Why Attend College? Start With Earnings

With June comes high school graduation. To many seniors, graduation means freedom from the drudgery of classes--forever.

About 40% of high school graduates don’t go to college.

Their reasons--which range from being sick of school to fearing that they can not afford college--are as individual as the million or so students who made the decision in 1992. Many of their reasons are valid.

Yet statistics and information compiled by experts in education and poverty research show that terminating an education after high school could be the biggest financial mistake of an individual’s life. The only bigger mistake is failing to get a high school diploma, said Sheldon Danziger, professor of social work and public policy at the University of Michigan in Ann Arbor.

Here are the facts:

Average earnings of men, aged 25 and over, with a high school diploma are $28,043 annually, or $2,156 per month, according to the U.S. Department of Education. Average earnings of a male college graduate are $44,554 annually, or $3,713 monthly.

Assuming that the wage gap remains the same, the college graduate will earn $600,000 to $700,000 more than the high school graduate during their careers.

Recent trends show the wage gap widening. In the 1970s, relative earnings of men with some college experience--not necessarily a degree--averaged 20% more than those who had only a high school education. That gap doubled during the 1980s.

By 1989, those who spent some time in college were earning between 40% and 50% more, said Robert M. Hauser, director of the Institute for Research on Poverty at the University of Wisconsin-Madison.

“There is a tremendous and growing gap between the earnings of people who have gone to college and those who haven’t,” Hauser added.

It isn’t that college graduates are making much more than they used to. The gap is widening because high school graduates are making much less.

“When the economy boomed during the 1980s, the people at the bottom were left behind,” Danziger said.

Experts believe that there are a number of reasons. Technology became increasingly prevalent in industry, which necessitated more sophisticated skills. Businesses increasingly formed international ties, which put a premium on knowledge of other cultures and languages. It also became cost-effective to set up manufacturing facilities in countries where unskilled labor is cheap.

Women entered the work force in greater numbers, increasing competition for jobs. A larger percentage of high school students opted for college, which tended to increase employer expectations and put non-college-educated individuals at a comparative disadvantage.

Meanwhile, unions, once a powerful force battling for higher income levels for both skilled and unskilled labor groups, began to lose their clout.

The end result: College-educated men, aged 25 to 54, saw net income rise by 7% between 1979 and 1989. Those with a high school degree saw their earnings decline nearly 11%. Those without a high school degree saw their earnings plunge 23%, Danziger noted.

But the advantages of college don’t just boil down to how much you earn when you’re working. A college degree can be a pivotal element in whether you can find a job at all.

According to the biannual Job Outlook published by the U.S. Department of Labor, nearly all the job categories that are expected to grow rapidly during the next decade require degrees.

And a college education is expected to give an edge to those working in jobs and professions that never before required advanced schooling, according to the report. Everyone from construction foremen to car salesmen are expected to be college-educated if they plan to climb the corporate ladder, others note.

It is unclear whether this shift toward hiring college graduates is caused by practical factors, such as the technological and economic shifts previously mentioned, or if it’s a type of corporate snobbery that Hauser calls “excessive credentialism.”

Nonetheless, Danziger said, “what it tells you is that you better try to get a college degree because that is the only group that’s making it in the ‘90s.”