College Pays Off. But by How Much Depends on Race, Gender, and Type of Degree.

The wage gap between young workers with and without bachelor’s degrees has never been larger. On average, recent college graduates earn $52,000 per year, while young workers with high school diplomas but no higher education credential earn only $30,000 per year. The difference in wages between college and high school graduates – often referred to as the college wage premium – has increased since the start of the COVID-19 pandemic (see figure 1). This growing source of economic inequality is particularly troubling given that college enrollment has also declined by more than 1 million students since the onset of COVID-19. If these trends continue, they could exacerbate economic inequality for years to come.

Wage premiums for recent graduates are just one of many economic benefits associated with college completion. Research suggests that in 2018, the median earnings of workers of all ages with bachelor’s degrees were nearly $25,000 higher than those of workers with high school diplomas. This suggests that college wage premiums remain for workers of all ages and do not fade over time. Additionally, college graduates have lower unemployment rates than high school graduates. In January 2022, the unemployment rate for college graduates was half the unemployment rate for high school graduates without college degrees (see figure 2). Taken together, this means that college graduates are more likely to have jobs, and more likely to have higher-incomes, than are people without college degrees.

A More Nuanced Reality: Economic Benefits of College Differ by Degree & Program of Study

While college wage premiums are observable for workers of all ages, the economic returns to higher education differ by institution, type of degree, and program of study. In 2018, the median earnings of full-time workers aged 25 and older with bachelor’s degrees were $65,400. In the same year, the median earnings of full-time workers with associate's degrees were $50,100, and the median earnings of full-time workers with high school diplomas were $40,500. This shows that college completion – both at community colleges and four-year universities – is associated with increased earnings and economic security (see figure 3).

However, the economic benefits of a college degree differ by program of study. For example, bachelor’s degrees in nursing, engineering, science, and health tend to have the highest – and fastest – returns on investment for graduates, while bachelor’s degrees in music and studio arts offer the lowest return on investment. Associate degrees in nursing, engineering technologies, and computer programming offer similarly positive economic benefits for their students, while associate’s degrees in programs such as culinary arts frequently do not lead to positive economic returns for graduates. While the value of both Bachelor’s and Associate degrees is positive on average, the economic benefits stemming from college degrees depend on the field of study.

Racial and Gender Inequities in Economic Returns to College Degrees

Despite the average economic benefits of a college education, there are significant racial inequities in the employment and income outcomes of college graduates. In 2018, white workers had higher incomes than Latino/a and Black workers at every level of educational attainment (see figure 4). From 2000 to 2018, the Black-white racial wage gap increased at every level of educational attainment. This suggests that college degree attainment alone will not solve racial inequities in labor market outcomes: even though earning a college degree increases wages, white college graduates still earn significantly more than their Latino/a and Black counterparts.

There are also significant gender inequities in the labor market outcomes of college graduates. Female workers aged 25 and older with associate’s degrees earned, on average, $41,500 in 2018, while their male counterparts earned an average of $56,700. In the same year, female workers with bachelor’s degrees made, on average, $56,700 while their male counterparts made, on average, $75,200. Gender inequities in labor market outcomes are so significant that, on average, male workers with bachelor’s degrees actually make more money than female workers with master’s degrees (see figure 5). While earning a college degree is associated with increased earnings for both male and female workers, earning a college degree will not solve systemic gender-based inequities in the labor market.

Important Takeaways and Policy Implications

The economic returns to college degrees are at historic highs, even though the benefits of higher education differ by race, gender, type of degree, and program of study. As the demand for workers with college degrees outpaces the supply of college graduates, policymakers need to increase the number of people who attend, and graduate, from college to increase economic security and equity. To do this, policymakers and college leaders need to make higher education more affordable, equitable, and supportive. However, this research also suggests that expanding access to college alone will not solve long-standing racial and gender inequities in the labor market. To ensure all people can access the benefits of higher education, policymakers must therefore work to increase the number of college graduates and ensure that all graduates have equal access to high-paying, high-quality jobs.

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