The Impact of Education on One's Income Potential and on One’s Ability to Get a Job (Blog Post #2)

In my first blog post, I mentioned that jobs which pay an annual salary typically require more qualifications and have more responsibilities associated with them than jobs that pay an hourly wage. Greater qualifications can come in the form of higher levels of education that are required, specific skill sets, and/or depth, breadth and/or quality of one’s work experience.

Education is the gateway to opportunity. Education provides a proven pathway to developing knowledge and skills, landing job opportunities, having options with regard to one’s career, exercising some control over one’s own career trajectory, and ultimately achieving financial independence and financial stability in one’s life.

Consider the following data:

• There is a positive relationship between one’s level of education and the amount of money one can earn over one’s lifetime. The higher the level of education you receive, generally (although not always) the greater your income potential over your lifetime.

• The following represents the “median” lifetime income of full-time US workers (lifetime in this case is defined as 40 years’ worth of work), as measured by level of education.[1] (In math, the “median” represents the middle value in a set of numbers. Therefore, ½ the set of numbers in a given data set fall above the median value and ½ fall below the median value.):

• As you can see, adults with a full 4-year college degree have a median income of $2.8 million over their careers, or an average income of ~$70,000 per year, versus $1.6 million, or an average income of ~$40,000 per year, for adults with a high school diploma. In other words, there is a $1.2 million difference in career earnings, or a $30,000 difference in annual income, for those who choose to go on to college and acquire a full 4-year college degree versus those who choose to end their educational pursuits after completing high school. I hope you would agree that this is a big difference.

• Separate income-related data is highly comparable. It shows that 4-year college graduates over their careers earn on average ~$78,000 per year, while those who have only a high school diploma earn on average ~$45,000 per year.[2] Again, a big difference.

To be clear, plenty of people without advanced degrees earn more than those with advanced degrees. And there are plenty of people who do not go on to get a full 4-year college degree and who nevertheless manage to earn more than those who do get a 4-year college degree. Why is that? Because your field of study in college, your field of work, and other factors like your geographic location (such as what State you work in and whether you work in a city or in a rural area) impact your income potential as well.

Your field of study in college, of course, can strongly influence the field of work you eventually go into, and your field of work can strongly influence how much money you make during your career. So let’s look at the relationship between one’s field of study and one’s income potential. The following represents the median lifetime income of full-time US workers (lifetime in this case is defined as 40 years’ worth of work) who have a 4-year college degree, and is based on one’s field of study in college[3]:

You previously saw that the median lifetime income of those who have Master’s degrees (a type of “advanced degree”) is $3.2 million, or ~$80,000 of income per year. And yet, here you can see that the median lifetime income for individuals with a college degree who studied engineering, or who studied computer science/statistics/mathematics, actually exceeds the median lifetime earnings of those who have completed a Master’s degree. In sum, going to college and getting a college degree can greatly impact your income potential. Your field of study in college, however, also can greatly impact your income potential since it can strongly influence the field of work you eventually go into.

Of course, you can only earn income from a job if you actually can get a job. Here again, there is a positive relationship between one’s level of education and one’s chances of getting a job.

The higher the level of education you receive, generally (although not always) the greater the chance that you will be offered a job. Consider the following data on US employment rates, from 2010 through 2020, of 25- to 34-year-olds, as measured by one’s level of education[4]:

As you can see, there are big differences in US employment rates depending upon one’s level of education.

How about US employment rates, from 2010 through 2020, of 25- to 64-year-olds, as measured by level of education[5]?

Again, as you can see, there are big differences in employment rates depending upon one’s level of education.

In conclusion, while it is indeed possible for someone to earn more than someone else who has received a higher level of education, and that absolutely happens especially due to differences in one’s field of work, there is a clear positive relationship between one’s level of education and the amount of money one can earn over one’s lifetime. The higher the level of education you receive, generally (although not always) the greater the amount of money you potentially can earn over your lifetime. Furthermore, the higher the level of education you receive, the more likely you are to be employed.

Remember, education is the gateway to opportunity. Education provides a proven pathway to developing knowledge and skills, landing job opportunities, having options with regard to one’s career, exercising some control over one’s own career trajectory, and ultimately achieving financial independence and financial stability in one’s life.

I would love to hear from you. Any ideas, experiences, thoughts, comments and questions….please do share.

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[1] “The College Payoff”, 2021, The Georgetown University Center on Education and the Workforce (an independent, nonprofit research and policy institute affiliated with the Georgetown University McCourt School of Public Policy).

[2] The New York Federal Reserve; https://www.bloomberg.com/news/articles/2021-07-14/skip-college-not-if-you-want-to-make-more-money.

[3] See footnote #1.

[4] US Department of Commerce, https://nces.ed.gov/programs/coe/indicator/cbc; https://nces.ed.gov/programs/digest/d20/tables/dt20_501.50.asp. [5] See footnote #4.