Over the past decade, returns to postsecondary degrees have diminished nationwide and in NC

Key takeaways: A college degree is associated with several positive life outcomes, ranging from greater financial security to better health. However, over the past decade, returns on postsecondary degrees have diminished both nationwide and in North Carolina.

We reported recently that the level of educational attainment among North Carolina’s degree-earners continues to rise. This is related, in part, to a shifting job market favoring higher-skilled workers. However, as more individuals seek out greater levels of postsecondary education, the question remains as to whether these advanced degrees continue to provide larger financial returns over the course of an individual’s life.

A publication from Georgetown University’s Center on Education and the Workforce sought to answer this question, and determined that there are four general rules to earnings and education:

Rule 1: Degree level matters.

In general, higher degrees are associated with higher earnings.

Rule 2: Occupational choice can trump degree level.

Individuals with less education may earn more in higher-paying fields, such as STEM careers, than those with more education in lower-paying fields.

Rule 3: Although occupation can trump education, degree level still matters most within individual occupations.

Individuals with more advanced education in their career field earn more than those that with lower levels of education.

Rule 4: Race/ethnicity and gender are wild cards.

These demographic factors can play a larger role in future earnings than even education or occupation.

Georgetown’s analysis used national-level data, so we decided to investigate how well these rules hold up for workers in North Carolina. In this blog post, we examine the first rule—whether degree level matters—on degree level attainment and earnings advantages over time. We will look at the other rules in future posts.

Our findings at the state level closely matched Georgetown’s national findings.

Calculating Synthetic Work-Life Earnings

For this analysis, we conducted a synthetic work-life earnings estimate. A “synthetic” estimate means that these are not the actual dollar amounts earned by real people over the course of their working lives (which would require an extensive amount of sensitive, longitudinal data). Instead, these are estimates derived from a point-in-time cross-sectional survey—the American Community Survey, in this case.

We focused on individuals aged to 25 to 64 because these are our prime working ages. We also chose to focus the analysis on full-time, year-round workers—defined as being employed at least 35 hours per week and working at least 50 weeks per year—because we believe that they are a better representation of wage returns to education in the labor market. This means that we are excluding workers who work seasonally, who work part time, or who drop out or stop out temporarily from the labor force.

Using wage and employment data, we calculated the median earnings for each 5-year age group between ages 25 and 64 for full-time, year-round workers in North Carolina by educational attainment. (So, for example, we looked at the median earnings for 25-29 year-olds with a high school diploma, an associate degree, a bachelor’s degree, etc.) We then calculated each educational group’s predicted lifetime earnings by multiplying each age category by 5 to obtain their estimated total salary for each age range. Finally, we summed the estimated total salary for each age range from 25-29 to 60-64 to obtain the total synthetic work-life earnings estimate.

For example: Let’s calculate the median earnings for a full-time, year-round employee with a bachelor’s degree

Median earning between 25-29: $42,000
              Total salary for age range 25-29 = $42,000/year * 5 years = $210,000
Median earning between 30-34: $48,000
                Total salary for age range 30-34 = $48,000/year * 5 years = $240,000
Median earning between 35-39: $56,000
                Total salary for age range 35-39 = $56,000/year * 5 years = $280,000
Median earning between 40-44: $62,000
                Total salary for age range 40-44 = $62,000/year * 5 years = $310,000
Median earning between 45-49: $66,000
                Total salary for age range 45-49 = $66,000/year * 5 years = $330,000
Median earning between 50-54: $65,000
                Total salary for age range 50-54 = $65,000/year * 5 years = $325,000
Median earning between 55-59: $65,000
                Total salary for age range 55-59 = $65,000/year * 5 years = $325,000
Median earning between 60-64: $63,000
                Total salary for age range 60-64 = $63,000/year * 5 years = $315,000

Lifetime earnings = sum of total salaries for each age range

$210,000 + $240,000 + $280,000 + $310,000 + $330,000 + $325,000 + $325,000 + $315,000
= $2,335,000 in lifetime earnings

Of course, these estimates come with necessary caveats and limitations. Education alone does not account entirely for a worker’s lifetime earnings, and, in some cases, sex and race/ethnicity play an even larger role in influencing earnings than one’s degree. In a future blog post, we will address the effects of sex and race/ethnicity on earnings potential over the course of a lifetime.

More broadly speaking, these estimates examine the median lifetime earnings of a worker with a given level of education. In other words, this means that half of individuals in each age range earn less than this amount, while half earn more. This is not meant to represent the lived experience of any specific worker.

