The value of a 4-year college degree depends on these labor market realities
Americans are losing confidence in higher education’s ability to help them get ahead. Rising costs, a lack of high-paying jobs, and debilitating student loan debt have many questioning, “Is college worth it?”
I understand. I’ve spent my career working to improve job opportunities and college success, and there is much to be concerned about. But I think we should be asking a different question.
On average, a 4-year degree offers a positive return on investment, so overall, college pays off. However, there’s a catch—not every graduate will land a high-paying job or even earn average wages. Where college graduates fall on the earnings spectrum depends, to a large degree, on who they are, according to labor market outcomes data.
That’s why a better question might be: Is college worth it for you?
I’ve been thinking about this a lot lately. After decades of examining college value for others, the question has become personal. My 14-year-old son has started talking about his plans and vision for college.
My son is Black, so I can’t assume average returns—Black graduates overall earn 20% to 25% less than their white peers. But at the same time, a degree might significantly impact his life. He could earn 67% more over his working life with a degree than by only finishing high school. This motivates my family to prioritize college, even as others may question its value for their children. But there’s more to consider.
Black children, even those from well-off families, are more likely to experience poverty than children from other demographic groups. Outcomes are particularly poor for Black boys. They grow up to earn less than white boys in 99% of U.S. jobs, according to research by economist Raj Chetty and his colleagues, based on data from the U.S. Census Bureau. This is true even when Black and white boys grow up in the same neighborhood, and their parents have similar levels of education, income, and wealth.
Our family—and anyone evaluating the value of a college degree—must navigate numerous labor market realities to ensure that a degree will be worthwhile. However, three factors are especially important to recognize and consider when deciding whether a degree will be worth the investment.
• Employers value certain degrees more than others.
• Employers require degrees for certain jobs.
• Employment and earnings for college graduates differ depending on who you are.
Let’s examine how each of these factors can impact the value of a degree.
Employers value certain degrees more than others
Graduates with math-intensive majors like computer science and engineering are more likely to secure higher-paying jobs, while liberal arts majors are more than twice as likely to work in a job that does not require a college degree.
I’m not suggesting that liberal arts degrees lack value. It’s about your individual circumstances. For instance, I hold undergraduate degrees in English and government, both of which have positively impacted my career. Yet they didn’t lead to immediate job offers. It wasn’t until I earned a teacher’s certification and later pursued advanced degrees that I secured roles that offered wages that allowed me to support myself and my family.
A liberal arts degree can be valuable, though getting hired and paid a salary befitting a college graduate might take longer than majors with direct career paths like nursing or computer science
Employers require degrees for certain jobs
College may be worth it to you if your kid aspires to higher-paying jobs in white-collar professions, such as law or medicine. Employers require bachelor’s degrees for about 25% of all jobs, according to an analysis by the Burning Glass Institute, which examined over 51 million job postings.
This is a relatively small slice of available jobs, but they are likelier to be higher-paying jobs that come with benefit packages that include insurance coverage, paid time off, and retirement plans.
You may have seen news coverage about some employers, and even some states like Maryland and Colorado, dropping degree requirements from job listings and wondered what this trend might mean for investing in college. The reality is that this trend is more prevalent in so-called middle-skill jobs, such as paralegal and customer service manager, which historically have not required a 4-year degree, rather than in those positions where employers have typically expected one.
Don’t be fooled into thinking this means no one needs a college degree anymore. Employers removing degree requirements from middle-skill jobs and the value of a 4-year degree are two different issues. To ensure that a degree holds value for you, it’s essential to grasp the distinction.
Employment and earnings for college graduates differ depending on who you are
Employment rates and wages for college graduates differ by race, gender, and other factors, including socioeconomic status, geographic region, and industry. There are clear racial disparities in employment rates and earnings among recent college graduates. A review of labor market outcomes indicates that white graduates are the most likely to be employed and the least likely to occupy positions that do not require a 4-year degree when compared to their Asian American, Pacific Islander, Black, and Latino peers. In 2019, Black graduates earned 12% less than their white counterparts, and female graduates earned roughly 13% less than their male counterparts.
Differences in college majors can lead to differences in earnings. However, there are gaps by race and gender for people with the same degree. For example, a white person with a political science degree earned $93,760 compared to the $63,390 that a Black person earns with the same degree. Women’s median earnings trail men’s median earnings in all degree fields, even in math-intensive fields that employers claim to prefer. Women with computer science degrees earned $91,990 compared to the $115,500 their male counterparts earned.
Your socioeconomic status impacts your chances for employment and earnings potential. People from high-income backgrounds have higher employment rates and higher earnings. The region you live in matters, too; for example, earnings are lower in the Deep South, Appalachia, and some rural parts of the Midwest and West. Finally, there are significant differences in employment and earnings by industry.
So, is college worth it for you?
I share these labor market insights to help you maximize your degree’s value, not to discourage you. To enhance your chances of success, evaluate your degree’s potential value based on your personal characteristics and outcome expectations—not merely the average graduate’s experience.
Demographics don’t determine your future, but being aware of the labor market outcomes for individuals with your background can serve as a useful benchmark, guiding you in making informed choices that increase the potential value of your degree.
How to maximize the benefits of college for you
No matter who you are, simply holding a college degree doesn’t guarantee a return on investment. To maximize the benefits, you should take advantage of work-based learning opportunities such as internships and build a strong network by cultivating relationships with people in and adjacent to the industries in which you hope to work. Look for employers who are open about salaries and advancement, and research compensation to negotiate effectively.
That’s the advice I’ll give my son when he goes off to school. Regardless of what he ends up studying, I’m confident a degree will increase his chances of career success on the path he chooses. And that’s invaluable.