The College Wage Premium by Occupation

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.

salary_occ_educ_over_25_1

salary_occ_educ_over_25_2
Data from the 2015 American Community Survey. The occupations are listed in order of overall average salary.

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.

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