February 28, 2014

For Millennials, a bachelor’s degree continues to pay off, but a master’s earns even more

Monthly earnings of Millennials, college graduates with bachelor's, master's, doctorate degreesMillennials are the nation’s most educated generation in history in terms of finishing college.  But despite the stereotype that today’s recent college graduates are largely underemployed, the data show that this generation of college grads earns more than ones that came before it.

In 2009 (the latest year available) the median monthly earnings of young adults with a bachelor’s degree and no further education was $3,836, a 13% increase from 1984 ($3,399), according to the Census Bureau’s Survey of Income and Program Participation (SIPP).

The economic payoffs for obtaining a bachelor’s degree vary widely by major field of study.  It is certainly possible that earnings have declined since the early 1980s for specific major fields of study.  But given what young adults choose to study, the typical or median young adult with a bachelor’s degree earns more than they used to.

Household earnings of college graduates, MillennialsThe data also show that earnings of young workers with advanced degrees have grown even more than the earnings of those with bachelor’s degrees.  The median monthly earnings of young adults with master’s degrees rose 23% from 1984 ($3,875) to 2009 ($4,772).  Median earnings for those with professional and doctorate degrees is up even more –34%.

Admittedly, the earnings figures above only reflect young adults who can find work.  They also do not take into account important demographic changes that have occurred along educational lines.  Relative to less-educated young adults, those with a bachelor’s degree have become more likely to be married to someone in their socioeconomic class.   And, due to the delay in marriage in this group, there may be delays in having children, which means fewer dependents to support in the household .  These are all arguments for looking at another standard measure of economic well-being: household income.

College level attainment of Millennials, bachelor's, master's, doctorate degreesThe median adjusted monthly household income of households headed by a young adult with a bachelor’s degree has increased by about $1,300 in inflation-adjusted dollars from 1984 ($5,960) to 2009 ($7,232).  Household income gains have been even greater among households with advanced degrees (up $1,500 for those headed by a 25- to 34-year-old with a master’s degree and up $3,400 for young adult heads with a professional or doctorate degree).

In stark contrast, the household income of young adults with less than a bachelor’s degree has declined in real terms since 1984.

These findings do not show that the college education in and of itself caused the gains. All the findings above simply pertain to the economic payoffs associated with a bachelor’s or advanced degree. But students and their families still need to know the typical payoffs associated with educational degrees in order to make informed decisions.

One last finding worth pointing out is that college-educated Millennials do not appear to be  completing advanced degrees in record number, contrary to the commonly held belief that a weak economy drives more college graduates into graduate school to delay entry into the workforce.  In 2009, the most recent data available, 27% of college-educated young adults had gone on to also complete an advanced degree.  SIPP data show that’s not statistically different than college grads from 25 years earlier. In 1984, 26% of college-educated Boomers had also finished an advanced degree.

Topics: College, Economics and Personal Finances, Educational Attainment

  1. Photo of Richard Fry

    is a Senior Research Associate at the Pew Research Center’s Hispanic Trends Project.

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4 Comments

  1. Claretta D Freeman5 months ago

    This doesn’t seem to take into account standard of living changes and the effect of loans on that standard of living. How much more money in loans do millennials pay out compared to their 1980′s cohorts?

    Reply
    1. Richard Fry5 months ago

      The figures do take into account standard of living changes in that the earnings figures are expressed in constant dollars or dollars that adjust for price inflation.

      The figures relate to the benefits of additional education. The costs of obtaining the additional education may have changed. This post does not attempt to describe the offsetting costs of the additional education. I did some of those calculations in a report on “Is College Worth It?,” which we published in May 2011. You might also look at p. 13 of the College Board publication “Education Pays 2013,” where they account for the impact of loan repayment on the earnings streams of workers with different levels of education.

      Reply
  2. Rob Evans6 months ago

    As always, thanks for your work. Struggled to figure out, are these figures before or after taxes?

    Reply
    1. Richard Fry6 months ago

      Thanks! The figures for both earnings and household income are BEFORE taxes.

      Reply