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Five Articles on College Graduates: Outlook, Earnings, and More U.S. Department of Labor Bureau of Labor Statistics Fall 1998

Earnings of College Graduates in 1996 by Theresa Cosca You've heard that college graduates benefit financially from extra years of schooling. But how can you be sure an investment in education will pay off? Unfortunately, there are no guarantees because no one knows what the future will bring. Studying data from the recent past can offer some clues, however. Data from a 1997 Current Population Survey (CPS) show that most 1996 college graduates were employed in higher paying managerial, professional specialty, and high-level sales jobs. These data support the notion that as education increases, so does the likelihood of higher earnings. This article analyzes the median earnings for 1996 college graduates, the kinds of jobs they held, and the proportion of college graduates who earned less than the median for high school graduates. College Graduate Earnings One point about college graduate earnings is clear: On average, workers with a bachelor's, master's, doctoral, or professional degree have higher median incomes and lower unemployment rates than do workers with less education. According to the March 1997 CPS data, median earnings for all college graduates were $40,753 in 1996. This was nearly 75 percent more than the $23,317 median for all high school graduates. The college graduate unemployment rate was 2.4 percent, less than half the 5.7-percent rate for high school graduates. Education level. One measure of the benefit conferred by higher education is the percent difference in earnings between the media earnings for high school graduates and college graduates, known as the "premium." While the premium for all college graduates averaged 75 percent, it increased with education, as shown in the following tabulation of the median annual earnings of year-round, full-time workers by education level in 1996:

Education level	Median annual earnings	Premium over high school graduates (percent)	Premium over high school graduates (dollars)
Professional	$71,868	208	$48,551
Ph.D.	60,827	161	37,510
Marter's	46,269	98	22,952
Bachelor's	36,155	55	12,838
High School	23,317	---	---

Chart 1: Distribution of earnings for college graduates who worked full time, year round, by degree level, 1996 Medians are a good indicator of what a typical worker might expect in the labor market. However, medians do not tell the whole story. Chart 1 presents the variation in earnings by education level between the top and bottom 10 percent of workers, where 80 percent of workers fall. The top 10 percent of all college graduates earned more than $90,144 in 1996. The top 10 percent of workers with a professional degree earned over three times that amount, $316,513. Of these very high earners with professional degrees, most were physicians, lawyers, or high-level executives who have years of education beyond high school. Yet the bottom 10 percent of this highly educated segment of the work force earned less than $29,800, just above the median for all workers ($27,320). For the remaining education levels, the top 10 percent earned about four times more than the bottom 10 percent. Although median earnings for bachelor's degree holders were $36,155, the bottom 10 percent earned less than $16,698, well below the median for high school graduates ($23,317). Major occupational group. The typical bachelor's degree holder had median earnings of $36,155, but earnings varied by major occupational group. Chart 2 shows median earnings for nine occupational groups; median earnings in four of those groups were higher than those for all bachelor's degree holders. Top earners in the group with the highest paid workers, executive and managerial occupations, made $95,450. Workers in nonretail sales occupations-a group that includes finance and business services sales representatives-were close behind, with the top 10 percent in that group earning more than $91,538. However, high earnings did not accrue to all workers in a highly paid occupational group. For example, 10 percent of executives and managers earned less than $21,598. The variation was less pronounced for some other occupational groups. For example, earnings for the middle 80 percent of workers in administrative support occupations differed by $35,109, compared to $73,852 for executive and managerial occupations. Within the major occupational groups, the top 10 percent earned anywhere from three to six times more than the bottom 10 percent. Earnings were highest for workers in college-level jobs. BLS considers workers to be in college-level jobs if they have college degrees and their jobs are in the professional specialty, executive and managerial, or technician occupational groups. A college degree is not required for a job in some other occupations, such as retail sales; services, except police and detectives; agriculture, except farm managers; and craft, operator, and laborer positions, except blue-collar worker supervisors. Regardless of their level of education, workers in these groups are assumed to be in jobs that do not require a college degree, and they tended to have lower earnings. For workers in other occupational groups, however, educational requirements are less clear. Workers who need a college degree to perform their jobs are considered to be in college-level jobs, while those who could perform their jobs without a degree are classified as having noncollege-level jobs. Among the occupations in these groups are police and detectives, blue-collar worker supervisors, and a number of administrative support workers, such as secretaries and bookkeeping and accounting clerks. Earnings for workers in these occupations vary greatly because of their diverse educational backgrounds. Chart 2: Distribution of earnings for bachelor's degree holders who worked full time, year round, by occupational group, 1996

