The Bitter Inequality Of Higher Education And Earnings

“Education pays,” says the Bureau of Labor Statistics (BLS) chart. You can see the proof, with earnings and unemployment rates by educational attainment in 2021, the most recent compilation available. The more you learn, the more you earn. Just look at the chart.

Did you ever wonder whether that chart, full of promise, applied to everyone equally? If you dig into slightly deeper levels of data available from the Census Bureau, it doesn’t. And probably a good number of those negatively affected in this market of education, skills, and pay already knew or at least suspected.

The advantage of more education is generally true. No matter what your background, with higher attainment you typically achieve a larger income. But fix a few of the variables and you get a significantly different picture.

In this case, fixing variables meant no split by gender, no mixed-race categories, and only full-time and year-round employment. These factors are important, of course, but by paring away at the variations, a clear look becomes more obvious. The data comes from the Current Population Survey (CPS) Annual Social and Economic (ASEC) Supplement, developed by both the Census Bureau and BLS. This is survey data, self-reported by respondents.

Both median (the center of the range from top to bottom) and mean (average) incomes appear. They are virtually never the same, with median incomes being lower than the corresponding mean. The difference means there is likely top weighting, where a smaller portion of people with a given degree make much more than most others in the category. That could be a matter of a given specialty; a PhD in physics, especially if applied to corporate use of big data, like likely worth more on the labor markets than a PhD in comparative literature of Romantic Era poets.

What is remarkable, though, is the degree to which earnings vary by category when the differentiating factor is race.

Here is the first category: white, non-Hispanic workers.

White alone, non-Hispanic, median/mean annual earnings by education:

Bachelor’s—$76,393/ $98,575

Master’s—$86,947 / $112,153

Professional—$131,134 / $186,486

Doctorate—$121,403 / $167,077

Take that as a baseline for a moment. Now, look at Asian only comparisons.

Asian alone, median/median annual earnings by education:

Bachelor’s—$80,322 / $95,705

Master’s—$107,007 / $131,958

Professional—$130,978 / $187,410

Doctorate—$121,895 / $151,178

There are obvious differences in those with master’s degrees, where white workers are far behind in earnings. But otherwise, the figures are fairly close, both average and median.

Now consider first black alone holding varying levels of college degrees, and then Hispanic of any race.

Black alone, median/mean annual earnings by education:

Bachelor’s—$57,346 / $73,011

Master’s—$71,858 / $90,084

Professional—$105,988 / $122,513

Doctorate—$97,117 / $130,245

Hispanic, all races, median/mean annual earnings by education:

Bachelor’s—$59,096 / $75,950

Master’s—$77,329 / $90,843

Professional—$77,102 / $126,583

Doctorate—$102,035 / $119,782

Except for professional degrees, where the median professional degrees show a marked difference, the two are more or less equivalent.

The big differences show between white/Asian on one side and black/Hispanic on the other. These are two worlds.

Compare median wages of white and black holders of bachelor’s degrees. Median wages of blacks are 25% lower, while the mean is lower by about 26% For Hispanics, the median and mean are both 23% lower.

For master’s degrees, the differences are lower, but still significant. For median incomes of blacks and Hispanics, the numbers are 17% and 11% off. Mean incomes are down by roughly 20% and 19%.

Median incomes of those with professional degrees, off by 19% and an astounding 41%, respectively (with no idea why). Means, missing the higher levels by 34% and 32%.

Finally, on the doctoral level median, 20% and 16%, then on the mean, off by 22% and 28%.

Big disparities. Because both men and women are included, an argument about different choices of careers, of social studies, say, over STEM, seem unlikely. Is it barriers over years to bigger name schools that can drive up initial pay, which then perpetuates through raises? Maybe. Flat out racism in pay offers? Many studies over the years would suggest this as a big factor.

The differences in income would seem likely to play a role in student debt. The less money you make, especially if you’ve had to borrow more for school, the harder it is to repay the loans. As of 2019, here is a graph from the Federal Reserve of repayment status of people who took student loans out.

And students of color are more likely to take out greater totals of loans to attend school.

This is the ugly financial rear of the bus mechanism, making an end to unjust inequality that much more difficult to overcome.