Statistics lie, even when they relate to making choices in college.
Ever heard the math textbook definition of average or median? Both of these calculations are measurements of central location. Location might sound like an awkward word to describe a math formula, but it's an accurate description.
When you hear "central location," it probably makes you think of finding the middle of New York City. This is actually a good analogy for how averages work. To calculate an average or median, you need to collect a population of numbers. Then, placing all those numbers on a grid, you run an average or median calculation and you come up with the middle of where the numbers fall. It's possible that the number you calculate may not even be one of the numbers you collected.
Another thought to consider: What does the middle of anything tell us about a whole? If the center of New York City were Central Park, could we then assume that all of New York City is a well-maintained urban park?
This runs contrary to our personal identification with the term "average." We tend to think that we are average people. So when we hear a statistic that shows the average college graduate earning nearly twice what an average high school graduate earns, we expect that we'll achieve the same outcome. After all, we are average people, so we'll be earning the average wage.
How do we temper the misperception of averages and median data? Let's say you rolled a die six times and it turned a 1, a 2, a 3, a 4, a 5, and a 6. The actual average/median of this outcome is 3.5. Does this mean the average person is going to roll a 3.5? Obviously, this statistic sounds silly, but also shows exactly how misleading these calculations can be. What if I said you had a one in six chance of rolling a 3? It changes your perception. That's why today I'm going to give you the odds, not the averages, on succeeding with a college degree.
Odds of Earning the Median Salary
The Bureau of Labor Statistics (BLS) published a chart called "Education Pays." It showed the median weekly earnings of a college graduate to be $1,053 per week and those of a high school graduate, $638. This type of statistic leads to the belief that if you go to college, you'll earn nearly twice what high school graduates make. Is this a realistic expectation?
In real life, plenty of high school graduates out-earn college graduates. Just think of college dropout Bill Gates. BLS used a median figure, which really means that you have a 50/50 chance of earning more or less than $1,053 per week. What were your odds of earning a median salary or more before college?
Georgetown University measured the range of income responses by college education. They found that 14.3 percent of those with a high school diploma or less earn as much or more than the median college student. That works out to a one in seven chance of out-earning the median college student.
Odds of a College Graduate Being Unemployed After Graduation
Ouch. Unemployment for recent college graduates is almost 9 percent. That means 1 out of 11 college graduates are not earning a paycheck. Granted, this number is inflated given current economic conditions. However, the unemployment rate for those with a high school diploma is almost 23 percent, or nearly one in four.
While your odds of avoiding the unemployment line with a college degree is nearly three times that of high school graduates, you have to consider the fact that unemployed with no college cost is far better than unemployed after having paid $12,804 per year for public tuition.
Odds of Striking it Rich
The top 1 percent of wage earners in the U.S. earn almost $500,000 per year. The odds of anyone making it to the top are low, even with a college degree, but the odds are better than those with no college education.
Gallup conducted a study of its survey results to get a better understanding of how education and riches were related. Of those with college degrees, roughly eight in 1,000 make it into the upper echelon of income earners. For those without a college degree, the odds drop as low as three out of 1,000.
Notice that success is not something out of reach for anyone of any education level. It also means that success is not a guarantee. However, what college can do is help increase your chances of success. For example, when it comes time to measuring up to median college wage earners, life hands the college student a coin to flip and a high school graduate something close to a die. Whether or not increasing those odds are worth it to you will depend on who you are.
JP is the author of the money blog My Family Finances, a site dedicated to helping families make wise financial decisions. He is also an MBA and works in corporate finance.
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