Age. Median earnings usually increase with age, as workers amass experience that makes them more valuable to employers. In 1996, bachelor's degree holders aged 50 to 59 earned a median of $18,000 more than did those aged 20 to 24. Median earnings declined after age 59, as many well paid workers retired. However, some older workers with high earnings defer retirement; the top 10 percent of workers aged 65 and older earned more than $100,966. Young workers aged 20 to 24 had the least variation in their earnings, with the middle 80 percent making between $10,353 and $37,593. Young workers are more likely to be in low paying, entrylevel, or temporary jobs. Earnings of workers in the bottom 10 percent peaked between ages 40 and 49, while those in the top 10 percent rose with age. Bachelor's degree graduates with earnings in the top 10 percent earned more than $80,000 annually after age 40. Those in the bottom 10 percent in each age group earned no more than $19,511.
Chart 3: Distribution of earnings for bachelor's degree holders who worked full time, year round, by age group, 1996	Chart 4: Percent of college graduates working full time, year-round, who earned less than the median for high school graduates ($23,317) by degree level, 1996
College Graduates Earning Less Than High School Graduates Another way to characterize college graduate earnings is to compare them to those of high school graduates. In 1996, about 17 percent of college graduates earned less than the median for high school graduates. One-quarter of college graduates earned less than the median for all workers. The proportion remains significant even if workers under age 30, who are more likely to be in low paying, entry-level, or temporary jobs, are excluded. About 14 percent of the college graduates aged 30 and over earned less than the median for high school graduates. Workers with the most education were least likely to have lower earnings. The percentage of workers earning less than $23,317 dropped steadily from 21 percent for bachelor's degree holders to 7 percent for workers with a professional degree. Some high-wage occupations are difficult or impossible to enter without higher education. And within occupations, workers with the most education usually have the highest paying jobs. In some occupational groups-such as service, farming, transportation, machine operators and laborers, and administrative support-more than 40 percent of workers with a bachelor's degree earned less than the median for high school graduates. Only 13 to 14 percent of workers employed in executive and managerial or technical occupations were likely to have lower earnings. As you might expect, low earnings are most common among younger graduates. Over one-half of young bachelor's degree holders aged 20 to 24 earned less than the median for high school graduates. But large numbers of older college graduates also have earnings below the median for high school graduates. There are two reasons for this. One is that workers in the oldest age group may retire but continue working in lower paying jobs to supplement their retirement incomes. The other reason is that higher earning bachelor's degree holders may retire earlier, leaving the relatively lower earners-those who can't afford to retire-in the older age groups.

