Published on 2013/11/18

Education Pays: Degrees Are Not the Only Pathway

Education Pays: Degrees Are Not the Only Pathway
While degree-holders have historically earned higher wages than non-degree holders, one should not discount the value of sub-baccalaureate postsecondary education.

Amid this lackluster economic recovery, and despite growing frustration with the cost of college, a bachelor’s degree still offers enormous value to recipients. Everyone — with some rare exceptions — should be encouraged to pursue at least a bachelor’s level of education. Yet, the reality is that the majority of adults, both young and old, have not done so. Leaders in education and policy should emphasize the alternative options available to those who appear unwilling or unable to obtain a four-year credential.

The basic advantages of a bachelor’s degree over a high school diploma are enormous and growing. In 1980, those with a bachelor’s degree earned 23 percent more than those with a high school diploma, after controlling for gender, experience, hours worked and race. As of 2013 that premium is 51 percent. The advantage of a graduate level education (master’s degree, PhD or professional degree) also increased dramatically from 34 percent to 77 percent over the same period.

The relative benefits of college hugely outweigh the cost of tuition. My colleagues Michael Greenstone and Adam Looney calculated the average lifetime earnings of college graduates compared to high school graduates after subtracting lost wages from schooling and tuition costs. They found that net lifetime earnings were still $570,000 more for college graduates.[1] This earning advantage is even better for the highest earning majors like engineering, computer science and other “STEM” fields. Over their lifetimes, students in these fields can expect to earn millions of dollars more than high school graduates and lower-paying bachelor’s level majors, according to Census Bureau research.[2]

University education is highly beneficial, but it is not the only way to acquire valuable skills. On-the-job training, experience and certifications can lead to rewards of promotions and higher wages for workers. To measure this, I compared the median wages of workers across 639 occupations, noting the most common level of education, training or experience required for each (using 2012 data from O*NET and the Bureau of Labor Statistics). A job that requires a certification has an annual salary roughly 23 percent more than a job that requires only a high school diploma. A year of on-the-job training is associated with salary gains of 7 percent while a year of experience provides 6 percent in extra earnings.

As my report The Hidden STEM Economy found, roughly half of all highly-skilled STEM occupations do not require a bachelor’s degree.[3] STEM skills are highly rewarded by employers, but some professional STEM occupations like computer support workers and technicians, healthcare occupations, like nurses and lab technicians and most blue collar occupations, like electricians, machinists, and mechanics, require only short periods of post-secondary education, often involving an associate’s degree or certification. Workers in these sub-bachelor STEM occupations earn 37 percent more than workers in non-STEM sub-bachelor occupations. Average salaries are roughly $50,000.

There are multiple pathways to a rewarding career with a decent salary. Investing in education and training — human capital, more broadly — is necessary and worthwhile, even as some skills are valued more than others. It has never made sense to assume that people win or lose in this economy based only on whether or not they finish a four-year degree. Community colleges and universities should use information about the demand for skills to concentrate their scarce resources on programs that will most benefit individual students and society.

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[1] Michael Greenstone and Adam Looney, “Where is the Best Place to Invest $102,000 – In Stocks, Bonds or a College Degree?” The Brookings Institution, June 25, 2011. Accessible at

[2] Tiffany Julien, “Work-Life Earnings by Field of Degree and Occupation for People With a Bachelor’s Degree: 2011,” U.S. Department of Commerce, October 2012. Accessible at

[3] Jonathan Rothwell, “The Hidden STEM Economy,” The Brookings Institution, June 10, 2013. Accessible at

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Readers Comments

Ursula V.F. 2013/11/18 at 7:12 am

I’m lost … I can’t figure out whether the author is telling me that a degree is useful or not useful.

    Ian Richardson 2013/11/18 at 10:33 am

    A degree is useful but the subject matter of the degree is more important. So if you are extremely competent in STEM subjects but only have a 2yr degree, you’re more likely to find work than someone with a 4yr degree in history.

Francis Beyer 2013/11/18 at 2:04 pm

I don’t think STEM is the be-all and end-all of success. With the knowledge economy comes a need for soft skills – communication, critical thinking, etc. We should be putting more attention and focus on the value of the liberal arts rather than pushing people into degree programs that guarantee them an entry-level job and nothing else.

    Stacy Hexner 2013/11/18 at 5:10 pm

    Your argument is the root of the problem. Yes, arts education is important to excel in a career. But STEM skills are critical to getting your foot in the door. Why is everyone taking part in this debate so blind to the value of interdiscriplimary learning that blends STEM with arts?

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