shared with students in their career exploration efforts is the idea that the higher your educational attainment, the greater your earning potential. That trade-off between greater investment in education and higher average earnings is shown in this graphic displaying data for the U.S. However, a few recent studies have shown that the benefits of having a college degree are becoming more polarized. A recent article in the Wall Street Journal, “College Still Pays Off, but Not for Everyone,” notes that while inflation-adjusted earnings for college graduates climbed throughout the last century, they have been little changed since 2001. The article also cites a recent New York Federal Reserve study that showed about 40 percent of recent college graduates ages 22 to 27 were employed in jobs that didn’t require a college degree. With the cost of higher education soaring much faster than average wage or the broader consumer price index, that value proposition may be a little dimmer for more college graduates in the future. Keep in mind that just because a recent college graduate is employed in a job that doesn’t require a college degree does not mean that in the future that will always be the case. If it was, I would still be cooking in a restaurant somewhere, rather than being employed as an economist. To be sure, South Coast wages are also higher on average with greater levels of education, according to data from the Census Bureau’s Local Employment Dynamics. In the second quarter of 2018, the average monthly earnings for those with a bachelor’s degree were $4,670. For those with some college or an associate’s degree, average monthly earnings were $3,519. High school or equivalent education level workers had average monthly earnings of $3,215. The gap between high school graduates and bachelor’s degree or higher holders peaked in the second quarter of 2009, at $1,619. In the South Coast area, workers with bachelor’s degrees made, on average, about 50 percent to 60 percent more than workers with a high school diploma throughout the mid-1990s, increasing slowly through 2001, dipping a bit over the next few years and then staying fairly steady until reaching a new peak in 2009. Since 2010, the wage premium has declined to levels not seen since the mid-1990s. We have yet to see if the declines in the bachelor’s degree wage premium will persist or level out. With the cost of a bachelor’s degree at average public four-year colleges up by 311 percent nationally from 1997 to 2017 in inflation-adjusted figures, according to Georgetown Law professor Adam Levitin, the value proposition is not as clear cut as it once was for many college graduates. Mr. Levitin calculates that median household incomes rose by just 14 percent, adjusted for inflation, in the past three decades ending in 2017. This data highlights some of the truisms that still exist – you are on average better off with higher levels of education. But the return on investment for that expense might be lower than it once was, as the cost has risen swiftly in recent years. It should make consumers of educational services more wary about how they spend their education dollars, knowing that they will likely incur dizzying expenses to reach those higher levels of educational attainment. A new tool that consumers of educational services, students, and in many cases their parents, have available to them are performance outcomes from educational completers from Oregon’s higher education institutions. These data can be found at https://www.qualityinfo.org/pm. Some of the data points available include wage gain after exiting education programs and how many educational completers are employed at four or eight quarters after exiting an educational program. The data are detailed. For example, for educational completers in 2015 from Southern Oregon University in their education (teacher) training program, of the 109 who exited, 99 were employed eight quarters after exit, for an “employed rate” of 91 percent. For education completers from Southern Oregon University’s economics degree program, the “employed rate” eight quarters after exiting the program was 65 percent. Many that exit a two- or four-year educational program may go on to graduate school or pursue other degrees. So they wouldn’t show up in the number employed at four or eight quarters after exiting an educational program. These caveats and limitations should be kept in mind when looking at performance measure data from educational programs. Texas and Colorado are some of the first states in the Census Bureau’s Post-Secondary Education Outcome (PSEO) data program. These longitudinal analyses track employment and earnings outcomes about a decade after students complete their studies and enter the job market. To see more go to https://lehd.ces.census.gov/data/pseo_beta.html. For many, some college, an associates or bachelor’s degree or higher level of attainment is a worthwhile and, in the long run, financially wise decision. So choose your career path and educational goals with return on investment, along with job and career satisfaction, in mind.
