When Pay Changes the Picture

For workers with bachelor’s degrees, earnings provide a third way to examine whether an occupation is a meaningful match. This chapter asks what a within-occupation earnings premium can reveal when the BLS entry label and the education distribution point in different directions. The conclusion is deliberately bounded: higher pay for graduates is evidence that some of them may be bringing valued capabilities to below-degree occupations, but it is not a direct test of the tasks performed by every worker.

What an earnings premium measures

An earnings premium is the difference in pay between two groups, expressed relative to the pay of the comparison group. Here the comparison is between workers with bachelor’s degrees and workers with a high school diploma in the same broad occupational category. The point is not that every graduate should earn more than every high-school graduate. The point is that the medians of the two groups can reveal whether education is associated with different economic returns even when the occupation carries a lower entry assignment.

That within-occupation comparison adds information that a BLS category cannot provide by itself. The entry category asks what education is typically needed to begin. An earnings comparison asks whether workers with more education receive a return while doing work classified in the same occupation. If the answer is yes, then at least some graduates may be using skills that employers value, even though a bachelor’s degree is not the usual minimum for entering the occupation.

The Georgetown report finds a sizable premium in both kinds of occupation it compares. Among full-time, full-year workers ages 25–54, bachelor’s-degree workers in occupations BLS classifies as high-school level have median earnings of $62,000, compared with $45,000 for workers with a high school diploma—a 38 percent premium. In occupations BLS classifies as bachelor’s-degree level, the corresponding medians are $86,000 and $63,000, a 37 percent premium.

The similarity matters. A reader might assume that a degree has economic value only in an occupation whose entry label already requires a bachelor’s degree. These results challenge that assumption. The premium is nearly as large in the high-school-level group as in the bachelor’s-level group. The occupational label alone therefore does not tell us how much value graduates may be creating or receiving within the work.

The comparison is about group medians, not a matched experiment involving two people doing identical tasks. A median summarizes the middle of a distribution. It does not show how much a particular graduate earns, whether the graduate’s tasks are more demanding, or what the same person would have earned without a degree. The strength of the evidence is that it identifies a consistent education-linked pay pattern within broad occupational categories. The limit is that the pattern does not isolate one cause.

The premium is not the same everywhere

The report’s table shows that the earnings difference is not a single fixed return. In high-school-level occupations, the bachelor’s-degree premium is 31 percent at the 25th percentile, 38 percent at the median, and 52 percent at the 75th percentile.