Posted by: Josh Lehner | January 11, 2018

Occupations, Wages, and Educational Attainment

Four year degrees are not the be-all and end-all when it comes to career choices and earnings. Inevitably some dropouts will become successful managers, while some graduate degree holders will continue to work food preparation jobs. However, the correlation between education and pay is strong. The surest path toward a high-wage job in today’s economy is a college degree, and in some cases a graduate degree. That said, it is important to point out that certificate programs, apprenticeships and the like also further individuals’ skills. Workers are more competitive in the labor market provided the training or program itself is actually of value to employers (not all of them are, unfortunately).

What’s interesting when it comes to occupations, wages, and educational attainment is the wide range of outcomes within similar groups. First, let’s talk about the occupations that have high levels of formal education, or the right-hand side of the chart below. Within this group there are those, like computer programmers, doctors, engineers, and lawyers, that earn more than double the statewide median wage. Conversely, other highly educated occupations, while certainly paying more than the median wage, do pay less that these counterparts. Among these are Scientists, Teachers, Community Service (counselors, social workers, clergy, etc) and Arts, Design and Entertainment occupations (includes public relations and media). The majority of these jobs do require a bachelor’s degree and may reflect more of a lifestyle occupational choice than a pure salary story, where the workers enjoy additional nonpecuniary rewards in addition to their salary.

However, what I find most interesting, or among the most important items to note with this research, are the differences among the upper middle-wage occupations. All of these jobs pay approximately the same wage because they are performed by skilled workers, yet require vastly different levels of formal education. You can see this a bit clearer in the chart below. Note that this chart shows the same exact information, however it is zoomed in a bit, and I have changed the color scheme for aesthetic reasons — it looks better for presentations when there isn’t a sea of red.

The differences here are that construction workers and installation, maintenance, and repair workers learn largely on the job, while teachers, librarians and social workers learn in the classroom. Within the job polarization research, the reason for this is that these jobs require abstract thinking and problem solving skills. These occupations also perform nonrountine physical activities and require human interaction, making them harder to automate. Construction and installation, maintenance, and repair jobs are the gold standard for wages when it comes to jobs that largely do not require a college degree. This is one reason why an increased focus, or at least maintaining focus on the trades and apprenticeships and the like is important for both individuals, and the economy at large.

In terms of the outlook, these upper middle-wage jobs can largely be thought of population driven. Stronger population growth leads to increased demand for housing, repair work, police officers, social workers, and teachers. During the strong 1990s expansion, population growth averaged nearly 2 percent per year. It was during this period that Oregon was able to stem the polarization tide, given the strong gains in these types of jobs. In recent years, we have seen middle-wage jobs increase again as the economy has turned around and population growth has picked up. That said, many of these occupations have yet to fully recover all of their lost jobs to date. The outlook calls for ongoing gains as the expansion continues.

Finally, for those interested in more details, the last chart shows more granular educational attainment shares for all occupational groups. The chart is sorted not by median wage but by the share of college graduates, from highest to lowest.

This post was an updated and modified excerpt from our office’s original Job Polarization in Oregon report. I pulled this information for two reasons. First, as mentioned the other day, I am updating and working on some new research regarding the trades and blue collar occupations. And second, at times the reasoning behind these issues, and the labor market outcomes are not discussed enough. Consider this an effort to keep these in mind.


Responses

  1. Josh,

    I really enjoyed this post. I also agree the reasons behind why folks get paid what they do doesn’t get discussed much at all.

    One of the things your first graphic does show but you didn’t discuss in this post is the number or amount of jobs that need or require a bachelor’s degree or higher to get into them. About 20 percent of jobs require a bachelor’s degree. Another 20 to 30 percent need some post-secondary education and the rest probably need just high school to have the education necessary to be successful in the job.

    This leads me wonder why our educational community pushes four year college degrees so hard for so long. I guess it is beneficial to employers to have coffee baristas with bachelor’s degree.

    Will Summers

    • Hi Will,

      Thanks and I agree. I really like combing through the occupational projections and the education needed to be a competitive candidate for the openings. That’s really helpful and insightful work. There does appear to be a gap between educational attainment projections and occupational/industrial projections. From a big picture perspective, I’m not too worried about it. I think education, or increasing skills and gaining human capital and the like is always useful for the individual. The problem is when the cost is so high that it potentially outweighs the benefits, or the training/program doesn’t actually provide skills that employers value or are willing to pay for. Those are huge issues that need to be addressed.

  2. […] Source: Occupations, Wages, and Educational Attainment | Oregon Office of Economic Analysis […]

  3. […] is good news, because these jobs, along with construction (particularly the nonresidential) are the gold standard for career paths that do not require a four year degree. Both of these occupational groups are largely population driven and less prone to automation or […]

  4. […] Finally, it is quite clear that the skilled tradespeople earn the high wages. The construction wage premium is not about residential workers but about the nonresidential work. For more see our previous work on Labor and the Trades, but also a broader look at Occupations, Wages, and Educational Attainment. […]


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