Friday, October 20, 2006

It Really Pays to Stay in School-A Really Long Time

There was a column in yesterday’s Wall Street Journal that every college student should read. The article is entitled “Why It Takes a Doctorate to Beat Inflation”. Only a small percentage of workers in our economy have seen their real incomes rise in the past five years. Who are they? Let me share some pithy quotes from the thought provoking piece by David Wessel.

“The typical American worker with a four-year college degree earns a lot more money than a similar worker who didn't go beyond high school -- 45% more. Education does pay. But in today's economy, getting a bachelor's degree is no longer a guarantee of raises big enough to beat inflation.

Although the best-paid college grads are doing well, wages of college grads have fallen on average, after adjusting for inflation, in the past five years. The only group that enjoyed rising wages between 2000 ... and 2005 ... were the small slice with graduate degrees….

Think about that: Even though the economy and productivity have been growing smartly, lots of workers who played by the rules and went the distance to get a four-year college degree aren't getting ahead. ... The very best-paid workers are getting the bulk of the raises. ...

[I]n the middle -- where many four-year college graduates work -- ... imports, overseas outsourcing and technology seem ... to be reducing U.S. employer demand ... significantly, and thus restraining wages. That is the kind of shift in the tectonic plates of the economy that produces political earthquakes.”

Professor MacroMind knows a lot of PhDs (he has one himself). I’ve never noticed that my friends with PhDs were richer monetarily than the folks that I know who don’t hold their doctorate. But it looks like the revenge of the geeks took place in the first five years of the millennium. (See the accompanying chart.) PhDs make $93,593 on average, compared to $68,302 for people with a Master's degree and $56,740 for garden variety college grads. M.B.A.s, lawyers, and medical doctors do even better averaging 120 k. You can check the numbers at the source. You can listen to an interview with the author of the article concerning the growing pay disparity here.

Have a good weekend, studying!?

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