OLMIS

by Jason J. Yohannan
Published Jul-22-2008

Okay, so the heading above isn't exactly news to most people. Still, it never hurts to reinforce the connection between education and career success, especially at a time when the job market is getting more and more competitive. And, if you're a teenager weighing your career options (or the parent of such a teenager), you may be wondering just how much more benefit might accrue from further schooling.

So, we'll use this space to properly verify that people with greater educational attainment can expect better labor market outcomes.

Graph 1 uses national data from 2007 to plot the relationship between schooling and unemployment. Among Americans ages 25 and up, unemployment averaged 3.6 percent in 2007. Labor market participants with an Associate degree or more education, on the whole, had lower unemployment rates than that. Those without at least a high school diploma had an unemployment rate about twice the 2007 average. Fewer than one in 50 people who earned a postgraduate degree found themselves out of work last year.

Not only did highly educated people more easily find work, they earned more money on the job. Graph 2 plainly shows that each successive step on the academic ladder led to fatter paychecks in 2007. The typical worker with a Master's degree earned nearly twice as much as the typical worker with a high school diploma.

Different individuals bring different skills to the workforce. One thing that stays the same year after year is that education pays.