Career Earnings After College: Are Degrees Worth Less for Women?

This question came up from when I was looking at the study about how college graduates make a million dollars more over their career than a high school graduate (which, by the way, we'll call that one the million dollar college lie) is that there is a huge difference between what men with a college degree make and what women with a college degree make.  In fact one of the biggest surprises that I came across was just how bad the statistical data looked regarding women and earnings out of college.  While high school graduates' earnings and college graduate earnings are compared all the time, no one seems to mention that female college graduates do not make as much money as male college graduates.  In fact, it's not even remotely close.

I hope the below page will help to breakdown the difference in the earnings of men vs. women after graduating college, and also show how much money a male high school graduate makes compared to a woman college graduate.  While many people in the U.S. vaguely know that there's some kind of gap, the actual numbers stunned me.  Just to help give you a sense of how surprising the numbers actually are, we will start by just comparing the average income made by a female high school graduate with the average income made by a female college graduate. 

The numbers turn out to very surprising.  So surprising, that one even wonders if a college degree is even worth it for most women compared to just graduating high school. 

Answering the basic question of "Is college worth it for women?" should start with a comparing the earnings of women who graduate college with women who graduate high school. According to a report written by Jennifer Cheeseman Day and Eric C. Newburger called, "The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings" (this is the famous/infamous report everyone quotes about the million dollar income difference) women who graduate from high school on average earn around 1 million dollars in their working years compared to 1.6 million dollars for women who graduate from college.

Okay, so it's not a million, but at first glance $600,000 does still seem like a lot of money, but a closer examination shows that is not nearly as much money as one would think. When you take into consideration the amount of money it costs to go to college, the average debt of college, and interest rates from unpaid student loans, you could easily have $100,000 of debt a high school graduate would not have.

The high school graduate also has the advantage of four working years that the college graduate is not going to have during college. The high school graduate gets a head start on work experience, which is often considered more important when hiring than the college degree, and can be turned into a great long-term advantage. This is without even mentioning the extra $100,000 the high school graduate will likely make during those 4 years.

Without the added debt, the high school graduate also hast the opportunity to buy a house, a new car, and experience life long before the college graduate will get that opportunity.

Taking into account factors like the ones listed above, women who graduate college do not make an overwhelmingly more amount of money in a lifetime than high school graduates.  And as the bottom section of this hub may prove: they may retire with less money.

That same study, "The Big Pay Off" also examined the amount of money that college graduates who were men made, and then compared that to the amount of money college graduates who were women made.  The numbers showed that an average college graduate makes $2.5 million for a man, and $1.6 million for women, nearly a million dollar difference. 

In fact, men who just graduated from high school made an average of $1.4 million dollars compared to the $1.6 million for women college graduates, a staggering difference in numbers.  When men can earn almost as much as women by just graduating from high school, it really questions the importance of a college degree in the working world, and should bring up a whole hell of a lot more questions about pay inequity between men and women.

Some would argue that the numbers are skewed by the older population, who made a lot less money compared to men back in the 1960's-1980's.  There might be some degree truth to that, but even if the pay gap between men and women is only 20 cents to the dollar now, 2.5 million dollars in earnings for men equals 2 million for women, and in truth that pay gap is probably around 25 cents. So while it might not be as bad at first glance, it's still not explained away, no matter how hard you try.

No matter how you look at it, there is a HUGE disparity between men with college degrees compared to women with college degrees.

One part of the career earnings equation that this study doesn't consider, and one that changes the financial value of a college degree for women or men, is that workers right out of high school can start an IRA or other retirement savings account right away, while college students are busy trying to cram for midterms and the end of the year exams. If an 18 year old high school graduate starts an IRA at age 18 instead of 23, and the two contribute the same amount per year until age 65, the high school graduate will have $330,000 more to live off of in retirement.

That virtually wipes out any positive benefit that comes from the extra earnings that a college degree might bring. The math for those numbers is this:

Age 18: start at $1,000, invest $2,000 per year, & $94,000 life time investment comes out to $1,015,496 at retirement assuming 8% a year average.

Age 23: start at $1,000, invest $2,000 per year, & $84,000 life time investment comes out to $682,205.

While you can argue that the college graduate will eventually invest more per year, the same could be said about the high school graduate who is getting raises while working in the real world. Also, adding more later doesn't make up for the gap of getting started early. If the 23 year old college graduate puts in $3,000 a year until age 65, they will still be a few thousand short. And asking a college grad just getting moved, looking for work, paying off student student loans, and the like to get started early with that level of money is a lot to ask.

It's the financial elephant in the room that nobody is talking about: difference in retirement savings.

I think it would be naive to say that no women should go to college. There are some benefits to a higher education, and those do have to be weighed against the cost of going to college.  There are many good jobs that are only available through a college education, and obviously averages can be skewed.  If you're going to be a lawyer or a doctor, you can probably ignore most of this hub.

However, if the federal government, the media, and high schools all across the country want to keep sending people to college, they need to tell students THE TRUTH about what they're getting into. Females are probably going to leave college and get a lower paying job than males. When taking on a serious load of debt, knowing that a high paying job may not be waiting for you is information that is too important to keep hidden.

Hopefully, with the federal government encouraging more and more people to go to college, they will take a serious look at making sure college graduates have an equal playing field upon graduation.

College: The Million Dollar Lie

Is College the Best Route for Women?

Is College the Best Route for Black Students?

Top 6 Reasons College Is Overrated

Community College Best Idea