Business Trails STEM In Salaries

Money fight

By now, the extrinsic value of a college degree is no secret. A college graduate will, on average, earn $1 million more during a lifetime than a high school graduate. But that number is not nearly as high as the economic gap between some college majors, according to a new report from Georgetown University’s Center on Education and the Workforce.

According to the report, the average difference in earnings between the highest and lowest paying college majors is $3.4 million. Specifically, a degree in early childhood education earns $1.4 million while a degree in petroleum engineering pays $4.8 million during a lifetime.

The main takeaway from this year’s study is majors fitting into STEM (science, technology, engineering, and math) fields continue to surge in annual earnings but all job-related degrees, including business, are holding strong in popularity and value. “The general trend in higher education is occupational degrees,” says Georgetown professor Anthony (Tony) Carnevale, center director and co-author of the study. “That is the major trend. There is a steady decline in humanities, liberal arts, and similar majors.”

The study, which looked at employment trends from 2009 through 2013 based on 137 of the most popular college majors, showed business degrees as being the most popular, attracting 26% of students, a slight uptick from last year’s 25%. Business was followed by STEM-related degrees at 20%. Teaching is the next most popular college path at about 15%. According to Carnevale, who has been outspoken on the need for increased job-specific skills and STEM education at the high school and community college level, the trend of students fleeing humanities and liberal arts degrees and into more practical majors has been perpetuated by the recession beginning in 2007.

Share Of College Graduates (ages 25-59)

Major SupergroupShare
Business26.1%
STEM19.6%
Teaching and serving14.5%
Arts, liberal arts, and humanities13.4%
Career-focused11.9%
Health7.5%
Social sciences6.9%

Source: Georgetown University Center on Education and the Workforce analysis of U.S. Census Bureau, American Community Survey micro data, 2009-2013.

“The major trend is towards alignment with the labor market,” Carnevale explains. “There’s a cyclical dimension that at robust times all degrees tend to have increased earnings. After 2007, students started paying more attention to the state of the economy because it wasn’t as certain. It has created a structural phenomenon. A shift in the structure of the economy has led to a different type of service jobs. Manufacturing is the most obvious to be hurt. There’s been a very substantial increase in service in terms of information, business, education, healthcare, and other STEM, and a shift to high-wage jobs. There’s additional value in service workers, and I don’t mean McDonald’s service, I mean finance and business and STEM has gone way up.”

Regardless, the college degree retains value. “I think the advantages of college will persist especially for high-paying majors,” Carnevale says. But the research shows that economic advantages of some majors eclipse others. “This doesn’t mean all of the majors out there don’t provide earnings,” Carnevale says. “But the earnings are not as strong as STEM and business and the employability is not as strong as education, business, and STEM.”

Indeed, STEM, business, and health-related fields have the highest income earnings for college graduates. The median annual wage of a college graduate from 21 to 24 years old with a STEM degree is $43,000. Health degree holders earn $41,000 and business degree holders earn $37,000. The overall median for college graduates is $33,000. The lowest-earning degree path is arts, liberal arts, and humanities at $29,000—not all that much higher than the national median for high school graduates, which is $22,000.

Median Wages For College Educated Workers (ages 21-24)

Major SupergroupAnnual Earnings
STEM$43,000
Health$41,000
Business$37,000
Social sciences$33,000
All majors$33,000
Teaching and serving$30,000
Career focused$30,000
Arts, liberal arts and humanities$29,000
High school graduate$22,000

Source: Georgetown University Center on Education and the Workforce analysis of U.S. Census Bureau, American Community Survey micro data, 2009-2013.