Where people go to college can make a big difference in starting pay, and that difference is largely sustained into midcareer, according to a large study of global compensation.
In the yearlong effort, PayScale Inc., an online provider of global compensation data, surveyed 1.2 million bachelor's degree graduates with a minimum of 10 years of work experience (with a median of 15.5 years). The subjects hailed from more than 300 U.S. schools ranging from state institutions to the Ivy League, and their incomes show that the subject you major in can have little to do with your long-term earning power. PayScale excluded survey respondents who reported having advanced degrees, including M.B.A.s, M.D.s and J.D.s.
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Salary Increase by Type of College
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Even though graduates from all types of schools increase their earnings throughout their careers, their incomes grow at almost the same rate, according to the survey. For instance, the median starting salary for Ivy Leaguers is 32% higher than that of liberal-arts college graduates -- and at 10 or more years into graduates' working lives, the spread is 34%, according to the survey.
One reason why Ivy Leaguers outpace their peers may be that they tend to choose roles where they're either managing or providing advice, says David Wise, a senior consultant at Hay Group Inc., a global management-consulting firm based in Philadelphia. By contrast, state-school graduates gravitate toward individual contributor and support roles. "Ivy Leaguers probably position themselves better for job opportunities that provide them with significant upside," says Mr. Wise, adding that this is the first survey he's seen that correlates school choice to a point later in a career.
Also, more Ivy League graduates go into finance roles than graduates of other schools, and employers pay a premium for them, says Peter Cappelli, a professor of management and director of the Center for Human Resources at the Wharton School of the University of Pennsylvania. "Dartmouth kids get paid more for the same job than kids from Rutgers are [doing]," he says.
Which school pays off the most? According to the survey, graduates of Dartmouth College, an Ivy League college, earn the highest median salary -- $134,000.
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Of all Ivy League graduates surveyed, those from Columbia earn the lowest midcareer median salary -- $107,000. Meanwhile, the highest-paid liberal-arts-school graduates, from Bucknell University, earn slightly more -- $110,000.
Mr. Wise called the data thought-provoking. "These results, to some extent, confirm suspicions that many people have about the importance of a person's college choice in giving them better pay opportunities down the line," says Mr. Wise. "What we still don't know is whether or not it's the training or education the school provides that drives these pay differences, or if the people from those schools are just wired to self-select into jobs that are likely to be paid more."
The survey also looked at how much salaries increased over time. Liberal-arts-school graduates see their median total compensation grow by 95% after about 10 years, to $89,379 from $45,747. Meanwhile, graduates of "party schools" (as defined by the 2008 Princeton Review College Guide) aren't that far behind, with their incomes increasing 85% during that time to $84,685 from $45,715.
At the bottom: Engineering-school grads, who earn the highest starting salaries, yet see their paychecks expand just 76% by their career midpoints to $103,842 from $59,058.
Contrary to what many parents tell their children majoring in subjects like political science or philosophy, these degrees won't necessarily leave you in the poorhouse. It can depend on what career path you choose to pursue with that degree. History-majors-turned-business-consultants earn a median total compensation of $104,000, similar to their counterparts who pursued a business major like economics -- whose grads earn about $98,000 overall at midcareer, the PayScale study shows.
English majors in all career paths who graduate from Harvard University earn a median starting salary of $44,500, compared with $35,000 for those with English degrees from Ohio State University -- a 27% difference. And that disparity widens even more after 10 years. By then, English majors from Harvard reported earning $103,000 in median pay, 111% more than their counterparts from Ohio State.
"With a liberal art's degree, it's what you make of it," says Al Lee, director of qualitative analysis at PayScale. "If you're motivated by income, then there are certainly careers in psychology that pay as well as careers out of engineering."