Degrees of Wealth

Reports of the demise of certain glass ceilings have been greatly exaggerated.

Women may dominate in higher education student bodies, and may soon dominate in the upper echelons of the U.S. workforce. But they need more degrees than men do in order to earn the same amount of money. “On average, to earn as much as men with a bachelor’s degree, women must obtain a doctoral degree,” says a new Georgetown University study.

The situation is similar for black and Latino students. White people with bachelor’s degrees typically will earn more over their lives than will blacks and Latinos who hold master’s degrees.

Anthony Carnevale, director of Georgetown’s Center on Education and the Workforce, describes these as “the most disappointing findings” of his new study, which was released today.

The study, entitled “The College Payoff,” is the latest of a string of studies Carnevale’s shop has released that generally tout the benefits of college attainment. (This study was trumpeted Thursday at a joint news conference with the Lumina Foundation for Education, whose college completion push resonates with the Georgetown study.) For this report, the Georgetown researchers estimated the lifetime money-making prospects of various types of degree holders. To reflect contemporary circumstances, they extrapolated a 40-year career based on 2009 earnings data. Unlike previous studies with similar methodologies, the study used median estimates rather than averages.

Carnevale and his co-authors describe gender and race/ethnicity as “wild cards that can trump everything else in determined earnings.”

A man who drops out of college will probably earn about as much as a woman who graduates with a bachelor’s degree, the study finds. Under current conditions, men are projected to out-earn women over their lives at every level of college attainment. The greatest gap occurs at the level of professional degrees. The Georgetown researchers projected that women who get a professional degree will earn $3 million over their lives. That is more than $1 million less than a man with the same type of degree.

Similar patterns hold within the ranks of professional academics. Among “postsecondary teachers,” women can expect to earn 18 percent less than their male colleagues, the study says.

Generally, Degrees Are Good

But notwithstanding the apparent persistence of racial and gender-based handicaps, “obtaining a postsecondary credential is almost always worth it” for everyone, the researchers say. Broadly, people with associate degrees would typically earn around $1.7 million over their lives; those with professional degrees would earn $3.6 million. The degrees in between -- bachelor’s, master’s, and doctoral (in that order) -- make up pretty even steps, each worth about $400,000 more than the last.

Of course, speaking broadly about the earning power of different types of degree oversimplifies the matter, the study points out. As one might expect, the actual field someone studies -- and the jobs their degree points them to -- weighs heavily on how much that degree is “worth.”

For example, the largest percentage of people who have doctoral degrees teach college for a living (26 percent); but the typical postsecondary instructor will probably make less money ($2.8 million) than her fellow Ph.D.s in other professions, including physical scientists (5.2 percent, $3.8 million), lawyers and judges (4.7 percent, $3.7 million), and pharmacists (2.6 percent, $4.4 million).

Predictably, those who take their degrees in the STEM fields -- science, technology, engineering, and mathematics -- often make more than those who concentrate their studies elsewhere, even if they do not reach the same level of attainment. Someone who never finishes his bachelor’s degree but manages to make a career in a STEM field will typically make nearly about 30 percent more than an educator who holds a master’s degree.

The study also finds that people with more-advanced degrees make more money than their colleagues in the same occupation. An accountant with a high school diploma typically would make $1.5 million in her life; an accountant with some college would make $1.7 million; an accountant with a bachelor’s degree would make $2.4 million; and an accountant with a graduate degree would make $3 million. “The same pattern generally holds within all occupations,” the report says.

A Skeptical Perspective

Richard Vedder, an Ohio University economist and vocal skeptic of the idea of college completion goals set forth by the White House and various educational foundations, says that while the latest Georgetown report does a good job of highlighting the variability with which different degrees affect earning power, it still leaves out some crucial accounting. (The two of them have debated these topics on Inside Higher Ed and elsewhere.)

A major highlight of Carnevale’s report is that people with bachelor’s degrees typically earn 84 percent more than people who don’t. During the phone call with members of the media on Thursday, Jamie P. Merisotis, the president of the Lumina Foundation, quoted this statistic as further evidence that “any person interested in building and maintaining a middle-class life” should go to college.

Vedder says this is misleading. College completion is often a symptom of the sort of cognitive and metacognitive abilities that make successful workers; it is not necessarily the cause, he says.

Some employers do give an automatic pay bump to workers with more-advanced degrees, he says. But some of the “premium” on higher degrees might be attributed to the fact that people with the intelligence, discipline, and “human capital” to get into college are likely to be successful in their careers for those same reasons, says Vedder. That goes double for those who finish college, and triple for those who manage to get a graduate degree.

This does not mean the Georgetown report is bunk, he says. It only means that it should be taken with the appropriate caveats. For students who want to advance in certain fields, the “premium” on getting a degree might be much lower than 84 percent -- and indeed might not exceed the expense, credit risks, and opportunity costs of enrolling. There is also the question of how much that premium might go down at each level as more people get degrees. (Carnevale told media on Thursday that if 20 million more Americans get bachelor’s degrees, the premium would sink from 84 percent to 50 percent for the typical degree-holder. “That’s still a very high premium,” he said.)

Still, attempts to distill coherent insights from complex data inevitably end up oversimplifying things, says Vedder. That is true of most studies that attempt to say anything meaningful. Unfortunately, he says, the potential students that are most likely to take the Georgetown findings without a healthy dose of salt are probably the least likely to realize the high returns they might take it to promise.