Degrees Lead on Wages

Associate degrees can lead to far greater wage earnings than certificates, a new report shows.

March 29, 2017
 

While some states and colleges are focused on boosting certificates as a way to increase workforce development, associate degrees continue to increase graduates’ earnings more than shorter-term credentials.

A new paper from the Center for Analysis of Postsecondary Education and Employment at the Community College Research Center, at Teachers College of Columbia University, found that women on average receive a boost of about $7,200 a year for an associate degree, about 26 percent more than the earnings of women who have some college but no degree. For men, the earnings premium is about $4,600, 18 percent more than men with some college and no degree. The earnings gains and the time frame for when they appear for both men and women vary depending on the career.

The gain for certificate holders, however, is somewhat smaller. The average earnings increase for women who hold certificates is about $2,940 a year, and about $2,110 a year for men. The researchers state that longer-term certificates are more valuable than short-term ones, but the earnings boost may fade away over time. The researchers also considered the income losses connected to attending college.

“Over the long run, it is better to get an associate degree than a certificate in terms of earnings,” said Clive Belfield, an economics professor at Queens College of the City University of New York, who co-wrote the paper. “It’s also better to get a certificate than drop out … the idea is more is better.”

The report examines research from eight states that looked at students who completed degrees from 2002 to 2008. Their earnings were tracked for at least three years after college, until as late as 2014.

Belfield said the research is pretty consistent across state lines, but the gender differences have to do with the fields in which students pursue their certificate or degree.

Women may get paid less than men on average, but over a few years they gain more earning power than men, he said, adding that women tend to choose allied health or nursing fields to complete a certificate or degree.

“That’s kind of surprising, because males could choose those fields, too, but male students tend to choose subjects that either pay off or don’t pay off -- they take more risky choices,” Belfield said, adding that those riskier careers tend to be in areas like construction.

Some states are encouraging more students to pursue certificates. For instance, Indiana is offering two years of free tuition to students who pursue high-demand certificates. Meanwhile, Arizona, Kentucky, Louisiana and New Mexico have seen increases in the number of certificate holders, as the economies in those states are centered around fields that may only require a certificate at most.

Last year, the Lumina Foundation started counting high-quality credentials as part of the nationwide goal to reach 60 percent degree or certificate attainment by 2025. The foundation uses Georgetown University’s Center on Education and the Workforce metric of "high quality" as a certificate that gets a student a job with earnings 20 percent above the median wage for holders of high school diplomas.

“The more education you have the more you can earn, but at least having a high-quality credential is like life insurance,” said Courtney Brown, vice president of strategic impact for the Lumina Foundation. “It's something that shows you know something or you're able to do the job, and if you lose that job … you can take it to get another job or further education.”

Brown said the foundation will be reporting soon on the status of degree and certificate attainment in the country, but early numbers are showing certificate attainment remains about the same as it was last year, although it is increasing for those who already have a credential.

“It’s important that states are considering what are the most important credentials for their states,” Brown said.

Whether those credentials are certificates or degrees, states should be counting that they are high quality, protect workers and close equity gaps, she said.

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