Detailed Occupations Earnings often vary by occupation without regard to the education of the worker. The table presents median annual earnings, ranked from highest to lowest, by education level for occupations with at least 100,000 college graduates in 1996. For workers in almost all of the occupations listed, investing in a college degree pays off. Most of the highest paid workers were employed in college-level professional and managerial occupations. Only 4 of the first 30 occupations listed were not in the professional specialty or executive and managerial occupational groups: production supervisors, securities and financial services sales occupations, police and detectives, and computer programmers. In all but 9 of the 78 occupations listed in the table, median earnings for college graduates were higher than the overall median for all high school graduates. All of the lowest paying occupations were in one of three major occupational groups: administrative support, service, or farming, transportation, and machine operators and laborers. Only a few high school graduates earned more than the median for all bachelor's degree holders. They were employed in occupations that most often require a college degree, including marketing, advertising and public relations managers, and computer systems analysts and scientists. And although earnings usually increase with education, in a small number of noncollege-level occupations-such as mail and message distributing occupations-more education added little earnings potential. Beyond the Data Data in this article are from the March 1997 supplement to the Current Population Survey that collected information on earnings of all workers by education level. In this survey, employed respondents were asked to report their annual earnings, before deductions, for the previous year. The analysis presented here is limited to year-round, full-time workers so the effect of variable schedules on annual earnings does not cloud comparison of earnings. About 3 out of 5 earners aged 16 and older worked year-round, full-time in 1996. However, less than half of the workers in some occupations-such as prekindergarten and kindergarten teachers, retail sales workers, teacher aides, and waiters and waitresses-worked year-round, full-time. Most voluntarily chose to forgo year-round, full-time employment for noneconomic reasons, such as to attend school or fulfill personal or family obligations. Chart 5: Percent of bachelor's degree holders working full time year-round, who earned less than the median for high school graduates ($23,317), by occupational group, 1996 Chart 6: Percent of bachelor's degree holders working full-time, year-round, who earned less than the median for high school graduates ($23,317) by age group, 1996 The CPS data paint a detailed picture of the earnings success of college graduates. The diversity of their labor market experiences is sometimes masked by medians and broad occupational groupings. General trends can prove informative but should be interpreted with caution. Because educational attainment is only one of many variables determining occupational earnings, individual experiences can vary greatly. Earnings also reflect workers' innate skills and talents. In addition to the factors discussed in this article, other factors affecting compensation include workers' sex, the industry in which occupations are concentrated, job benefits, geographic location, and union affiliation. For some workers, less tangible aspects of a job-flexible hours or the nature of the work itself, for example-are more important than high earnings. Employers will continue to demand skilled and capable workers who are the best fit for their organization. Data in this article provide only a snapshot of the dynamic labor market for college graduates. For more information on college graduate outlook, occupations, earnings, and trends, see the summer issue of the OOQ. Theresa Cosca is an economist in the Office of Employment Projections, BLS, (202)606-5712.

Table: Employment and median annual earnings by college and high school graduates who worked full time, year-round, by occupation and degree level, 1996

