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Value of College Degree at Its Highest in Decades

EARNINGS BENEFIT UNDERSCORES NEED TO ADDRESS EQUITY GAPS

SAN FRANCISCO, December 10, 2018—The value of a college education has risen to its highest point in decades, but too few Californians are earning degrees, according to a report released today by the Public Policy Institute of California (PPIC).

Between 1990 and 2016, median earnings increased by 18 percent for Californians with at least a bachelor’s degree while dropping by 15 percent for those with only a high school diploma. The typical full-time, year-round worker with at least a bachelor’s degree earned $80,000 in 2016, compared to $36,000 for the worker with just a high school diploma.

The report examines the connection between higher education and economic mobility in the state. It looks at the wage premium associated with a college degree: the ratio of average annual earnings for workers with at least a bachelor’s degree compared to those with no more than a high school diploma. The wage premium has grown even as the share of college graduates in the workforce has increased—an indication that the demand for college graduates has outpaced the growing supply.

Among the key findings:

  • The benefits of a college degree extend beyond wages. College-educated workers are more likely to be employed and more likely to have jobs that provide non-wage compensation such as paid vacation leave, employer-provided health insurance, and retirement plans.
  • Graduate education confers additional gains, while career education gains fall short. The wage premium for a graduate degree has increased more rapidly than that for a bachelor’s degree. Postsecondary career education brings wage gains that tend to be smaller than those conferred by a bachelor’s degree.
  • More students are eligible for college, but equity gaps persist. Low-income Latino and African American students who would be the first generation in their families to attend college—a majority of the state’s public high school population—are less likely than their peers to get a diploma, enroll in college, and graduate. Among young adults born in the state, 60 percent of Asian Americans and 40 percent of whites have at least a bachelor’s degree, compared to 21 percent of African Americans and 18 percent of Latinos.

“A college degree is the ticket to a good job and upward mobility in California,” said Hans Johnson, report coauthor and director of the PPIC Higher Education Center. “While improvements in high school graduation rates and college preparation are encouraging, the state needs to take further action to realize the potential of higher education as an engine of social mobility for all our children.”

After noting that the California State University (CSU), University of California (UC), and California Community College systems have made efforts likely to boost college access as well as graduation rates, the report makes several recommendations for further action. They include:

  • College preparation. The state and its educational institutions need to ensure that all students and families have clear information about admission requirements for UC and CSU, as well as available financial aid, as early as middle school.
  • Financial aid. While the state and its public colleges and universities have done a good job of providing grants to cover tuition costs for low-income and even some middle-income students, efforts are needed to address other costs—especially housing—that are barriers for some students.
  • Transfers. The vast majority of low-income and historically underrepresented students begin higher education at a community college, and transfer rates to four-year institutions are relatively low. Ongoing efforts to improve transfer rates need to be rigorously monitored and evaluated.
  • Access. Colleges should consider giving a higher admissions priority to low-income students. Expanding capacity at UC, CSU, and private nonprofit institutions would also improve access. UC and CSU currently turn away qualified students or redirect them to campuses that are difficult for them to attend.

The report, Higher Education as a Driver of Economic Mobility, is supported with funding from the College Futures Foundation and the Sutton Family Fund. In addition to Johnson, the coauthors are Sarah Bohn, PPIC research director, and senior research associate Marisol Cuellar Mejia.

About PPIC

The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research. We are a public charity. We do not take or support positions on any ballot measure or on any local, state, or federal legislation, nor do we endorse, support, or oppose any political parties or candidates for public office. Research publications reflect the views of the authors and do not necessarily reflect the views of our funders or of the staff, officers, advisory councils, or board of directors of the Public Policy Institute of California.

Contacts

Steven Bliss
General Media
415-291-4412
bliss@ppic.org
Lori Pottinger
PPIC Water Policy Center Media
415-291-4428
pottinger@ppic.org
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