Education has Biggest Impact on Earnings, 5 Times More than Other Factors
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A new U.S. Census Bureau Study shows how education levels have more of an effect on earnings over a 40 year span in the workforce than any other demographic factor, giving evidence that a worker with a professional degree is expected to make more than a worker with an education level of 8th grade or lower.
The study released today showed that education was more effective than other demographic factors such as gender, race, and Hispanic origin.
The study shows that non-Hispanic white males, Asian males, and Asian females benefit more from higher levels of education over a 40 year career in a professional degree than those in other groups.
According to the release by the Census Bureau, white males with a professional degree make more than double, about $2.4 million more than that of Hispanic females with the same level of education.
Although many factors influence work life earnings such as race and Hispanic origin, gender, citizenship, English-speaking ability and geographic location, the most influential impact is education.
While the annual earnings impact of gender was $13,000, the impact of a professional degree and an 8th grade education was about $72,000 per year or about 5 times more than gender. The report was released by the Education and Synthetic Work-Life Earnings.
“This analysis shows that there is a clear and well-defined relationship between education and earnings,” said Tiffany Julian, an analyst in the Census Bureau's Housing and Household Economic Statistics Division.
“The overall economic value of educational attainment in this report supports the belief that higher levels of education are well-established paths to better jobs and higher earnings.”
The U.S. Census Bureau outlined some data highlights that can be found below.
- Overall, white males had higher earnings than any other group at every education level, with the exception of those with a master's degree, which was topped by Asian males, and those with a professional degree, where Asian males were not significantly different from white males.
- In general, women in the most economically advantaged race groups usually earn less than men in the most disadvantaged race groups. For example, a white female with master's degree is expected to earn $2.4 million over a 40-year work-life. In comparison, a Hispanic male with a master's degree is expected to earn $2.8 million.
- For Asian, black and Hispanic groups whose highest education completed is high school, the difference between each group's work-life earnings was not large compared with the differences between these groups when they had higher levels of education.
- Asian men and women with a bachelor's degree or higher had greater returns on higher education than blacks or Hispanics of either gender. For example, an Asian female with a professional degree made $3.7 million in work-life earnings compared with $2.3 million for a Hispanic female with a professional degree.
- Naturalized citizens saw a small yearly increase in earnings over the native-born population ($1,210), but those who were not citizens made $2,446 less a year than the native-born.
- Language spoken at home had an effect on earnings: those who spoke a language at home other than English saw a decrease in annual earnings after considering all other factors. Even those who speak English “very well” saw a decrease of $989 in annual earnings compared with English-only speakers.
- Geography impacted earnings, showing higher earnings in the Pacific states and in New England and lowest earnings in East South Central states.
The Census Bureau reported that data for this research comes from the 2006-2008, 3-year American Community Survey and that all estimates are presented in 2008 dollars representing the amount of estimated money that one can expect to earn from ages 25 to 64.