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Lifetime earnings data for associate degrees too low

A new report from the University of Wisconsin-Madison examines the differences in lifetime earnings based on educational attainment in that state. According to the data, an associate degree produces a slim 14% increase in lifetime earnings over a high school diploma, while a bachelor’s degree produces a 53% increase.

Comparing a bachelor’s degree to an associate degree, the four-year degree increases lifetime earnings by more than 34%. When comparing average lifetime earnings of an associate degree to the average earnings of Wisconsin residents regardless of educational attainment, an associate degree returns negative value. The average annual income from an associate degree in Wisconsin is just 91.4% of what the average Wisconsinite regardless of educational attainment. Put another way, people with associate degrees take a nearly 10% pay cut.

Nationally, workers with a bachelor’s degree can expect to out-earn workers with just an associate degree by nearly 45%. Over a 40-year career, this translates to about $800,000 in “lost” earnings by those with lower educational attainment.

In Wisconsin, about one-third of working adults have at least a bachelor’s degree. About 30% of working adults have only a high school diploma. In comparison, about 11% of that state’s working adult population has an associate degree.

The earnings gap between workers with bachelor’s degrees and workers with associate degrees is growing. In 2010, the median annual income of a full-time worker with a bachelor’s degree was 21% higher than that of a worker with a two-year degree. By 2021, the earnings gap had increased to nearly 37%. During that time, the wages of workers with associate degrees (measured in 2021 dollars) remained virtually stagnant.

Lifetime earnings gaps are growing

The lifetime earnings gap is even worse for women. In 2021, women with a bachelor’s degree out-earned women with an associate degree by 77%. Unfortunately, women make up the majority of community college students.

Under these circumstances, it’s not hard to understand why community college classrooms have emptied out over the past decade. Community colleges offer the lowest tuition among all higher education options. While that makes a community college an affordable way to earn a college degree, unfortunately it is a degree that people can’t really afford to have.

In effect, the recent push to increase the number of workers with associate degrees is a push to increase the number of workers willing to voluntarily earn 10% less than the average worker in their state. Is that really what we’re going for?

This is an urgent call to action for community colleges. It is a demand to increase the lifetime earnings potential for their credentials as fast as possible. That demand must come from community college trustees, who – for the most part – appear to be asleep at the switch.

Photo Credit: Amanda Kumm