What we learned: There are gaps in lifetime earnings based on the highest level of education that someone has completed

Any level of postsecondary attainment translates to greater lifetime earnings compared to an individual with a high school degree alone, and additional education beyond an associate or bachelor’s degree is correlated with higher earnings. Lifetime earnings for all workers in North Carolina range from just over $1 million for individuals with less than a high school diploma to nearly $4 million for professional degree-holders, such as lawyers and doctors.

This gap in lifetime earnings has widened over the last decade. For full-time, year-round workers, bachelor’s degree-holders in 2007 could expect to earn 78% more than workers with just a high school diploma/GED and 33% more than workers with an associate degree. As of 2017, those numbers had grown by one percentage point and four percentage points, respectively: workers in North Carolina with a bachelor’s degree in 2017 could expect to earn 79% more than workers with just a high school diploma or GED certificate and 37% more than associate degree-holders.

For every education group, anticipated lifetime earnings in 2017 were lower than in 2007.

We also found that over the last decade, median lifetime earnings for full-time, year-round workers have decreased for every level of educational attainment.

Workers with an associate had the largest drop in lifetime earnings. Those with an associate degree in 2017 make 7% less than those holding the same degree in 2007.

But full-time, year-round employees in North Carolina made less at every degree level. Compared to 2007, expected lifetime earnings in 2017 were:

  • 5% less for those with less than a high school diploma;
  • 7% less for those with a high school diploma or GED certificate;
  • 5% less for bachelor’s degree-holders ;
  • 8% less for master’s degree-holders;
  • 3% less for doctoral degree-holders; and
  • 7% for professional degree-holders.

Reasons for this are likely complex, but without fully accounting for the composition of the workforce, it is hard to definitively know what this means. It may be related to wages being slow to recover since the Great Recession. Age hiring trends may also play a role, as much of the hiring at the national-level has skewed towards younger age groups (16-24 and 25-34). These newer workers tend to earn less than older age groups. While this does not speak to North Carolina specifically, it is likely that the state is following similar trends as the nation.

The American Community Survey from the Census Bureau is a nationwide representative survey that collects data on a wide variety of social and economic factors, such as ancestry, educational attainment, housing characteristics, and employment.

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NC: Improvements in on-time graduation rates for high schoolers, but still room for growth

We often help policymakers and educators understand the landscape of educational attainment in North Carolina, with a focus on high school completion rates and the transition to postsecondary programs. As part of this work, we focused on several questions related to North Carolina’s high school student population, including:

  • How many students are graduating high school on time?
  • Why (and when) do students dropout?
  • And why is it so important that students graduate from high school?

On-time graduation rates are increasing

Over the past twelve years, the share of North Carolina 9th graders graduating high school in four years—also known as the on-time graduation rate—has steadily increased.

Our state’s on-time graduation rate steadily rose from 68.3% in 2006 to 86.5% in 2017. This rate dipped 0.2 percentage points to 86.3% in 2018, with small declines for most groups.

But even with improved on-time graduation rates, students are still dropping out

Despite these overall improvements in on-time graduation, this still means that more than one in every eight ninth graders (13.7%) dropped out or did not complete high school within four years. For the 120,000 students who began 9th grade in 2014, this means that 16,450 did not receive a diploma on time. Students who are held back or have a break in their high school enrollment are more likely to dropout.

According to the most recent state evaluation (2017–18), most students dropped out in 10th grade (30%), followed by 9th grade (27%), 11th grade (25%), and 12th grade (15%). The most commonly cited reason for dropout was attendance issues (47%), followed by unknown (9.5%).* Other reasons for dropout included lack of engagement (7.5%), choosing work over school or needing employment (7.1%), academic problems (3.1%), and incarceration in an adult facility (2.1%).

Why does this matter?

Earning a high school diploma is associated with general economic, social, and health benefits. Compared with adults without a high school degree, high school graduates

Successfully attaining a high school diploma is a necessary step in the transition to either college or gainful employment. Earning a high school equivalency credential, like the GED, is not the same as a high school diploma. Compared to high school graduates, individuals with a GED earn less in the labor market and are less likely to go to college. The high school diploma is more than an indicator of academic knowledge; it is also a barometer of the individual’s capacity to stick with a task and other soft skills that may be harder to quantify.

Next up: What are outcomes for Career & Technical Education (CTE) graduates in North Carolina?

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*According to NC DPI: “In most districts, school social workers or school counselors are responsible for documenting the reasons for dropping out. By their very nature, dropout events can be difficult to investigate, leading to circumstances when school officials must provide an “approximate” reason for a student’s leaving school.”
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Census 2020: Everything you need to know about North Carolina’s hard-to-count communities

A complete and accurate census count is incredibly important. The census shapes how billions of dollars in federal funding are distributed, how congressional seats are apportioned, and how communities plan for their future residents.

But certain populations have historically been undercounted in the census, due to a variety of factors. Undercounting these communities skews the census data that’s used to ensure fair political representation and support community planning.

