The Remarkable Prosperity of College Graduates
Hall, Robert E., Reason
Americans have done well in the past decade, but college graduates have really cleaned up. Between 1990 and 1998 (the last year reported by the government), BA holders' earnings rose by 18 percent after adjustment for inflation. People with graduate degrees did even better: 25 percent higher earnings over the eight years, after inflation. High school graduates without college, at the same time, saw earnings increases of only 11 percent after inflation. The financial payoff to a college education and to graduate training rose to an all-time high. The benefits go to those who actually finish college and receive a BA--there has been no sharing of the bonanza by those who receive two-year AA degrees or drop out of BA programs. Because college graduates were already at the top of the earnings distribution, the widening of the education gap contributed to the general rise in economic inequality noted during the decade.
What do college graduates do that puts them on the earnings escalator? The industries that hire large fractions of college graduates are technology users. They include business and engineering services, financial institutions, and the chemical industry. All these industries have workforces that are at least 25 percent college graduates. The most college-intensive industry is securities trading, where 58 percent of all workers have graduated from college.
Industries where college graduates have little role are decidedly low tech: restaurants, hotels, mining, and basic manufacturing, including paper, steel, lumber, and food. College graduates are 7 to 15 percent of the workforces of these industries. …