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May 24, 2011

What's a Degree Worth? Report Has Answers, by Major

By Beckie Supiano

From The Chronicle of Higher Education

For the first time, researchers have analyzed earnings based on 171 college majors. They found wide differences, even among some in the same broad field.

Tuition is rising, the job market is weak, and everyone seems to be debating the value of a college degree. But Anthony P. Carnevale thinks these arguments are missing an important point. Mr. Carnevale, director of the Georgetown University Center on Education and the Workforce, has argued that talking about the bachelor's degree in general doesn't make a whole lot of sense, because its financial payoff is heavily affected by what that degree is in and which college it is from.

Now, new data from the U.S. Census Bureau sheds light on one big piece of Mr. Carnevale's assertion: the importance of the undergraduate major. In 2009, the American Community Survey, the tool the bureau uses to collect annual estimates of population characteristics, included a new question asking respondents with a bachelor's degree to give their undergraduate major.

After combing through the data, Mr. Carnevale says, it's clear: "It does matter what you major in."

And the differences are striking: For workers whose highest degree is a bachelor's, median incomes ranged from $29,000 for counseling-psychology majors to $120,000 for petroleum-engineering majors. The data also revealed earnings differences within groups of similar majors. Within the category of business majors, for instance, business-economics majors had the highest median pay, $75,000.

Those and other findings are highlighted in a book-sized report, released by the Georgetown center today, showing what Americans earn and the occupations and industries they work in by college major. It also homes in on gender and racial differences. The report considers full-time, full-year workers ages 25 to 64.

Clear Payoff

While Mr. Carnevale wants to move the conversation away from the bachelor's degree in general, the report, "What's It Worth? The Economic Value of College Majors," does show that it is a good investment. Over their careers, full-time, full-year workers whose highest degree is a bachelor's make 74 percent more, on average, than those whose highest attainment is a high-school diploma, the authors found. When those with more than a bachelor's degree are included, the premium for higher education rises to 84 percent.

One limitation of the report is that it does not look at workers whose highest credential is an associate degree. The available data just doesn't capture the information needed to analyze associate-degree holders, Mr. Carnevale says.

Among full-time, full-year workers, median income for those whose highest degree is a high-school diploma was about $32,000; for those whose highest degree was a bachelor's, it was about $55,000.

Counseling psychology was the only major for which bachelor's-degree recipients had lower median earnings than high-school graduates. The report also considers, by major, the likelihood that a person will go on to earn a graduate degree, and how much, on average, that boosted their earnings. Seventy percent of those counseling-psychology majors go on to obtain a graduate degree, and it raises their earnings by 67 percent. The report does not tease out what graduate degrees people with various majors earn, so it's unclear whether they are in fields related to people's undergraduate majors or if the degrees are master's, professional, or doctoral. Mr. Carnevale intends to deal with those questions in continuing research.

The sample of counseling-psychology majors who have a bachelor's but not a further degree was too small to run a lifetime-earnings figure, Mr. Carnevale says. But the authors grouped the 10 lowest-paid majors together and ran the lifetime earnings for them. They found people with those majors earned, on average over their careers, $148,000 more than someone whose highest degree is a high-school diploma—even after taking into consideration the expense and opportunity cost of attending college.

The report is meant to be helpful to policy makers and students alike, Mr. Carnevale says. For policy makers: "The bottom line is, the BA's all seem to be worth it," he says. As for the earnings by major, "Truthfully, what we have here is something students and college administrators ought to know."

The findings on the highest- and lowest-earning majors probably won't shock anyone. But, Mr. Carnevale points out, the report considers the earnings associated with 171 different majors, a large-enough number that most people won't be able to guess the average earnings for many of them. And while few students are choosing between counseling psychology and petroleum engineering, a decent number might be considering both business economics and finance.

Variations Among Majors

The report found a close, but imperfect, link between major and occupation. That was no surprise, Mr. Carnevale says, since college is becoming more and more linked to occupation. "The image higher education carries of itself as a large liberal-arts institution where everyone sits on the lawn and reads Shakespeare," he says, "hasn't been true since the 70s."

Some majors are very closely tied to a particular occupation: For example, 82 percent of nursing majors work in health-practice occupations. Other majors lead to several sets of occupations, which could be one explanation for the variation in earnings for those majors. Physics majors, for instance, work in computer occupations (19 percent), management occupations (19 percent), engineering occupations (14 percent), and sales occupations (9 percent).

There was also a close connection between college major and industry. For instance, 84 percent of nursing majors worked in the health-services industry. But again, there is variation in some groups of majors. Biological-engineering majors were split between durable manufacturing (16 percent), construction (11 percent), professional services (10 percent) and nondurable manufacturing (9 percent) industries.

The report uncovered significant earnings differences by gender and race. Those differences were smaller in more-technical fields, Mr. Carnevale noted. Men outearn women in each group of majors, and nearly every individual major, in many cases significantly. For instance, men who majored in math earn a median of $75,000, while women earn a median of $54,000. Some of that can be explained by occupation, Mr. Carnevale said: Many of those women who major in math go on to be teachers. The only majors with which women earned more than men were visual and performing arts, physiology, and information sciences. (Some majors had sample sizes too small to analyze by gender.)

Those differences are all the more striking because the report considers only full-time workers, and the larger share of women who work part time is one explanation for earnings discrepancies between men and women.

The report also looks at earnings by race for groups by broad categories of majors. Whites outearned all the other groups in 10 of the 15 groups of majors, and tied with African Americans for the highest earnings in one category, education. Asians had the highest median earnings in the remaining groups of majors: biology and life sciences, health, law and public policy, and psychology and social work.