Don't Quit Your Day Job…

As I mentioned in my last article, education is one of the categories where spending has increased the most over the last decades.  However, it’s unclear if the product students are receiving is even worth the cost they have been paying.  At issue: this article from the New York Times, heavily digested all over the internet.  Setting aside the fact that our protagonist majored in Religious and Women’s studies, what is the value (in expected weekly salary) of a graduate or an undergraduate degree?

The Slow Decline in Weekly Pay

Thanks to Mike Mandel at Mandel on Innovation and Growth, this data has been aggregated.  Adjusted for inflation, weekly expected salary for an undergraduate degree is less than it was in the first quarter of 2001 (set to 1 in the below graph).  Graduate degree salaries took a stranger turn; falling below their 2001Q1 benchmark, only to move in the opposite direction of undergraduate salary – with a nice bump up over the last 6 quarters.

Recession Effect on Degree-Type Salaries (BLS, Mike Mandel)

Surely the chart isn’t telling the whole tale.  Certainly some of the potential high earners on the undergraduate side took a look at the job market, said “No way” (or other choice phrase) and applied to graduate school.  However, that can’t explain the whole dynamic.  What is going on here?

Larger Sample Sizes

Not that the sample size in this data is small, but expect it to get larger.  After scrounging through the hard-to-find-data site run by the National Center for Education Statistics, I ran across a few gems.  First up, this information on total first-time enrollment at “degree-granting institutions” in 2000, 2004, 2005, 2006, 2007, and 2008 (I take this to mean anything from an Associate’s degree to a Ph.D – enlighten me?).  Second up, this data on education participation by overall enrollment at those institutions.  I have conveniently graphed some recent years here for your enjoyment.

Enrollment in Degree-Granting Institutions (BLS)

Yes, there is a noticeable bump in enrollment even in the 2004 – 2008 span.  So, what forces are at play here?  Are there more academically ‘marginal’ students (I mean, that wouldn’t have considered college previously) enrolling, bringing down salaries?  Is this data just a blip from the recession (and if it is, how do you explain the divergence in graduate school salaries?)?  I want to hear your thoughts!

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