Federal Report Highlights The Economic Case for Higher Education

The U.S. Departments of The Treasury and Education recently announced the release of a joint report highlighting the economic value of higher education achievement for individuals and the country as a whole. Entitled The Economics of Higher Education, the report confirms the continuing importance of postsecondary success to economic progress, including key findings such as the following:

· There is substantial evidence that education raises earnings. The median weekly earnings of a full-time, bachelor’s degree holder in 2011 were 64 percent higher than those of a high school graduate ($1,053 compared to $638).

o The earnings differential grew steadily throughout the 1980s and 1990s. Recent evidence suggests that the earnings differential observed today is higher than it has ever been since 1915, which is also the earliest year for which there are estimates of the college wage gap.

o Moreover, the earnings differential underestimates the economic benefits of higher education since college-educated workers are less likely to be unemployed and more likely to have jobs that provide additional non-wage compensation (e.g., paid vacation, employer-provided health insurance).

· Higher education is important for intergenerational mobility. Without a college degree, children born in the bottom income quintile have a 45 percent chance of remaining there as adults. With a degree, they have less than a 20 percent chance of staying in the bottom quintile of the income distribution and a roughly equal chance of ending up in any of the higher income quintiles.