How much do people with two-year or four-year degrees earn? Here are the facts.
We hear frequently from employers and their political allies that many/most kids would be better off pursuing an occupational certificate or two year degree with an occupational major than getting a four year degree. Some version of students with a four year degree are earning low wages with lots of debt, while students going into the skilled trades or other middle skills occupations are earning far higher wages. These stories are almost always anecdote––rather than data––driven.
Fortunately we now have data that allows us to ascertain how much those who attended either a two year or four year college are earning from work at age 34. (Either in wages or self employment income.) The data links how much a student earns at age 34 with the college they attended most. (There is a link in this New York Times article to summary data for nearly every college and university in the country. It’s that data that are used in this post.)
The data come from The Equality of Opportunity Project. Led by economist Raj Chetty of Stanford. All of the data they collected is publicly available on their website. Really worth checking out.
Let’s look at the data for Michigan colleges and universities. It tells a far different story than what passes for conventional wisdom these days. First, to provide some context, the average earnings for 34 year olds in America is around $27,000. (Pretty shockingly 20 percent of 34 year olds have basically no earnings from work.)
For the two Michigan universities that draw students from across the planet, at 34 the median earnings from work for those who most attended the University of Michigan in Ann Arbor is $68,700. For those who most attended Michigan State University its $52,600. The second ranked Michigan public university is Michigan Tech with median earnings from work at 34 of $65,900. The lowest ranked of Michigan’s 15 public universities is Lake Superior State with median earnings from work at 34 of $35,700. In the middle of the pack are Ferris State University and Central Michigan University (ranked 7th and 8th) both with median earnings from work at 34 of $42,400.
For private non profit colleges the two engineering focused schools have the highest median earnings at 34. Kettering is first overall all in the state, by far, at $85,400. At Lawrence Tech its $54,600. Of the private non profit liberal arts colleges the highest ranked is Kalamazoo College at $53,700. The lowest ranked is Olivet at $34,700. In the middle of the pack is Adrian at $40,300.
Two other large private colleges are near the bottom of the rankings. Davenport University has median earnings at 34 of $23,400, Baker College is at $22,500 .
For community colleges the highest ranked is Monroe with median earnings from work of $32,800. The lowest ranked is Wayne County at $19,400. In the middle of the pack is Henry Ford at $27,800.
So the lowest ranked of Michigan’s public four year universities has median earnings at 34 about $3,000 higher than the top ranked community college. There are only six of 28 Michigan community colleges with median earnings from work at 34 of at least $30,000 (Monroe, Alpena, Schoolcraft, Macomb, Grand Rapids and Lansing). Eleven of Michigan’s 15 public universities have median earnings from work at 34 of at least $40,000 (all but Wayne State, Eastern Michigan, Northern Michigan and Lake Superior State.)
The pattern depicted by the data above is representative of the data nationally. That median wages at 34 is substantially higher for those who attended a four year college rather than a community colleges. Nationally for profit colleges have the lowest median wages.
One may respond to the above data with ” but even though the average earnings from work across the board are higher for those who attended a four year college compared to those that attended a community college, those who are in the best paying work still might be those who go to community colleges”. So lets look at the proportion of students from each college at 34 who have earnings at the 80th percentile or higher. About $56,000 or more.
There are only three community colleges with at least 20 percent of attendees in the top 20 percent of earners at the age of 34. Alpena, Schoolcraft and Macomb. All at 21 percent. At all other community colleges a higher proportion of all 34 year olds are in the top 20 percent of earners than those who most attended a community college. The exact opposite is true for Michigan’s 15 public universities. At every one of them a higher proportion of their attendees are in the top 20 percent of earners compared to all 34 year olds. Eleven of the 15 have at least 30 percent of their attendees at age 34 in the top 20 percent in earnings from work. Michigan Tech at 61 percent has the highest proportion of its attendees in the top 20 percent. Lake Superior State at 23 percent is the lowest.
So the story we hear over and over again about students going to four year universities making low wages and those going to community colleges high wages is not true. If you only care about how much you earn from work, going to a four year college is the most reliable path to good-paying work. That doesn’t mean that all young adults need a four year degree or that there aren’t good-paying jobs that don’t require a four a year degree. But it does mean telling other people’s kids that they should skip pursuing a four year degree because they are far more likely to be paupers who can’t repay their student loans is simply inaccurate.
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“It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.” Mark Twain
Amen! Those stubborn facts get in the way of a good story.