Median Wage in Utah

The following is an excerpt from Prosperity Through Education. As noted by some economic experts, median wage may be the most appropriate measure of state economic success for several reasons:

It should be the goal of state development policy to raise the standard of living, which requires both improvements in productivity and that the gains from productivity (how much output is generated by the economy in each hour of work) be shared with workers in the form of higher wages and salaries. Productivity improvements that only enhance profits will benefit only those at the top of the income and wage distributions. And average wages, as opposed to median wages, will rise even when all the gains are captured by those at the top. . . . We use wage rather than income because wages are directly affected by state efforts to increase labor skills while investment income could derive from ownership anywhere in the world. Furthermore, for most of the population, improvements in wages are the principal, if not the only, path to improving income. We do not use growth in jobs or in output (state GDP) because an increase in jobs or in output does not necessarily translate into an improved standard of living; an influx of low-wage jobs can drive down average pay, and an increase in output can occur with little increase in employment or wages if it comes about through substituting capital for labor.[43]

In 2012, the median hourly wage for all occupations in Utah was only $15.80.”[44]

THE IMPACT OF EDUCATION ON MEDIAN WAGE

Three points deserve emphasis here. First, the data is clear that wages substantially increase with higher levels of education. The College Board’s Education Pays 2013 report states:

Median earnings of bachelor’s degree recipients with no advanced degree working full time in 2011 were $56,500, $21,100 more than median earnings of high school graduates.

Individuals with some college but no degree earned 14% more than high school graduates working full time. Their median after-tax earnings were 13% higher.”[45] The difference in earnings is particularly stark when one looks at median earnings across all levels of educational attainment. 2013 data from the U.S. Bureau of Labor Statistics highlights median weekly earnings of American adults age 25 and older:[46]

  • Professional degree: $1,714
  • Doctoral degree: $1,623
  • Master’s degree: $1,329
  • Bachelor’s degree: $1,108
  • Associate’s degree: $777
  • Some college, no degree: $727
  • High school diploma: $651
  • Less than high school diploma: $472

This differential translates into major long-term income advantages for those who complete a college degree. Over a lifetime, the earnings of an associate’s degree recipient are roughly $170,000 higher than those of a high school graduate, while the earnings of a bachelor’s degree holder are $570,000 more than those of a high school graduate.[47] In fact, according to one recent report, “higher education is one of the best investments an individual can make. . . . [T]he returns to earning an associate’s, professional, or bachelor’s degree exceed 15 %, and even the average return to attending some college for those who do not earn a degree is 9 %. In comparison, the average return to an investment in the stock market is a little over 5 %; gold, ten-year Treasury bonds, T-bills, and housing are 3 % or less.”[48]

Second, the financial return associated with postsecondary education and the gaps in earnings by education level are increasing with time. “The difference between median earnings for women ages 25 to 34 working full time year-round with a bachelor’s degree or higher and those in the same age range with high school diplomas rose from 43% in 1971 to 56% in 1991 and to 70% in 2011. The earnings premium for men rose from 25% in 1971 to 56% in 1991 and to 69% in 2011.”[49]

Third, as discussed above, the research of Diamond and others indicates that the well-educated tend to congregate, which drives wages up. “The correlation is very strong and there are very large differences between median hourly wages in states with well-educated workforces and hourly wages in states with less-well-educated workforces (as measured by the share of workers who have at least a bachelor’s degree). In the 22 states with the least-educated workforces (30 % or less with a bachelor’s degree or more education) [of which Utah is one], median wages hover around $15 an hour, the only exceptions being Alaska and Wyoming. In the three states where more than 40 % of the population has a bachelor’s or more education, median wages are $19 to $20 an hour, nearly a third higher.”[50]

 

[43] Berger, N. & Fisher, P. (2013). A well-educated workforce is key to state prosperity. Washington, D.C.: Economic Analysis and Research Network, 4-5. Retrieved from http://s2.epi.org/files/2013/A%20well- educated%20workforce%20is%20key%20to%20state%20prosperity.pdf

[44] Langston, L.P. (2013). Waging a living: What do Utah’s occupations pay? Salt Lake City: Utah Department of Workforce Services. Retrieved from http://www.jobs.utah.gov/wi/pubs/trendlines/summer13/whatshappening.pdf

[45] Baum, S., Ma., J., & Payea, K. (2013). Education pays 2013: The benefits of higher education for individuals and society. New York: The College Board, 5. Retrieved from http://trends.collegeboard.org/sites/default/files/education-pays-2013-full-report.pdf

[46] U.S. Bureau of Labor Statistics. (2014, March 24). Earnings and unemployment rates by educational attainment. Washington, D.C.: U.S. Bureau of Labor Statistics. Retrieved from http://www.bls.gov/emp/ep_chart_001.htm[/fusion_text][/fullwidth]