The basic theme is hardly a surprise: there is a strong correlation between education and income. What may be a shock to some is just how wide the variation is. It is (or should be) enough to renew the commitment of students to staying in school and parents to saving to pay for it.
Let me start with a few dollar figures. Data for 2001 (the latest available) compiled by the Census Bureau indicates the median income level for all people age 18 and older is $35,805 per year. A median is the point at which half of the observations in the designated group fall below, while half fall above; in this case, it indicates half of all adults in the US make less than $35,805 per year and half have incomes exceeding that amount. Unlike an average, it is not skewed by extremes at either end of the spectrum.
The median income level for those who do not complete high school, however, is only $18,793 per year—barely more than half the overall figure. Simply adding a high school diploma pulls the income to $26,795 per annum, a greater than 40% jump just for finishing. Add some college courses or an associate’s degree and median income jumps to $30,782 per year.
The big gains come with a bachelor’s degree, with a median income of $50,623 per annum. For those with advanced degrees, the total rises more than 40% again to $72,869. And remember, this is a median, so it’s not a case of a few people at the tip top skewing an average. Bill Gates is counted exactly like the rest of us.
There are certainly exceptions to this pattern—high school dropout who are millionaires, for example—but those are the exceptions. The fact that the median yearly income for someone with an advanced degree is four times that of persons who don’t finish high school is difficult to ignore.
I’ve written at length about the importance of education and training programs. Improvement in these areas, both in terms of quality and accessibility, is one of the most important goals we can aspire to as a state. (My lovely bride spends countless hours working toward these ends as a member of the Texas Higher Education Coordinating Board, a group whose mission is to work with the Legislature, Governor, higher education institutions, and others toward these ends.)
As an economist, I feel such strides are crucial to growing the economy and increasing the standard of living for all Texans. As the world of business becomes more global, complex, and mobile, employees will need to hone their skills through education and training. This will be necessary not only to job performance, but also to adaptability to a changing environment. Education is also a major factor in the domestic productivity growth which is essential to sustainable prosperity. On a personal level, I have five children at, near, or just beyond college age. I know how hard it is at times for them to understand the lifelong consequences of their educational choices. I also know how expensive it is to foot the bill for college. The crisis in higher education affordability is one of the biggest challenges to our long-term economic performance as a state.
A great resource is www.CollegeforTexans.com. A project of the Higher Education Coordinating Board, this website is loaded with information about financial aid, the application process, and other important topics. Did you know, for example, that $2 billion is available every year to help Texans attend college?
Finding ways to keep more kids in high school and encourage them to go on to college is integral to the future vitality of the Texas economy. It’s also crucial to the quality of life of Texans. These are Herculean tasks, but as the numbers demonstrate, it’s well worth the effort.