Don’t let anyone tell you a college degree – or what major you pick – doesn’t make a big difference in life. The numbers tell a different story.
Yes, exceptional people will almost always get ahead, with or without a degree. Just holding a degree also doesn’t guarantee you anything except maybe debt, as the Occupy Wall Street movement demonstrated.
But for the first time ever, on Oct. 10, the Census Bureau released reports analyzing lifetime earnings by both degree field and occupation. These reports are based on the 2010 and 2011 American Community Surveys, which unlike the U.S. Census are taken every year and show how people live, rather than just counting them and breaking down demographics.
There are several interesting findings, some of which you have probably heard before anecdotally. But now we can attach dollar signs to hard data, with the caveat that estimates are “not intended to be a prediction but an illustrative example of the magnitude of differences in earnings,” according to one Census report.
Here are 10 things you should know about how college affects your job opportunities and pay…
1. Some majors are more likely to have full-time jobs right now
Science, engineering, and business majors were more likely to be consistently employed full-time last year. The Bureau says, “Sixty-four percent of business majors were full-time, year-round workers.” Less than half of people who majored in literature, languages, or visual and performing arts could say the same. And this is despite the fact business remains the most common college major (12 million out of 59 million American degree-holders majored in business).
Education majors were least likely to be employed full-time and year-round, at 41 percent. (There are about 8 million people with education degrees, making it the second-most popular field of study.)
2. Right now, engineering is the best bang for your buck
In 2011, a bachelor’s degree in engineering was worth $92,000 a year. “At the other end of the continuum were fields such as visual and performing arts, communications, education and psychology,” with average annual earnings under $55,000 according to the Bureau.
3. Education level matters
In some fields, pursuing higher degrees can be worth an extra million. “Among social science majors working as financial managers, those who have a bachelor’s degree earn $3.5 million while those with a master’s degree earn $4.6 million over a work-life,” the Bureau says.
And not having a degree at all can cost a lot more: lifetime earnings ranged from $936,000 for those who didn’t finish high school to $4.2 million for folks with professional degrees.
4. It’s not necessarily about bachelor’s versus master’s versus doctorate
While your pay does tend to go up with your education level, your major matters significantly even among four-year degrees. “For example, among people whose highest degree is a bachelor’s, engineering majors earn $1.6 million more than education majors,” the Bureau says. Those with bachelor’s degrees in engineering, computers, math, science, business, and social science all make more than average, which is $2.4 million over 40 years.
5. Some majors make more money, even at the same jobs
My intuitive response to No. 4 was, “Of course. Teachers and engineers are in totally different fields with totally different pay grades. Careers matter.” But that’s still missing the point.
Even in sales, having an engineering degree sets you apart – to the tune of $1.4 million over 40 years. Those with a bachelor’s in engineering top $3.3 million over 40 years of sales work, while arts majors rake in just an average of $1.9 million, the Bureau says.
6. You don’t have to work in your degree field
While engineering majors might make more in sales, there’s nothing saying the English major has to stay involved in literature, or take up an office job. Those who successfully cross over to more lucrative fields still reap the benefits.
The Bureau says those who stopped after a bachelor’s degree in liberal arts but pursue a career related to computers and math have average earnings of $2.9 million over 40 years, “while liberal arts majors working in office support occupations have earnings of $1.6 million.”
And, of course, climbing the ladder makes a big difference: “Engineering majors who are in management earn $4.1 million during their work-life. At the other extreme, arts majors and education majors who were service workers make an estimated $1.3 million.”
7. Degrees affect self-employment pay
Those without any college education tend to make less working for themselves than salaried workers with bachelor’s degrees.
But higher degrees can make self-employment more profitable than salaried work: “Workers with master’s, professional or doctorate degrees had higher [average] earnings with self-employment if their bachelor’s degrees were in certain fields,” the Bureau says. Holding a bachelor’s degree in science or engineering, followed by any higher degree, brought average self-employment earnings up to nearly $100,000 a year. That’s more than such a person would make on average in a salaried position: $90,000.
In other words, higher levels of education make for a wealthier, more independent lifestyle – at least in certain fields. According to the Census Bureau, advanced degrees boost average self-employment income higher than average salaried income in science, engineering, and related fields, and in the arts and humanities.
8. Education majors tend to get perks
These reports repeatedly contrast the pay in engineering and education, but it’s not all bad news for the latter. The Bureau says last year “education majors were most likely to be working for government (which includes public schools).” Just 38.9 percent of those with education degrees work in the private sector, compared to an average above 60 percent for most other fields.
Public service workers may qualify for student loan forgiveness after 10 years, and governmental health benefits can be pretty good. That probably won’t offset millions in missed earnings, but it might make potential teachers feel a little better about their calling.
9. Some fields get higher pay working for the government
Working in the private sector usually means better pay. But some areas of study, especially in the arts, have higher average salaries in the public sector, including…
- Psychology ($53,533 private vs. $57,072 public)
- Education ($47,452 private vs. $52,141 public)
- Liberal arts and history ($56,043 private vs. $61,165 public)
- Visual and performing arts ($50,432 private vs. $52,738 public)
Interestingly, the literature and languages fields have about the same pay regardless ($58,887 private vs. $58,576 public).
10. These differences will matter less to frugal investors
We’re looking at the long term here and seeing numbers in the millions from the Census Bureau. These reports also show average annual pay ranging from the neighborhood of $40,000 to $90,000. That’s a wide range, and lifetime earnings are a mind-boggling sort of number. But it’s important to remember that regardless of degree, people who make wise spending decisions and smart investments can build substantial nest eggs and have an easier, earlier, and better retirement.
Check out an example from 6 Steps to Your Personal Independence Day. The people making more money clearly have the biggest opportunity to save and invest, but even middle-class incomes can do well. “Say you set aside $1,000 a month. If you earn 1 percent on it for 30 years, you’ll end up with $419,628. Earn 10 percent on it and you’ll end up with $2,260,487.” The key to success isn’t just your degree or job – it’s also your financial planning.
Want to dig into the reports for details? Here you go. More data is expected later this month, when the Census Bureau will release “three-year ACS estimates (covering 2009-2011) on field of degree, which will include all geographic areas with a population of 20,000 or more.”
Finally, below is an infographic highlighting what engineering majors can expect after earning a bachelor’s degree. You can see similar graphics for other fields here.