“The College Payoff”

An updated report from Anthony Carnevale and colleagues: “More Education Doesn’t Always Mean More Earnings”

Highlights from “The College Payoff”:

  • “The simple advice to high school students to ‘go to college’ no longer suffices.”
    • “In other words, postsecondary education has become more valuable in the workforce, but its value is also part of a complex equation.”
  • The authors to their credit use median income values rather than averages. The median figures are more useful because they point to what the typical person earns, without the distortion of a few high earners, as we have emphasized.
    • The report’s charts on ranges of annual income by educational level are illuminating and clearly presented. Nice work.
  • “Sixteen percent of high school diploma holders and 28 percent of associate’s degree holders earn more than [the median] of workers with bachelor’s degrees.”
  • “Gaps in Earnings [between educational levels] Widen with Age.”
    • “Differences in earnings by education level start small and grow over the course of a career.”
    • “By age 30, earnings for adults with professional degrees begin to surpass those of workers at all other education levels.”
  • They find STEM grads, along with architects, enjoy the highest career earnings.
    • The lowest paying field is education, below even the Arts.
  • Group differences
    • “Men have higher median lifetime earnings than women at every corresponding level of education, but women’s and men’s earnings still overlap significantly.”
    • “Depending on the education level, Asian or White workers have the highest median lifetime earnings, but there is still significant overlap among racial and ethnic groups.”
  • “Wyoming, Alaska, and North Dakota have the highest median lifetime earnings for workers with no more than a high school diploma/GED.”
  • At the report’s end, the authors promote the expansion of career counseling: “Students should begin interacting with career counselors by middle school and continue interacting with them as they maneuver through the secondary and postsecondary education systems toward their careers.”


These quotes are from “The College Payoff”, a new report from the Center on Education and the Workforce (CEW) at Georgetown updating earlier results from a decade ago (their 2011 publication). “The College Payoff” is an acknowledgement of labor market realities, with many lessons carrying over from their earlier work into 2021. We can speculate that the idea that college “no longer suffices” may be one reason behind recent falls in undergraduate enrollment and weakening college pricing power.

The attractive report, a pretty quick read, is accessible here. The authors — Carnevale, Ban Cheah and Emma Wenzinger — present the information crisply with admirable graphics that convey their points. They present median lifetime earnings by educational level:


And then show the range of typical lifetime earnings across the distribution of results:


Needless to say, we have a few disagreements, but generally the approach and communication is clear and persuasive. The quibbles:

  • Lifetime earnings are calculated on a 40-year basis (e.g.Bachelor’s degree holders earn a median of $2.8 million (M) over their careers). This time span is too long, with early retirement, pauses for family care, unemployment and further education all cutting into the number. Using 40 years overestimates the value of a degree in absolute terms.
    • If we used a more realistic 35-year number the median lifetime income of a Bachelor’s holder using the CEW’s annual income assumption is $2.45M vs a High School grad $1.4M, a difference of a bit over $1M. This is a meaningful change in assumption as it decreases the relative benefit of college. But this difference is in turn overstated because…
  • The authors assume a median $70k annual income for Bachelor’s holders, too high because it omits a sizable number of holders not working full time. Federal Reserve numbers indicate the true average to be ~$60k. (The 2020 US Census median figure for Bachelor’s holders was $61,080. See Total Work Experience – All Races – Ages 25 to 64.)
    • Putting these two points together, a more plausible median lifetimes earnings for someone graduating with a Bachelor’s is ~$2.1M (35 years * $60k) vs a High School degree of $1.2M (35 * $35k), a difference of $0.9 million.
    • This “selecting out” of people is a persistent flaw in educational payoff analyses. Studies often leave out portions of the sample population, making education look like a better deal than it is. It’s like saying “basketball players are all multimillionaires” by looking at only NBA players and ignoring those who didn’t make it. Degreeholders are not all employed and working full-time jobs – that needs to be factored in.
  • The Shale Boom is Over: “Wyoming, Alaska, and North Dakota have the highest median lifetime earnings for workers with no more than a high school diploma/GED.” Heavy energy drilling created a boom market in these three states, which are sparsely enough populated that a single industry’s boom can shift the averages. These state averages are of limited use because of the plunge, likely permanent, in shale gas extraction.
  • There’s no mention of college grads working in jobs where most colleagues don’t have degrees (per the Fed, this numbers 1/3 of college grads). This presents a different slant on professional outcomes and brings into view the question of supply and demand for college educatyed workers. CEW’s analysis covers income and educational attainment, but not underemployment.
  • Finally, the “College Payoff” is purely historic. The authors are experts on the labor market, which is right now displaying some fascinating evolving trends. What do they think is going on and how will it affect higher ed? It would have been great to see a bit more audacity. More please!

But these quibbles are inevitable. Thanks to the authors for a well-presented and worthwhile report.

Read this post and others at our CTAS Higher Ed Business blog on Substack.