To help North Carolina achieve a complete and accurate census count, Carolina Demography worked with the NC Counts Coalition to create a map that identifies communities across the state that are most at-risk of being undercounted in the 2020 Census.

Based on low-response scores and 2010 response rates from the U.S. Census Bureau’s  2018 Planning Database and the most up-to-date community characteristics from the U.S. Census Bureau’s 2017 5-Year American Community Survey, the tool also provides reasons why certain populations may be hard to reach or count.

We sat down with Rebecca Tippett, the Director of Carolina Demography, and Stacey Carless, Executive Director of the NC Counts Coalition, to learn more about making a map to examine North Carolina’s hard-to-count populations.

Undercounted communities and the census

First, we should start off with the obvious: Why is the Census important for policymakers and researchers?

Rebecca Tippett: When we talk about the importance of the Census, we often talk about power and money. We use the Census counts to distribute political power and allocate funding for everything from highway spending to programs like Medicare and Head Start.

But the Census is more than just that. It is the backbone of virtually every data product researchers, governments, and businesses use to understand who we are, how we’ve changed, and what this might mean for the future. It’s also the most democratic and inclusive activity we do as a country. This once-a-decade count is the only source of basic demographic data on all individuals living in the United States.

Why is an accurate Census count important for North Carolina?

Stacey Carless: The Census directly affects the allocation of $16.3 billion annually in federal resources to North Carolina. Additionally, it provides key decision-makers with the information they need to ensure that government resources are directed strategically to the state’s communities. Also, the Census ensures that communities are appropriately represented in the statehouse and in Congress. With an accurate 2020 Census count, North Carolina is projected to gain a seat in the House of Representatives, increasing its representation from 13 to 14 representatives.

Why is it important to understand the populations that might be undercounted in the Census?

Rebecca Tippett:  The term most commonly used by Census experts is “differential undercount,” which just means that not all populations are equally likely to be counted in the Census. Some groups—like college students or people who own two homes—are more likely to be counted more than once, while other groups—like young children or people who have recently moved—are less likely to be counted at all.

Communities only have one shot to count all of their residents. If a community is undercounted, they will have lower quality data and receive less than their fair share of political representation and funding for the next decade.

Why are communities undercounted?

There are four main reasons why a population might be hard to count:

  1. They might be hard to locate, like people who live off-the-grid or who don’t wish to be found.
  2. They might be hard to contact, like people who live in gated communities.
  3. They might be hard to interview, meaning they might have low literacy or struggle with English.
  4. They might be hard to persuade, meaning they are suspicious of the government or don’t see a benefit to participating in the Census.

What groups are traditionally harder to count?

Rebecca Tippett:   Hard-to-count communities include children under age 6, renters, and American Indian, Hispanic, and Black households. Changes to the 2020 Census – such as the shift to primarily online data collection and the proposal to add a citizenship question may create new risks of undercount among additional groups.

Making the hard-to-count map

Why did you commission the map and what were you hoping to learn?

Stacey Carless: We serve as a “go-to” resource for 2020 Census planning in North Carolina. Stakeholders and partners were asking for user-friendly maps to better target outreach to hard to count populations. There was a need for a NC specific resources and we wanted to develop it. Also, for our statewide plan, we needed more information on hard-to-count communities in North Carolina to determine where we will place our resources and target our outreach efforts.

How did you make the map that identifies communities across North Carolina  that might be hard to count in the upcoming census?

Rebecca Tippett:  We used Tableau Public with some expert guidance from the Davis Library Research Hub at UNC. We relied on data from multiple state and federal resources, including:

  • library branch locations from the NC Department of Natural and Cultural Resources;
  •  low-response scores and 2010 response rates from the U.S. Census Bureau’s 2018 Planning Database; and
  •  the most up-to-date community characteristics from the U.S. Census Bureau’s 2017 5-Year American Community Survey.

We then calculated distances from the middle of each census tract to the nearest library branch location in ArcGIS. All other data cleaning and evaluation was done using Stata.

What did you learn that surprised you?

Rebecca Tippett:  A few things. First, the risk of an undercount is not an urban or rural phenomenon. Hard-to-count communities are spread across the state.

And many of our hardest-to-count communities are military communities. Cumberland County, home of Fort Bragg, and Onslow County, where Camp Lejeune is located, have multiple tracts at high risk of being undercounted in the 2020 Census.

But based on low-response rates—the predicted share of households who will not self-respond to the 2020 Census—Robeson County is the hardest-to-count county in North Carolina. Seventy-two percent of Robeson residents live in a census tract that is predicted to be among the hardest to count in 2020.

How does NC Counts plan to use the map?

