As we explored in our last post conventional wisdom about the value of a B.A. in obtaining a good-paying job and having a prosperous forty-year career is vastly underestimated. The Georgetown University Center on Education and the Workforce calculates that 59 percent of today’s good-paying jobs require a B.A. and that will grow to 66 percent in 2031.

The stories that dominate the public conversation about the labor market are not only inaccurate in their portrayal of the value of a B.A. compared to sub B.A.credentials, but also in its description of which occupations provide the most good-paying jobs. Conventional wisdom has it that good-paying jobs are narrowly focused in the skilled trades and in STEM occupations. Not close to reality both today and tomorrow.

The reality is that there are a wide variety of good-paying jobs now and as projected by the Center on Education and the Workforce will be a decade from now. As you can see below, management is, by far, the occupation cluster with the most good-paying jobs. Computer and math occupations are the largest STEM occupation cluster and it ranks the seventh largest. The largest skilled trades occupation cluster is construction and extraction ranking eight.

In the Michigan Future analysis of good-paying jobs we pull out first-line supervisors from all the occupation groups. If you do that, the proportion of good-paying management jobs goes up substantially. We found that first-line supervisors are the largest good-paying jobs occupation among jobs that don’t require a B.A.

Here are the proportions of good-paying 2031 jobs by occupation in the Georgetown report. Only those occupations that have at least 3 percent of all good-paying jobs are listed. A far more diverse list of occupations than conventional wisdom.

• Management: 21%
• Business and finance: 9%
• Healthcare professional and technical 9%
• Education, training and library: 7%
• sales: 7%
• Office and administrative support: 7%
• Computer and math: 6%
• Construction and extraction 5%
• Transportation and materials moving: 4%
• Production: 4%
• Architecture and engineering: 3%
• Installation, maintenance and repair: 3%

How many parents and students do you think know that there are more good-paying jobs projected in 2031 in both sales and office and administrative support than either construction or computers?

If we’re serious––as we should be––about providing all students information about all good-paying occupations we will have to dramatically change the story we are telling them about what the labor market today and tomorrow looks like. We need a reality based story about a labor market where there are a wide variety of good-paying job opportunities. Where the path to a prosperous career is not narrowly focused on either a STEM degree or learning a skilled trade. And where a four-year degree in any major is the most reliable path to the middle class.

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Terrific new report entitled The Future of Good Jobs | Projections through 2031 by the Georgetown University Center on Education and the Workforce. Highly recommended.

Using what we would consider a low-bar definition of a good-paying job the report projects in 2031 66 percent of good-paying jobs will be B.A. pathway jobs; 19 percent middle skills pathway jobs and 15 percent high school pathway jobs.

The good news is that the report projects the proportion of good-paying jobs will increase from 59 percent of all jobs in 2021 to 62 percent in 2031. A net increase of 15.2 million jobs. Of that increase basically all are B.A. pathways jobs. So the proportion of good-paying jobs over the next decade that require a B.A. goes up from 59 percent to 66 percent.

More specifically:

• The report defines a good-paying job as one that pays at least $43,000 for workers age 25-44 and $55,000 for workers age 45-64. The report notes that “many of the good jobs referred to in this report pay well above the minimum earnings threshold and provide room for earnings growth with time”.
• The report also provides state level thresholds for good-paying jobs. For Michigan those thresholds are $40,200 for workers age 25-44 and $51,700 for workers age 45-64
• Nationally there were 42.6 million good-paying B.A. pathway jobs in 2021 and it is projected that will grow to 58.2 million in 2031
• Nationally there were 16.2 million good-paying middle skills pathway jobs in 2021 and it is projected that will grow slightly to 16.4 million in 2031
• Nationally there were 13.8 million good-paying high school pathway jobs in 2021 and it is projected that will fall slightly to 13.2 million in 2031

This reality today, and even more so projected a decade from now, is much different that conventional wisdom. The public conversation is dominated by the story that you can now do as well economically without a four-year degree as you can with one. That preeminent story is simply inaccurate. By far the most reliable path to a good-paying jobs and a good-paying forty-year career is to follow the B.A. pathway.

Also contrary to conventional wisdom are the occupations with the most good-paying jobs. Conventional wisdom has it that good-paying jobs are highly concentrated in the skilled trades for those without a B.A. and in STEM occupation fo those with a B.A. Neither is accurate. STEM occupations account for 11 percent of all good-paying jobs projected in 2031. Blue collar occupations––defined in the report as all jobs in construction and extraction; production; transportation and material moving; installation, maintenance, and repair; and farming, fishing, and forestry––account for 17 percent of all good-paying jobs projected in 2031.

By far the most good-paying jobs are in the management and professional office cluster––which encompasses the management, business and financial operations, and legal occupational groups. The cluster accounts for 31 percent of all the good-paying jobs projected in 2031.

Other occupation clusters with lots of good-paying jobs projected in 2031 are sales and office support at 14 percent, healthcare professional and technical at nine percent and education, training, and library at seven percent.

