The ROI of higher ed
New information about the immense value of college degrees will delight supporters of higher education. But what’s behind the numbers tells a tale of the unfinished business of college attainment.
The proportion of people with degrees increased 6.7 percentage points from 2010 to 2020. As a result, US workers will earn an extra $14.2 trillion over their lifetimes.
The details are in this report from the Center on Education and the Workforce at Georgetown University, “Learning and Earning by Degrees: Gains in College Degree Attainment Have Enriched the Nation and Every State, but Racial and Gender Inequality Persists.”
It's hard to comprehend figures at that scale. Put it this way: If this lifetime benefit were doled out all at once, that would equal nearly $43,000 for every man, woman, and child in America—not just the graduates. Any way you look at it, $14.2 trillion is a huge payoff. To paraphrase a well-worn political quotation: A trillion here, a trillion there—pretty soon you're talking real money.
But it's not just those college graduates who benefit. When people earn more, they spend more—not only on cars, homes, and groceries but on their own communities through civic involvement and charitable giving.
“For individuals, having a college degree is associated with monetary benefits like higher median wages and higher likelihood of employment, along with nonmonetary benefits like better health and greater reported happiness,” the report notes. “At a national level, college degree attainment spurs economic growth, facilitates innovation, and encourages the critical inquiry and deliberative skills that are foundational to a functional democracy.”
Unfortunately, while college attainment increased overall, not all groups benefitted at the same rate. Attainment grew more for white Americans than for Black or Native Americans, which means the attainment gaps between white Americans and these groups increased.
Closing those gaps will take time, effort, and money, but it could yield enormous benefits for those families and us. The Georgetown center's analysis found that if all racial/ethnic groups reached the same educational levels as white Americans, those groups would see an additional $11.3 trillion in net lifetime earnings, on top of the $14.2 trillion that all graduates will gain.
Meanwhile, the study shows a continued pay disadvantage for women. For nearly all racial and ethnic groups, women are more likely to hold degrees than men, but men continue to outearn women at every degree level. Put simply, says Jeff Strohl, one of the report’s authors and CEW’s director of research, women need much more education than men to earn the same pay.
“For example, the median annual earnings for white women with bachelor’s degrees are roughly $41,000, compared to median annual earnings of more than $42,000 for white men who have some college credit but no degree.”
The Georgetown researchers describe America as a “college economy.” Fifty years ago, before manufacturing began to lose its dominance, 72 percent of jobs required a high school diploma or less. Today 69 percent of good jobs, those paying at least middle-class wages, go to people with college degrees.
So, while the nation's increase in attainment is important—and hugely valuable to many people and society at large—we are not gaining ground in this vital area of racial and economic justice. That’s a big part of the unfinished business of the college attainment movement.
As Anthony Carnevale, CEW director and lead author of the study, put it: “Attainment gaps by race/ethnicity were significant in 2010, and they remained significant in 2020.”
Interestingly, this study adds fuel to the findings of a previous CEW study conducted with the Postsecondary Value Commission. Those researchers ran a simulation to gauge the effect of inequality in the US education system. Their conclusion: We miss out on $956 billion in earnings each year because of post-high school attainment gaps related to race and economic status.
That’s awfully close to a trillion dollars annually. It would be great if people supported racial and gender equality simply because it’s the right thing to do, but while we wait for that to happen, maybe the money will help. At a time when we’re debating the cost of education and the costs of failing to educate our people properly, these potential benefits keep adding up.
Surely, we’ve reached the point where we’re talking real money. And real money translates to real results, not just for individuals but for all of us.