Stacey Carless: To better target our outreach efforts and to provide it to the public for better understanding of hard-to-count communities in NC.

If I wanted to use the map to see my own community, how  do I learn what census tract I live in?

Rebecca Tippett:  You can use the Census Tract Street Locater tool from the U.S. Census Bureau.

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NC in Focus: The Sex Gap in Postsecondary Attainment

Nationally, 46% of women aged 25-64 reported having an associate degree or higher in 2017 compared to 39% of men, a gap of seven percentage points. In North Carolina, this gap was even larger: 48% of women had an associate degree or higher compared to 38% of men, a gap of 10 percentage points.

Compared to men, North Carolina women are more likely to report the completion of an associate degree (11.9% vs. 8.3%), bachelor’s (23.3% vs. 20.1%), or master’s (9.8% vs. 6.8%) degree. Men are slightly more likely than women to hold a professional degree (1.8% vs. 1.7%) or a doctorate (1.3% vs. 1.1%).

The female-male gap in postsecondary attainment differs by age, reflecting changing norms and expectations about women and work. At older ages—65 and above—men have higher levels of educational attainment, reflecting the different opportunity structures and expectations of the mid-twentieth century. (Among North Carolinians age 65 and older, 38% of men have an associate or higher compared to 30% of women.)

As women entered the workforce in increasing numbers in the 1960s and 1970s, female educational attainment also increased. The female-male difference in educational attainment emerges among individuals ages 55-64 (born between 1953 and 1962), with 42% of women reporting an associate degree or higher compared to 37% of men. This gap widens in younger generations, driven by steady increases in female educational attainment and relatively small changes in men’s overall attainment.

Among North Carolinians ages 45-54, the female-male attainment gap is 10 percentage points: 47% of women report an associate degree or higher compared to 37% of men. The difference increases to 12 percentage points among 35-44-year-olds, with 52% of women holding an associate degree or higher compared to 40% of men and remains at 12 percentage points among adults aged 25-34 (51% vs. 39%).

Next up: why is it so important that students graduate from high school on time?

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Rising Attainment Among North Carolina’s Degree-Earners

Forty-three percent of North Carolina’s adults aged 25-64 held some type of postsecondary degree in 2017—just over 2.3 million residents in the state. This share has risen five percentage points since 2010, and ten since 2000. In total, North Carolina gained 932K working-age adults with an Associate degree or higher from 2000 to 2017, and among these adults, the level of degree attainment continues to rise.

In 2000, the majority of NC adults aged 25-64 with a postsecondary degree held a Bachelor’s (53%). This share dropped three percentage points as of 2017 to just half of all degree holders. An additional one-fourth of degree-holders had an Associate in 2000. This share dropped one percentage point by 2017 to 24%.

The four percentage point (pp) loss among these two groups is accounted for by growth in Master’s (+3pp) and Doctoral degree holders (+1pp) over the same period. In 2000, 16% of degree-holders in North Carolina had a Master’s and 2% held a Doctorate, growing to 19% and 3% in 2017, respectively.

The number of NC adults aged 25-64 with a Master’s degree grew by over 100% – the only group to do so – from 222K in 2000 to 446K in 2017. This growth rate is followed closely by growth in the number of working-age adults with a doctoral degree (93%), from 33.3K in 2000 to 64.2K in 2017. Bachelor’s degree-holders, by comparison, grew the slowest at 59%, or 431K, since 2000. The difference in growth rates is partly due to the large number of Bachelor’s degree-holders compared to Master’s and doctoral degree-holders.

This growth in advanced degrees follows closely with the growth in occupations by degree level. According to data from North Carolina’s Commerce Department, jobs requiring a Master’s degree or higher are projected to have the fastest growth through 2026—their projected growth is 4.1 percentage points faster than the average growth for all jobs in NC. While occupations requiring an advanced degree still comprise a smaller overall share of the total job market – contributing to some of this fast growth – demands for the labor market are also experiencing real shifts. According to a nationwide survey conducted by CareerBuilder, “60% of employers who were satisfied with hiring high school graduates in the past claimed their work requires the skills held by those who completed higher education”.

With that said, North Carolina residents considering a postsecondary degree should recognize that job growth is projected to exceed the state average for any occupation requiring at least an Associate degree. An advanced degree may not be suitable for everyone, but some postsecondary attainment is increasingly recommended. Occupations requiring a high school degree alone have projected growth 1.5 percentage points slower than the average for all jobs. Growth will be even slower for those requiring some college, no degree at 3 percentage points less than the average for all jobs.

On the other hand, individuals can expect much faster-than-average growth in the skilled-service sector. These occupations typically require an Associate or a nondegree work credential, and will exceed the average for all jobs by 3.3 percentage points and 1.9 percentage points, respectively.

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