True of false: You’ll earn a bigger paycheck if stay on the job than if you leave for a graduate degree?
False, you say. Technically, that’s true. Business majors who spend three years at a job actually earn $5,000 more than peers who join a firm with a graduate degree – at least initially.
That was one finding from a new report from Georgetown University’s Center on Education and the Workforce. The report, entitled “From Hard Times to Better Times,” examined the impact of college majors on unemployment and earnings. Using census data from 2009-2012, the sample incorporates “full-time, full-year workers with positive earnings between the ages of 22 and 54.”
COLLEGE GRADUATES HAVE BETTER JOB SECURITY
Despite fears over crushing tuition debt, a college degree provides a benefit that many overlook: greater job security. According to the report, experienced high school workers (age 35-54) actually have higher unemployment rates than all recent grads except in architecture and social science. Workers with only a high school diploma are burdened with a 9.9 percent unemployment rate, 2.4 percentage points higher than recent college graduates (7.5 percent) and nearly double the percentage of all bachelor’s degree holders (5.1 percent).
And the gap is even larger for workers aged 22 to 26 who only possess a high school diploma. This group carries a 17.8 percent unemployment rate – more than double the rate of recent business graduates (7.0 percent) in the same age bracket. And it’s nearly quadruple the 4.5 percent rate of business degree holders aged 35 to 54 (i.e. “experienced college graduates”). Business majors with a graduate degree fared even better, with recent grads clocking in at 3.8 percent (0.5 percent higher than experienced advanced degree holders).
Overall, unemployment rates are still relatively high, especially among recent college graduates. For example, engineers, supposedly in demand, carry a 6.5 percent unemployment rate – which is actually higher than agriculture and natural resources (4.5 percent), physical science (5.0 percent), education (5.1 percent), and industrial arts, consumer services and recreation (5.4 percent). Despite the call for more STEM majors, biology and life sciences (7.4 percent) and computers, statistics, and mathematics (8.3 percent) also produce bloated unemployment rates. Still, these numbers are in decline. In fact, the only recent graduates who saw their unemployment rates rise in recent years were communications and journalism majors.
The unemployment rates for business majors have also been decreasing. Over the three year period, from 2009-2010 to 2011 to 2012, unemployment slipped from 7.4 percent to 7.0 among recent graduates – and from 5.2 percent to 4.5 percent among experienced graduates. For business majors with graduate degrees, unemployment has fallen from 5.0 percent to 4.4 percent among recent grads – and from 4.4 percent to 3.9 among experienced grads.
STARTING WAGES SLIPPING FOR BUISNESS MAJORS
The Georgetown report also found that wages have been tumbling across the board. For recent college graduates, starting wages slumped from $60,000 to $58,000 between 2009-2010 and 2011-2012. For newly-minted graduates, those numbers slid from $38,000 to $37,000 in that same period. While new grads average $1,000 more per year than experienced high school graduates, they earn 54 percent more than high school graduates in their same age bracket.
This wage decline also holds true for graduate degree holders. Recent graduates are earning $58,000 to start, a $2,000 drop from three years previous (2009-2010). And experienced workers with graduate degrees suffered a similar $2,000 drop over that time, with average earnings of $83,000 in 2011-2012.
Among new graduates, engineers earned the most at $57,000, followed by the following majors: computer, statistics and mathematics ($48,000), health ($43,000), business ($41,000), and architecture ($40,000).
Experienced workers with a business degree averaged $69,000 annually, higher than most majors but still lower than wages earned by bachelors degree holders in engineering ($93,000), computer sciences ($85,000), architecture ($73,000), and physical sciences ($73,000). For business majors with graduate degrees, the median earnings for new grads are $64,000 (and $92,000 for experienced graduates).
FINANCE MAJORS EARN THE MOST (TO START) AMONG BUSINESS MAJORS
And those numbers reflect an interesting dynamic: Business degree holders with three or more years experience actually earn more than new hires with postgraduate degrees by a $69,000-to-$64,000 margin. Make no mistake: an advanced degree is an investment – and the $69,000 median is a ceiling, not a starting point.
(See next page for 2011-2012 salaries for various business functions)