Despite the rising cost of college it is still argued that post-secondary education is a good investment because of the persistently large college premium. In 2014 a Council of Economic Advisers report fund that the median full-time worker over 25 with a bachelor’s degree had 70% more annual income than a similar worker with only a high school degree. Over the course of a career this premium leads to $1 million more earnings for the college graduate. Although these numbers are impressive, it’s important to remember that the wage benefits of a college degree vary widely by many factors, like major choice.
Payscale.com created a 2016-2017 College Salary Report that includes a list of the highest paying bachelor’s degrees. The average mid-career pay ranges from $172,000 for petroleum engineering majors, to $37,500 for those majoring in early childhood education. I was interested in seeing whether the college premium also varied by occupation, and if so, by how much.
To do this analysis I used data from the 2015 American Community Survey which can be found here. Like the CEA report, I restricted the data to workers 25 and over.
For the higher salary occupations in the first graph, it stands out to me that for most there is not much of a difference in average salary between workers with an associates and workers with only a high school degree. But for the more “blue-collar” occupations like extraction and protective service, the associates degree premiums (26% and 36% respectively) are very significant. The median associates degree premium for this data set is 11%.
The Bachelor’s degree premium ranges from 117% for those in sales related occupations, to 14% for installation, maintenance, and repair jobs. The financial specialists occupation group is a distant second with a premium of 70%. It was also surprising to me that workers in the life, physical, and social science occupation group have the second smallest bachelor’s premium (23%). The median bachelor’s premium is 39%.
Another way to measure the returns to college is the advanced degree premium, which is the difference in salary between advanced degree holders and those whose highest education level is a bachelor’s. Health care practitioners have the largest advanced premium with 109%, followed closely by workers in the legal group with a premium of 104%. The smallest premium is -6%, which belongs to the food prep occupation group. The median premium is 21%.
So like with major choice, the value of a college degree depends heavily on occupation.