WASHINGTON -- High unemployment has left many Americans questioning whether the soaring cost of college makes it a good bargain for today's young adults.
But there's strong evidence that a four-year degree pays off -- and in some ways that may be even more so for the current generation.
New data from Pew Research indicates that for people 25 to 32 -- part of the so-called millennial generation -- the gap in earnings between college graduates and those with a high school diploma or less has never been greater in the modern era.
Pew researchers, in a report released Tuesday, found that millennials who have college degrees made about $17,500 more in 2012, on average, than their peers with only a high-school diploma. In inflation-adjusted dollars, that compares with a gap of almost $10,000 for the early baby boom generation when they were the same age that millennials are today. For the so-called Generation Xers, who were born between 1965 and 1980, the pay disparity between college and high school graduates at the time they were young adults was $15,780 in adjusted dollars, according to Pew's analysis of federal data.
In percentage terms, millennial workers with only a high school education earned 61.5% of the annual income of similarly aged adults with a bachelor's degree. By comparison, for early boomers a high school graduate's pay was 77% that of a college graduate, and for Generation Xers it was 64%.
It's not surprising that the pay gap based on education has widened over the decades as the economy has become more service-oriented and specialized, and as globalization and an erosion of unions have further held down wages especially for blue-collar workers, analysts say. For young adults in the mid-1960s, when a much smaller share went to college and manufacturing was a much bigger part of the labor force, college graduates earned $38,833 in 2012 dollars, but employed high school graduates weren't so far behind. They had a median income of $31,384, or 81% of those with bachelor's degrees.
What these data show, then, is that the education pay gap has widened partly because the pay for college graduates has risen over the decades but even more so because the real earnings of the less educated have kept falling. The Millennial worker with only a high school diploma had a median income of $28,000 in 2012; that's down from $32,299 for comparably educated early Baby Boomers when they were young adults. And this difference is even larger than the increase in earnings for college graduates for millennials compared with the early boomers.
The Pew report also points up the severe effects of the Great Recession on young adults and how little real earnings have climbed for even college graduates, which is one reason people have questioned the value of a university education.
The median pay of millennial college graduates was $45,500 -- not that much more than the $43,663 that young adults made two decades ago and the $44,770 earnings of people ages 25 to 32 three decades earlier.
As the Pew report notes: "Young college graduates are having more difficulty landing work than earlier cohorts. They are more likely to be unemployed and have to search longer for a job than earlier generations of young adults." What's more, other research has shown that these hardships tend to shadow their careers as low starting pay means future earnings are likely to be depressed as well.
Still to the question of whether a college degree worth it, the answer from the millennials is overwhelmingly yes. Nine out of 10 with at least a bachelor's degree said that college had already paid off or will in the future, Pew's survey found.
Moreover, in the work world, many employers see a four-year degree as a must, even for clerical jobs. So even if there are doubts about the value of a college degree -- many millennials in the Pew survey had regrets about their major -- what's clear is that the alternative is much worse. As the Pew report authors put it, "The picture is consistently bleaker for less-educated workers."