Mar 4, 2024 - Economy

Show this chart to anyone who tells you college isn't worth it

Median annual wage for recent graduates
Data: Federal Reserve Bank of New York; Chart: Axios Visuals

Yes, college is still worth it: The wage gap between recent college and high school grads has been widening for decades, and grew even more last year, per new data from the Federal Reserve Bank of New York.

Why it matters: Even so, Americans are falling out of love with the idea of a four-year degree.

  • Confidence in the value of a college education, a cornerstone of the American dream, is falling, per polling from Gallup and the Wall Street Journal.

Reality check: Economic data show clearly that a college degree gives individuals a lifetime earnings edge — and other benefits. Despite what you've heard about AI stealing our jobs, the U.S. economy needs educated workers to grow and flourish: how else would that AI get developed?

Zoom in: In 2023, recent college grads age 22-27 working full-time earned $24,000 more per year than 22-27 year olds with only a high school degree.

  • Back in 1990 the gap was $15,000, according to the numbers tracked by the NYFed.
  • To put that in perspective, by their early 20s the high-school degree workers likely have many more years of work experience than the new college grads — yet they're still getting out-earned.

Yes but: That gap is just the beginning. The wage premium goes on to double over a worker's lifetime, according to research economist David Deming published last year.

  • He was able to follow a group of college-educated workers through their working lives. At age 25 these folks had a 27% premium over high school only graduates. By age 55, that premium was 60%.
  • "It's malpractice to tell a young person that a college degree isn't necessary anymore," says, Deming, who is a professor at the Harvard Kennedy School.

Follow the money: A lot of research, surveys and news articles evaluate the worth of a degree for recent graduates  but the value of college education accrues over a workers' lifetime.

  • Even those who don't graduate have higher earnings than those who don't go at all.

For example: A trucker might earn around $50,000, about what a newly minted college grad might make, Deming points out in a piece for The Atlantic.

  • Knowing that, you might question spending a lot of money on a degree, if you can make the same money without one.
  • Thing is: Jobs that high-school graduates typically get don't see much wage growth. Truck drivers, with years and years of experience, don't go on to make considerably more money — than newbies.
  • Someone in, say, marketing or HR or even journalism, might see their salary double or more over their lifetime.

More educated workers are also more likely to have other benefits — the ability to work remotely, access to paid sick and family leave, health insurance.

The intrigue: In 2022 the college premium narrowed as real wage increases for lower income earners soared on the back of big post-pandemic demand for workers in sectors, like restaurants, facing worker shortages.

  • That was a blip — the gap has since widened again.

"We're in an economy that puts a premium on high skill, knowledge, idea generation," says Jaison Abel, head of urban and regional studies at the NY Fed who's tracked this data for years.

  • "There's fewer and fewer opportunities, especially good paying opportunities, for those who have just a high-school diploma."
Go deeper