Rob Valletta, vice president of Research Communications in the Economic Research Department of Federal Reserve Bank of San Francisco (FRBSF), examines the increasingly important role that education plays in finding a high-wage, high-skill job in an Economic Letter released this week.
Overall, Valletta notes, the value of a four-year degree is unquestionable—consistently leading to higher average wages for workers than if they had not pursued college. But in recent years, individuals who also hold a graduate or post-graduate degree have seen even better wage growth than their bachelor's-only peers.
Labor market trends
For his analysis, Valletta looked at the average earnings of three groups compared with the wages of workers with no post-secondary education: workers with only a four-year degree; workers with both a four-year and graduate degree; and a combined supergroup of all workers with at least a four-year degree.
Since 1979, the gap in earnings between college-educated workers and those with no post-secondary education ballooned—rising from 35% to nearly 80% higher in 2013.
However, over the same period, the relative value of holding a graduate degree increased even more. In 1979, graduate degree-holders made 11% more than workers with only a four-year degree. By 2013, the gap had widened to 30%.
Why recent graduates from tech and military schools out-earn the Ivy League
At the most elite level, those individuals with a post-graduate degree, the gains have been even more striking. Since 2000, that group has widened its wage return over non-educated workers by 17 percentage points, versus an increase of only 6 percentage points for workers with only a bachelor's degree (Valletta, "Economic Letter," Federal Reserve Bank of San Francisco, 1/12).
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