(Editor’s Note: Even though this article was written in 2006, there is a point worth making, and we surely do hope you figure it out.)
Copyright © 2006 Ed Bagley
Colleges and universities are fond of reminding anyone who will listen that there is great value in earning a bachelor’s degree. In the most recent statistics available the U. S. Census Bureau tends to agree.
Results from the 2004 Census Bureau report shows a $23,000 difference between the average annual salary of adults with a bachelor’s degree ($51,554) compared to adults with a high school diploma ($28,645).
In what may or may not be an anomaly, the income gap narrowed slightly from five years earlier when bachelor’s degree graduates made nearly twice as much as high school graduates.
The percentage of Americans 25 and older with a bachelor’s degree rose to 28%, and the percentage with a high school diploma rose to 85%. In 1970, 36 years ago, only 11% of Americans had a bachelor’s degree and a little more than half had a high school diploma.
It is probable that the increase over time has had much to do with the advent of technology in our society, and the impact of Internet accessibility to the general public in 1993 and 1994 through the creation of browsers.
If you are wondering, Minnesota, Utah, Montana, New Hampshire, Alaska and Washington had the highest proportions of adults with at least a high school diploma, all at about 92%. Texas had the lowest with about 78%.
Connecticut had the highest proportion of adults with a bachelor’s degree (37%) and West Virginia had the lowest (15%).
I have long been a believer that there is no real correlation between education and income unless the degree leads to a high paying profession, such as a physician, attorney or dentist. I have known too many people with bachelor’s degrees working at McDonald’s restaurants.
My standard comment is that it is not like all people with bachelor’s degrees make $100,000 a year and those with high school diplomas make $30,000. I also have known many people with only high school degrees and some high school dropouts who make well in excess of $100,000 annually, especially in sales.
Bill Gates is a college dropout who ranks as the richest man in the world. Forbes magazine rates William H. Gates III as the richest person in 2006 with $53 billion, proving perhaps that even Harvard dropouts can make a lot of money.
You, dear reader, will have to decide for yourself how big a difference in income is possible with a college degree instead of settling for a high school diploma. There is no question in my mind that the income gap will increase as the upper and lower edges of our middle class are falling away and the gap between the rich and poor in America widens.
I have also found little correlation between talent and income, intelligence and income and experience and income. Is there anyone in America who has not heard of the starving artist, or educated idiots in menial jobs, or janitors becoming millionaires?
The only real correlation I have noticed is between people skills and income. How else can you reasonably explain how a high school dropout becomes a self-made, multi-millionaire entrepreneur?
These successful entrepreneurs may not have perfect subject-verb agreement when they speak, but they certainly know how to relate to people in a meaningful way. You may have noticed that the whole world steps aside for the man who knows where he is going (ditto for women).
Also of note is the Bureau of Labor Statistics National Compensation Survey which shows that white-collar earnings average $21.85 an hour while blue-collar earnings average $15.03 and service occupations average $10.40.
Source information for the following statistics come from the Employment Policy Foundation.
The jobs that pay the most generally require at least a bachelor’s degree (4 years of higher
education) and several also require graduate (master’s or doctorate) degrees. Here are the average annual incomes during 2003 for the nation’s Top 12 Paying Jobs:
Top 12 Paying Jobs Overall
$147,000 – Physicians and Surgeons
$133,500 – Aircraft Pilots
$116,000 – Chief Executives
$112,000 – Electrical and Electronic Engineers
$99,800 – Lawyers and Judges
$90,000 – Dentists
$85,500 – Pharmacists
$84,700 – Management Analysts
$84,000 – Financial Analysts, Managers and Advisors
$83,000 – Computer and Information System Managers
$80,000 – Marketing and Sales Managers
$80,000 – Educational Administrators
Top Paying Jobs That Generally Require an Associate Degree or Certificates of Training
The jobs that pay the next best annual average salaries tend to be technical in nature and generally require an associate degree (2 years of higher education) and/or job-specific training certificates. Here are the average annual incomes during 2003 for the Top 6 Paying Jobs:
$66,000 – Healthcare Practitioners
$58,000 – Business Analysts
$57,000 – Electrical and Electronic Engineers
$56,800 – Mechanical Engineers
$54,000 – General and Operations Managers
$50,400 – Computer and Information System Managers
Top Paying Jobs That Generally Require a High School Diploma
These jobs generally require a high school diploma and emphasize work experience and on-the-job training rather than college degrees. Here are the average annual incomes during 2003 for the Top 6 Paying Jobs:
$58,900 – Computer Software Engineers
$56,400 – Computer and Information System Managers
$55,000 – Computer Programmers
$49,000 – Network Systems and Data Communications Analysts
$48,000 – General and Operations Managers
$48,000 – Database, Network and Computer Systems Administrators
Top Paying Jobs That Do Not Require a High School Diploma
These jobs tend to require substantial on-the-job training and work experience rather than formal education and specialized training. Here are the average annual incomes during 2003 for the Top 6 Paying Jobs:
$36,400 – Bailiffs, Correctional Officers and Jailers
$36,400 – Legal Assistants
$36,000 – Industrial Production Managers
$36,000 – Drafters
$33,600 – Construction Managers
$31,900 – Electricians
Sometimes the sources for these statistics are not really clear in the significance of their findings. You will notice that whatever the educational level, the positions for Computer and Information System Managers are mentioned.
It is the 9th highest paying job at $83,000 in highest educational level, shows up at $50,400 with a two-year degree and becomes the 2nd highest paying job at $56,400 for high school graduates.
The difference in salaries at different educational levels could have to do with the size of the company the worker serves. There is a difference in responsibility and technical requirements for a company generating $10 million in annual revenue as opposed to a company generating $100 million or $1 billion in annual revenue.
I believe it is also important to understand that many people with Top 12 paying jobs are self-employed professionals who are able to take many legitimate deductions in their business tax returns that workers do not enjoy.
Deductions lower their net taxable income. The earnings you see here can be much lower than their actual earnings because deductions can be “paper write-offs,” deductions that result from depreciation, for example, that can amount to thousands of dollars credit with no out-of-pocket expenses.
It almost goes without saying that many savvy college and high school graduates also have part-time businesses that allow them legitimate deductions that lower the net taxable income from their jobs.