Occupation	Total employment* (thousands)	Median annual earnings
		All graduates	Bachelor's degree	Master's degree	Ph.D. or professional degree	High school graduates
Total	124,664	$40,753	$36,155	$46,269	$65,890	$23,317
Physicians	676	92,002	-	-	91,791	-
Dentists	127	80,004	-	-	80,004	-
Lawyers	789	76,803	-	-	77,085	-
Marketing, advertising, and public relations managers	667	60,718	54,087	75,619	-	789
Production supervisors	1,224	60,662	61,538	-	-	32,010
Managers and administrators, n.e.c.	7,429	60,138	51,234	76,453	80,980	35,421
Securities and financial services sales occupations	427	56,501	50,512	-	-	30,809
Pharmacists	198	56,003	56,010	-	-	-
Economists	178	55,727	50,478	-	-	-
Electrical and electronic engineers	658	55,127	51,312	61,339	-	-
Mechanical engineers	379	53,430	52,954	61,243	-	-
Civil engineers	232	51,514	50,769	52,307	-	-
Operations and systems researchers and analysts	173	51,003	42,276	-	-	-
Management analysts	315	50,245	51,013	46,312	-	-
Computer systems analysts and scientists	1,227	50,187	46,719	52,788	-	42,365
Industrial engineers	241	49,601	46,541	-	-	-
Postsecondary teachers	918	48,263	22,776	41,345	51,973	-
Chemists, except biochemists	130	47,067	43,270	-	-	-
Financial managers	731	47,037	45,635	64,055	-	30,351
Psychologists	246	46,768	-	37,337	63,840	-
Administrators, education and related fields	724	46,514	36,797	50,462	56,019	17,434
Life scientists	209	46,504	35,012	-	56,863	-
Administrators and officials, public administration	551	46,162	44,325	50,402	-	30,199
Other financial officers	744	46,139	41,775	60,748	-	28,551
Physical and occupational therapists	156	45,744	42,186	-	-	-
Police and detectives, public service	528	45,648	41,005	-	-	33,610
Architects	183	45,495	46,255	-	-	-
Computer programmers	606	44,243	39,589	47,367	-	-
Medicine and health services managers	695	43,369	35,785	55,821	-	24,329
Property and real estate managers	521	42,575	41,852	-	-	25,849
Inspectors and compliance officers	251	41,721	42,530	-	-	-
Registered nurses	1,836	41,675	41,018	47,924	-	-
Sales supervisors and proprietors	4,724	40,308	37,407	55,778	-	26,535
Clinical laboratory technologists and technicians	384	40,255	38,983	-	-	22,046
Editors and reporters	254	40,121	37,349	-	-	-
Mining, manufacturing and wholesale sales representatives	1,403	39,600	39,650	-	-	35,521
Personnel, training, and labor relations specialists	430	38,223	36,042	42,328	-	26,112
Mail and message distributing occupations	935	37,286	36,871	-	-	36,077
General office supervisors	430	37,047	35,117	-	-	26,058
Accountants and auditors	1,525	36,147	35,320	46,440	-	24,846
Food service and lodging establishment managers	1,332	35,872	37,292	-	-	20,320
Engineering and related technologists and technicians	888	35,652	33,741	-	-	31,105
Construction supervisors	702	35,532	35,444	-	-	32,776
Managers service organizations, n.e.c.	566	35,396	29,873	43,267	-	26,441
Insurance adjusters, examiners, and investigators	481	35,313	34,593	-	-	25,466
Insurance sales occupations	593	3,001	32,165	-	-	28,175
Special education teachers	407	34,191	26,691	41,530	-	-
Librarians	221	33,760	-	34,573	-	-
Designers	689	33,052	32,615	-	-	20,651
Educational and vocational councelors	255	32,536	28,412	36,511	-	-
Real estate sales occupations	733	32,475	36,831	-	-	30,001
Legal assistants	297	32,472	31,883	-	-	29,376
Secondary school teachers	1,114	32,465	28,737	37,407	39,270	-
Authors	158	32,299	26,619	-	-	-
Mechanics and repairers, except supervisors	4,392	32,253	33,615	-	-	27,164
Clergy	355	31,322	24,756	35,199	-	-
Elementary school teachers	1,866	31,272	29,405	36,777	-	-
Production occupations, except supervisors	2,566	30,461	30,076	-	-	27,137
Records processing occupations, except financial	945	29,483	28,125	-	-	20,973
Prekindergarten and kindergarten teachers	526	29,422	25,531	33,267	-	12,577
Material recording, scheduling, and distribution clerks n.e.c.	1,877	29,366	28,813	-	-	22,438
Construction trades, except supervisors	4,487	28,646	28,688	-	-	26,705
Social workers	800	28,277	25,429	35,685	-	23,543
Machine operators, assemblers, and inspectors	7,708	26,832	26,985	-	-	22,951
Farmers, except horticultural	914	26,553	30,422	-	-	21,258
Retail and personal services sales workers	6,662	26,189	24,863	32,330	-	15,921
Painters, sculptors, craft-artists, and artist printmakers	218	23,993	23,928	-	-	-
Investigators and adjusters, except insurance	930	23,792	25,526	-	-	21,480
Bookkeeping, accounting, and auditing clerks	1,704	23,334	23,128	-	-	20,403
Secretaries	2,883	22,805	22,474	-	-	20,946
Truckdrivers	2,940	21,816	22,168	-	-	28,792
Handlers, equipment cleaners, helpers and laborers	4,561	21,795	23,484	-	-	20,912
Data-entry keyers	676	21,778	21,954	-	-	21,114
Guards and police, except public service	730	21,634	22,284	-	-	16,927
Information clerks	1,764	21,412	21,497	-	-	19,244
General office clerks	781	21,153	21,101	-	-	21,800
Waiters and waitresses	1,356	17,773	18,502	-	-	12,984
Teacher aides	665	13,833	13,944	-	-	11,383

* Includes workers at all education levels - Base less than 50,000 n.e.c. - not elsewhere classified

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