Skills and Earnings in the Full-Time Labor Market
Neeta Fogg, Paul Harrington, and Ishwar Khatiwada
Education and Earnings
In this section of the report, we examine the mean monthly earnings of 25- to 54-year-old full-time employed workers by educational attainment in an effort to measure the direct labor market impact of literacy and numeracy skills among those with the same level of education. As postulated by human capital theory, our findings from the PIAAC data files reveal that earnings do indeed rise sharply with educational attainment. The average monthly earnings overall were $4,729, amounting on an annualized basis to about $57,000 during the 2012-2014 period. Workers without a high school diploma earned just about $2,250 per month despite full-time employment (Figure 8). Those with a high school diploma, but no college, had mean monthly earnings of $3,574, a level that is nearly $1,330, or 59 percent, higher than the earnings of counterparts who failed to complete high school.
The mean monthly earnings of workers who completed some postsecondary education without earning a certificate or degree were not significantly different from those of workers with just a high school diploma ($3,858 versus $3,574 for high school graduates). It was likewise for attaining a college or trade school certificate ($3,881 versus $3,574);29 the associated earnings premium was a small $307 per month, or 8 percent, compared to high school graduates and was not statistically significant.
Recent evidence has shown that workers with certifications earned more than those without them.30 In a separate analysis of the earnings among 16- to 65-year-old employed (full-time and part-time) workers (not just those of prime age), we found no difference between the earnings of workers with some college but no degree or certificate award and those of high school graduates. However, the same analysis found a much more significant 12 percent earnings premium among workers with a college certificate relative to those with some college without a degree or certificate. Earning a certificate award from a college or trade school is associated with a labor market reward relative to completing some college without earning a degree or certificate among the entire population of 16- to 65-year-old workers but not among prime working-age (25 to 54-year-old), full-time employed workers. Thus, further research on the sources of the earnings premiums of workers with certificates employed in the labor market "periphery," which includes younger and older workers and prime-age, part-time employed workers, is warranted given that the pace of certification awards at the postsecondary level has accelerated in recent years. Examining only the prime-age, full-time labor market segment excludes 40 percent of the workforce.31
Workers with an associate's degree earned an average of $4,130 per month, yielding a monthly earnings premium of nearly 16 percent relative to those with a high school diploma. Workers with a bachelor's degree earned substantially more per month. With a mean monthly salary of $6,000, workers with a bachelor's degree earned nearly $1,900, or 45 percent, more than workers with just an associate's degree. Earnings of workers continued to increase with higher level college credentials: rising to $7,200 per month among those with a master's degree, representing $1,200, or nearly 20 percent, more than the monthly earnings of workers with just a bachelor's degree; $7,900 per month for general doctorate degree holders, yielding a premium of $740 per month, or 10 percent, relative to those with a master's degree; and $8,300 among workers with a professional degree such as M.D., D.M.D., J.D., and so on.32 (Table 4 describes relative differences).
Difference between Mean Earnings of Educational Groups
(Earnings of Groups in Columns B-H minus Earnings of Groups in Column A)
|(A) Educational Attainment||(B) No H.S. diploma||(C) H.S. diploma||(D) Some college||(E) Certificate||(F) Associate's degree||(G) Bachelor's degree||(H) Master's or higher degree|
|Source: 2012 and 2014 PIAAC surveys, restricted use files, tabulations by authors.|
|No H.S. diploma||0||1,328||1,612||1,634||1,887||3,756||5,206|
|Master's or higher degree||-5,206||-3,878||-3,594||-3,572||-3,319||-1,450||0|
29 Workers in this category include students who are still enrolled in college and working toward a credential.
30See U.S. Bureau of Labor Statistics, Data on Certifications and Licenses, April 2016, http://www.bls.gov/cps/certifications-and-licenses.htm.
31 Ashraf Ahmed, Neeta Fogg, and Paul Harrington, Postsecondary Completions in the Health Field: Trends in IPEDS Degree and Certificate Completions, Office of the State Auditor, Commonwealth of Massachusetts, May 2016.
32The monthly earnings differences of workers between every educational pair of workers were statistically significant at the .01 level except for mean earnings differences between the following pairs of educational groups: high school diploma and some college; high school diploma and a certificate; some college and a certificate; some college and an associate's degree; and a certificate and an associate's degree.