I teach a large Introduction to Macroeconomics class every Spring. For a number of years one of the local charter high schools has sent a group of their seniors to my class to give them a taste of college. A few days ago I went to the charter high school to meet the 13 students who will be taking my class. One of the things I talked to them about was why it is important to go and finish college.
As an economist I laid out a pretty simple argument. If you get a 4 year college degree you earn a lot more money. I used the Bureau of Labor Statistics quarterly “Usual weekly earnings of wage and salary workers” news release as the basis for my argument. The numbers I used came from table 5 of the Nov 1, 2013 release, but the answers haven’t changed much from year to year.
I divided the class up into men and women and had each gender look at the table and do their own calculations. The table shows the median weekly earnings for people with just a high school degree were $742 a week for men and $569 a week for women. The median weekly earnings for people with just a bachelor’s degree and no higher education were $1,267 for men and $941 a week for women.
While there are many more complex and correct ways to calculate lifetime wages (see my Business Macroeconomics textbook’s Chapter 14 section 3) I had them do a simple calculation. First they multiplied the weekly figures by 52 to turn the numbers into yearly averages. Then they multiplied the result by 40 since the average person spends about 40 years in the labor force. We finally rounded the results and got the following table.
Men With Just a High School Degree $1.5 million lifetime earnings
Men with a College Degree $2.6 million lifetime earnings
Additional amount earned by going to college $1.1 million
Women With Just a High School Degree $1.2 million lifetime earnings
Women with a College Degree $2.0 million lifetime earnings
Additional amount earned by going to college $800 thousand
There were two reactions to the table. The first was anger by a lot of women about the large difference in lifetime pay. The second was the recognition that even if college is expensive it clearly seems worth it to go and graduate. I don’t know if the promise of more gold at the end of the rainbow will help some of them complete college but it is eye-opening how large the pay gap is currently between high school graduates and college graduates.