Center Study: Minnesotans Without College Degrees Often Out-Earn Four-Year College Grads

Conventional wisdom has it that young people starting out in life need a four-year college degree to succeed. But a new Center of the American Experiment study (download here) concludes that Minnesotans who choose a two-year degree, apprenticeship or occupational certificate often do better financially on average than their college-educated peers.

The study–No Four-Year Degree Required: A Look at a Selection of In-Demand Careers in Minnesota—finds median lifetime earnings for machinists, dental hygienists, plumbers, electric line installers and similar jobs exceed those of their counterparts with four-year degrees by up to 61 percent. The average debt incurred by four-year college degree holders accounts in part for the financial disparity.

The findings confirm a disconnect between the educational choices of many young people and the educational requirements of the job market.  Some 50 percent of high school graduates set out to obtain a four-year college degree, despite the fact that just 22 percent of Minnesota jobs require a four-year degree or more. At the same time, thousands of high-skill, well-paying jobs that require less schooling remain unfilled, due to a lack of awareness of alternative career opportunities.

The study addresses the “skills gap” by selecting a cross section of occupations that do not require a four-year degree and estimating the long-term financial rewards for an 18-year-old Minnesotan looking to the future.

“These positions, such as in the healthcare or manufacturing sectors of the economy, often require skilled training, either on the job or in a more formal setting, and as such are rewarded with relatively high pay. Importantly, these positions are not only currently in-demand but are projected to continue to increase over the next decade,” according to the study’s author, Dr. Amanda Griffith, a labor economist at Wake Forest University.

The paper analyzed the return on training investment for occupations in four career paths: skilled manufacturing, healthcare, construction-related trades and jobs like HVAC technicians and electric line installers that typically require a certificate or diploma taking two or three semesters.

Griffith computed the cost of education and median hourly wages in each field for workers in the Twin Cities and statewide, using Minnesota Dept. of Employment and Economic Development and other data. Then she calculated a median lifetime earnings profile for each occupation that could be directly compared to the median lifetime earnings of Minnesotans with four-year college degrees.

The surprising results reveal that numerous occupations that do not require a college degree pay more than the $25.30 per hour median wage earned by four-year college graduates in Minnesota. For example, Griffith found the estimated median lifetime earnings for CNC machinists beat college graduates by 11 percent; registered nurses’ with associate degrees anticipated median lifetime earnings outpace four-year college degree holders by 50 percent; and electric line installers’ median lifetime earnings total an impressive 61 percent more than workers with a traditional college diploma.

The study is the first in a series of research papers to be undertaken as part of Center of the American Experiment’s “Great Jobs Without a Four-Year Degree” project launched in April 2017.

“There are many exciting, fulfilling paths to a successful and productive career—and life—in Minnesota in 2017,” said Katherine Kersten, American Experiment Senior Policy Fellow and Co-Director of the Great Jobs project. “Going forward, our society needs to re-emphasize the importance of honoring and respecting those who choose non-four-year routes for the valuable contributions they make to our communities. Our state’s future prosperity—and the well-being of many of our young people—depend on it.”