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Michigan Future is always trying to understand the reality of today’s economy and labor market. Our mission is to catalyze a future for Michigan where all families can thrive, which means that all families have the chance to earn a decent income that allows them to afford the necessities, save for emergencies, and help prepare for the future–retirement or education. Our new report, The Relationship Between Education and Income: Separating Fact from Myth to Inform State Strategy, is based on our desire to ground conversations about how to help Michigan families with an understanding of the labor market they actually live in. We want to make sure those conversations aren’t based in an image of Michigan’s workforce and booming middle class that we might carry with us from an earlier decade.

Don Grimes of the University of Michigan performed the data analysis in this report, which uses Bureau of Labor Statistics data about the 4.3 million jobs in Michigan, the median wage of their occupations, and the education those occupations require.

It’s important to note that this report uses data from 2019, which most people considered to be a strong economy. Yet, it was an economy where almost two in five Michigan households couldn’t afford basic necessities. We try to explain the disconnect.

Our basic findings are:

1. The majority of jobs in Michigan are in low-wage occupations. This preponderance of low-wage work is a structural characteristic of today’s economy.
2. More than half of Michigan payroll jobs are in occupations that don’t require any education beyond a high school diploma. This part of the labor market largely overlaps with those low-wage occupations.
3. Almost 80 percent of jobs in the higher-wage occupations require a B.A. or more. There are no guarantees to a good income, but a B.A. is the surest way to be prosperous. 
4. The highest-wage category is dominated by professional and managerial work that requires a B.A., not by STEM jobs exclusively or by blue collar jobs.
5. And lastly, while there is still a segment of the job market that requires a non-B.A., post-secondary credential and also pays in the middle wages, it’s a smaller segment than the popular imagination holds.

To see the details behind the data and the analysis, click here for the full report.

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This, of course, is now not conventional wisdom. We are constantly bombarded by way too many business and political leaders telling us that kids (really other’s kids) are better off forgoing a four-year degree and rather should go into the skilled/professional trades. And at the community level, they tell us, Michigan has too many people with four-year degrees. Neither are accurate.

In this and my next post I want to look at updated data that shows how inaccurate both are today. That the four-year prosperity premium keeps growing.

In this post we will look at data on average hourly wages by education attainment from 2000-2016. The data comes from an analysis by the Economic Policy Institute of Current Population Survey Outgoing Rotation Group microdata.

As you can see in the chart below, annual hourly wages have risen faster for those with at least a four-year degree. The most for those with an advanced degree. The wage premium is growing. There simply is no evidence that getting a four-year degree is less important today to a good-paying job than it was at the turn of the century or since the onset of the Great Recession.

Also striking is the decline in average hourly wages for those with some college. The only cohort that saw a decline from 2000-2016. Some college includes those with an Associates degree, those with a post secondary credential from a higher education institution and those who attended college but have not earned a credential. The steepest growth in average hourly wages is between those with a four-year degree and those with some college.

Here are the average hourly wages by education attainment in 2000, 2007 (the last year before the Great Recession) and 2016:

• For those with an advanced degree average hourly wages, corrected for inflation, in 2016 are $41.01 up from $37.79 in 2000 and $38.47 in 2007
• For those with a bachelors degree average hourly wages, corrected for inflation, in 2016 are $31.93 up from $29.87 in 2000 and $30.57 in 2007
• For those with some college average hourly wages, corrected for inflation, in 2016 are $19.11 down from $19.44 in 2000 and $19.54 in 2007
• For those with a high school degree average hourly wages, corrected for inflation, in 2016 are $17.25 up from $17.11 in 2000 and down from $17.33 in 2007
• For those with less than a high school degree average hourly wages, corrected for inflation, in 2016 are $13.23 up from $12.72 in 2000 and $13.16 in 2007

To be clear, we are not saying that everyone needs a four-year degree. That is not accurate. Or that there are not good-paying jobs, and more importantly forty year careers, that don’t require a four-year degree. That clearly is not accurate either. What we are saying is the most reliable path to good-paying jobs and careers is with a four-year degree or more. And that no kid should be steered away, by any adult, from pursuing a four-year degree. Even better, all kids should have a chance to explore data like this and decide for themselves what path they want to follow when they graduate from high school.

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The chart below is more evidence of why both are needed. It depicts real median wages by education attainment in 2007 (the last year before the Great Recession) and 2013 for the US, Michigan and Minnesota. Two patterns are clear: (1) median wages at all levels of education attainment are falling. This is true for the country; a low education attainment, low per capita income state like Michigan; and a high education attainment, high per capita income state like Minnesota. And (2) those with higher education attainment have higher wages no matter what the geography or in years when median wages are higher or lower.

So college attainment does not protect employees from falling wages. A combination of globalization, technology and policy are driving wages lower for everyone. Rising real wages are the key to raising living standards. So we need a policy to make that a priority. But whether wages are falling or rising, those with a four year degree or more have higher median (and average) wages. They work more too. So increasing college attainment for all––not just children of the affluent––is an essential ingredient as well in raising living standards.

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