So it might come as a surprise that a new study shows the value of a college degree is greater than it has been in nearly half a century, at least when compared to the prospect of not getting a degree. The Pew Research Center has found that the earnings gap between millennials with bachelor’s degrees and those with just a high school diploma is wider than it was for prior generations.
Among millennials ages 25 to 32, median annual earnings for full-time working college-degree holders are $17,500 greater than for those with high school diplomas only. That gap steadily widened for each successive generation in the latter half of the 20th century. As of 1986, the gap for late baby boomers ages 25 to 32 was just more than $14,200, and for early boomers in 1979, it was far smaller at $9,690. The gap for millennials is also more than twice as large as it was for the silent generation in 1965, when the gap for that cohort was just under $7,500 (all figures are in 2012 dollars).
The gap has widened considerably, yet many young college graduates are underemployed – how do those two facts square with each other? It’s not just that earnings are improving for college graduates, says one of the report’s authors, it’s that life for high school-only graduates has gotten tougher.“There’s a reason we call this report ‘The Rising Cost of Not Going to College,'” says Paul Taylor, executive vice president of special projects at the Pew Research Center.
“The driver of that widening is not so much that today’s college graduates are doing better than yesterday’s college graduates are doing; it’s that today’s high school-only graduates are doing worse than yesterday’s high school-only graduates,” he says. “The real story is the collapse in economic opportunity for people who do not continue their education beyond high school.”
Indeed, median annual earnings for full-time working 25- to 32-year-olds with bachelor's degrees grew by nearly $6,700 to $45,500 from 1965 to 2013. During that same time, median annual earnings for high school graduates in that same age group fell by nearly $3,400 to $28,000.[ALSO: Twice as Many College Grads in Minimum Wage Jobs as 5 Years Ago]
And those numbers are only among those working full-time. People with college degrees have a far easier time finding a job than those without a degree. Among 25- to 32-year-olds with a college degree, the jobless rate as of March 2013 was 3.8 percent. At 8.1 percent, the rate was more than twice as high for those with a two-year degree or some college, and it was more than three times as high for those with only a high school diploma at 12.2 percent. That kind of educational gap in the jobless rate persists across the broader population as well, as the most recent government jobs report shows.
That’s not to say that today’s young college graduates are entirely doing better than their predecessors. The poverty rate for millennials with a college degree or greater is nearly 6 percent, roughly twice as high as it was for Generation X in 1995 or the early boomers in 1979, and higher than the 4 percent rate for late boomers in 1986 (data for the silent generation was not available).
The total wealth of millennial college graduates is also lower than it was for 25- to 32-year-olds in 1984. As of 2011, those millennials had a median household wealth of $26,059, compared to $29,521 in 1984.However, the median wealth of people without degrees has fallen even further: High school graduates ages 25 to 32 had a median household net worth of $11,455 in 1984. By 2011, it was less than one-third of that, at $3,137.
“Some of the story that’s familiar about the difficulty, even of college graduates in today’s economy, is also told here. But that doesn’t mean they aren’t doing better vis-à-vis high school graduates,” Taylor says.
There’s also evidence that today’s college graduates have more regrets than their elders. Survey respondents were presented with four things they could have done differently in college: getting more work experience, studying harder, looking for work sooner and picking a different major. Among people 18 to 32 with college degrees, 31 percent said they would have done three or all four of those things differently, compared to only 22 percent of Generation Xers and 17 percent of boomers.
That could signal that millennials facing a tough job market wish they had taken more steps to get ahead of their peers. Then again, it could also mean that – given a decade or three's removal from college and having settled into their careers – many boomers and Generation Xers simply feel those regrets less acutely.
Either way, it's something we may not know until someone does the same study in 2024.