The financial benefits of higher education are a strong topic that has become the source of numerous debates around the world. In many countries, skilled workers drive up the wages of tradesmen. Americans have enjoyed rising living standards for decades. However, according to many Americans, the distribution of U.S. wealth is unfair. Though there are multiple factors that contribute to wealth inequality, the role of education plays quite a vital role among them.
Income Inequality in the U.S.: A Rising Trend
When people earn income, usually they use that to do a few things like buy goods and services, pay taxes, and pay taxes. The accumulation of money that people set aside for future use is called savings.
Savings is quite a vital component of building wealth. Wealth includes the total value of an individual’s assets, which include businesses, liquid assets, cars, real estate, etc. Saving is always crucial in any kind of financial planning.
However, usually, Americans don’t save as much as those in other countries that are industrialized. Hence, over the past 50 years, the U.S. personal saving rate dropped to a great extent. As of September 2016, the U.S. personal saving rate was around 5.7 percent, whereas, since 1959, it has averaged around 8.4 percent.
Education and Income
The relationship between income and education is quite strong. In many countries, education is even referred to as an investment in human capital. Thus, people must invest in human capital to make money and build wealth. Generally, individuals with more education earn higher incomes. Moreover, the more skills individuals have, the more employable they are. Thus, people with more education usually have quite a lower unemployment rate on average.
A similar situation can also be seen in the U.S., as data from the 2018 Current Popular Survey showed that the average weekly wages of employees were:
- Doctoral degrees- $1,825.
- Professional degrees- $1,884.
- Master’s degrees-$1,434.
- Bachelor’s degrees- $1,198.
- Associate’s degrees- $862.
- Some college- $802.
- High school graduates- $730.
- Less than a high school diploma- $553.
Looking at the above chart, you can easily know that your education level has quite a strong impact on your earning potential and job security.
Industries Where Education Increases Salary
Let us go through a few industries where educational background increases salary:
1.Finance
Finance is a massive industry in the U.S.A. and education plays a vital role here. Everywhere from wealth management firms to investment banks will need a finance degree. This industry even offers an increased salary if a candidate has a specialized degree.
Finance is an industry where people with the correct qualifications will lead to pay increases as well as more significant opportunities. Employees with an MBA degree will almost always have multiple job options. In contrast, accountants will require a bachelor’s degree in finance or accounting to get a good salary.
2.Medical
This is one of the most important industries where there is a direct correlation between education and skill. and salary level. There is a vast amount of skills to be learned. Moreover, the healthcare industry is quite large and a person could specialize in fields like software engineering and human anatomy. There is no doubt of the fact that healthcare is a high-tech, wide-ranging, and truly specialized industry.
Associate’s Degrees are usually required for positions like dental hygienist, radiation therapist, nuclear medicine technologist, etc. Each of these career paths includes earning some other certifications that increase salary. Bachelor’s degrees are needed for several roles like medical & health services managers or registered nurses.
In the medical field, earning a master’s degree may help a nurse to earn more than $100k per month by becoming a Physician’s Assistant. Moreover, a doctoral degree can result in a salary increase and several other possibilities for specialized career paths.
3.Education
Another important field where you will see a direct correlation between a person’s qualifications and their salary is Education. Teachers usually get a higher salary if they have a master’s degree or a specialization in certain teaching qualifications or credentials.
Teachers who have a doctoral or master’s degree are more likely to get higher positions with increased salaries.
How Educational Qualification Impacts Salary
Let us take a look at the overall statistics in the U.S.A. regarding how education affects income:
- Doctoral Degree
In the U.S.A., around 3% of jobs need a Ph.D. Many of these professions include judges, physicists, veterinarians, biochemists, etc. The annual median of these professionals is around $100,000 per year.
- Master’s Degree
According to the U.S. Bureau of Labor Statistics, around 2% of jobs in the U.S.A. need a master’s degrees. Many of these professionals include epidemiologists, healthcare social workers, statisticians, etc.
- Bachelor’s Degree
Near about 18% of jobs in the U.S.A. require a bachelor’s degree. Various positions across the spectrum need bachelor’s degree, like systems software developers, security analysts, marketing managers, special education teachers, etc.
- Associate’s Degree
The U.S. Bureau of Labor Statistics says that around 4% of jobs need an associate’s degree. Professions that usually require associate degrees are dental hygienists, registered nurses, food science technicians, legal assistants, etc.
Relationship between Skills and Increased Salary
Let us take a look at how some important skills can result in increased salaries for employees in the U.S.A.
Better math skills may increase an individual’s salary by $21,000 per year. If someone has strong reasoning ability with graphs, statistics, etc., then the total expected salary increase would be an additional $21,000 per year for a full-time U.S. worker.
Similarly, improvement in writing and reading skills may offer an increase of $11,000 in annual salary. Furthermore, graduating with a high school diploma may bring around $7000 in annual salary.
State-level and national economic impact of higher education is more than $200 billion. Today, not only do employees get to enjoy economic benefits from a boost in educational outcomes but also industries get to enjoy some benefits as well. According to several estimates, around 11 million employees in the U.S.A. would be able to enjoy several benefits from improved math skills and higher educational qualifications.
So, there is a very close relationship between an individual’s education and his/her salary. Hence, it is evident that more education leads to much more income. Moreover, an improvement in education will definitely be able to help kickstart the American economy.
Conclusion
Thus, to conclude we can say that education plays quite a decisive role in economic performance. An educated individual can easily take part in the economic growth of a country. Hence, students must continue to focus on improving their skills and knowledge.
