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NextGen Magazine


Study: College Grads Still Earn More Than High School Grads, But Advantage Diminishing

Chris Gaetano
Published Date:
Aug 9, 2019
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Research from the St. Louis Federal Reserve has found that while college degree holders still earn more than those with just a high school diploma, the degree no longer provides as massive an advantage as it used to, according to the Wall Street Journal

While those with a bachelor's degree are still more likely to be employed—and earn an average of $32,000 per year more—than people with a high school diploma, if one takes inflation into account, then graduates' wages have remained mostly flat over the past two decades, compared to the steady growth seen throughout the 20th century. 

This is because the premium offered by a bachelor's degree has been maintained more by rising costs and diminished wages in other areas. The Fed said that after the collapse of the dot-com bubble in the early 2000s, college graduates began taking on jobs that previously had been performed primarily by those with high school diplomas, which pushed earnings down. This, in turn, fed the growth of jobs that required a college degree, even if they previously never needed one before.

Essentially, the research revealed that more college graduates entered the lower-paying fields that previously had been dominated by those with high school diplomas, which gradually turned them into jobs that were seen as requiring a college degree. But these jobs nonetheless retained their high school-level pay grade, which then depressed the earnings of those who used to have those jobs, thus preserving the premium of a college grad over a high school grad. However, this premium is being further eaten away by the skyrocketing costs of a college education, and the consequent debt that increasingly comes with it. 

All these factors combined also mean that the wealth premium enjoyed by college graduates has similarly diminished, in some cases to the point of statistical insignificance. A typical black family headed by someone with a bachelor's degree who was born in the 1970s and 1980s, for instance, was found to have virtually no more wealth than one headed by a nongraduate. Hispanic families have seen similar situations.