TheLadders turned to its database of nearly 6 million professionals to provide insight into the decisions new grads face (and have already made by going to college), and how these decisions could affect their future compensation. We examined the relationship between education levels and variables such as industry, salary, and employment experience.
At the highest level, the data statistically justifies a widely held belief regarding the benefit of a college degree. As demonstrated by graph below, which plots salary progression over time for individuals with and without bachelor’s degrees, college graduates progress in salary at a faster rate than their non-grad counterparts.
While non-grad professionals may start their careers earning slightly more, on average, than their freshly-degreed counterparts, the rate of salary growth for graduates quickly outpaces the relatively flat career earnings over time for non-graduates. We also suspect that the initial difference in earnings may not represent the job market as a whole, but is instead a reflection of the professional backgrounds of non-graduate members specifically on TheLadders. Our non-graduate members are often employed in industries (i.e., healthcare, electronics, manufacturing) where a professional or trade school education is common.
We pulled a few numbers to further highlight the difference in earnings growth over time between graduates and non-graduates:
After establishing the general relationship between earnings over time and education level, we dug deeper by comparing these relationships across various industries. We began by finding the increase, or “bump,” in average mid-career salaries between four-year grads and non-grads. The overall average mid-career salary increase is about $16,000, but this was not standard across all industries.
Computer science and financial services are the two most popular industries on TheLadders, but these industries have very different relationships between education level and pay. In the computer science industry, no statistically significant increase was found in mid-career salaries between individuals with a four-year degree and those without. While this may be tough to immediately reconcile, it makes more sense considering the demanding technical proficiencies required to break into computer science, regardless of education. The opposite effect was observed in the financial services industry, which possessed the largest mid-career bump in salary (at just over $20,000) for those possessing four-year degrees. This substantial gap between our two most popular industries speaks to the difference of how education and technical proficiencies are evaluated across industries.
The following chart illustrates which industries are more lucrative than others, and displays the percentage of degreed vs. non-degreed individuals in each industry.
Here, we see average compensation on the vertical axis, and bars grouped by industry and ordered from lowest to highest average compensation on the horizontal axis.
The bars are split in color, displaying the percentage of individuals in each industry possessing a minimum of a four-year degree in blue. Here are a few key takeaways:
- Education requirements are generally higher in industries with higher compensations
- In three of the four highest-compensated industries on TheLadders, more than 80% of its professionals hold at least a four-year degree
- Outside of the top four highest-compensated industries, only the marketing industry possessed a workforce where more than 80% of its professionals held at least a four-year degree
Finally, we aimed to establish the monetary value of an advanced degree (master’s, PhD, JD) – which industries really pay out for continued education? To explore this, we analyzed two sets of data regarding the average mid-career salary for each industry. First, we found the average mid-career salary for professionals with advanced degrees. We then found the average mid-career salary for professionals holding a bachelor’s degree as their highest level of education. The average difference between these two sets of data is illustrated in the table below:
Surprisingly, the largest pay difference that we discovered between the holders of bachelor’s and advanced degrees was in the hospitality industry, with an average mid-career salary difference of about $10,000 in the pockets of advanced degree-holders. The healthcare and legal industries both saw similarly large pay differences of about $9,000 and $8,000 respectively. Our two most popular industries, computer science and financial services, saw the smallest bump in mid-career pay. This could be due to those industries relying largely on experience rather than education, with bachelor’s degree holders already possessing an acceptable baseline level of technical expertise.
If you just graduated and are considering a career in hospitality, you may want to start thinking about an advanced degree. If you’re pursuing work in computer science, get to work on your resume and technical skills, because as evidenced in the chart above, professional experience can often be at least as valuable as additional education.
At the end of the day, the benefits of an education are certainly financially rewarding over time and advanced degrees are worth considering, depending on your goal industry. That college degree represents a significant time commitment and financial investment, and thankfully your hard work wasn’t in vain.
Daniel Cronyn is the director of consumer marketing at TheLadders. Besides a passion for creative direct-response campaigns and analysis, he spends his time tracking down obscure music events and even more obscure food choices across New York City.