You don’t need a college degree to know that it pays to have one. In fact, the people who understand this most keenly are likely to be those who are not post-secondary graduates.
A new Pew Research Center report found that college graduates ages 25 to 32 who have full-time jobs earn some $17,500 more annually than employed young adults who have only a high school diploma. In the past, the pay gap was significantly smaller.
Indeed, the researchers note, “when today’s young adults are compared with previous generations, the disparity in economic outcomes between college graduates and those with a high school diploma or less formal schooling has never been greater in the modern era.”
What’s more, the absolute value of a college degree has increased, the report shows. From 1965 to 2013, the median annual earnings of 25- to 32-year-olds with a college degree increased from $38,833 to $45,500 in 2012 dollars—an increase of nearly $7,000.
Viewed from another angle, 22 percent of people in this age bracket with only a high school diploma are living in poverty, versus 6 percent of college-educated young adults.
While clearly valuable, a college degree does not come with a guarantee. For instance, there’s considerable evidence that in recent years a growing number of young college graduates are underemployed.
The lack of enough good jobs likely is the biggest factor explaining why those with only a bachelor’s degree have seen a downward trend in pay. The Progressive Policy Institute, using Census Bureau data, has shown that 25- to 34-year-olds with only bachelor’s degrees earned roughly 15 percent less in 2012, adjusted for inflation, than did their counterparts in 2000.
It’s not clear what can be done about the underemployment of many college graduates. Some experts think a more rapidly growing economy would boost demand for job seekers with more advanced skills. But more robust growth has proved elusive.
Unless that changes, we face the unhappy prospect of encouraging young people to pursue a college education in order to land jobs that less-educated people once had and that often don’t justify the big pile of debt left after graduation.
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