Postsecondary Degrees, Median Wages Related

The relationship between the percentage of state residents aged 25 and older with postsecondary degrees – associate, bachelor, graduate or professional degrees – and that state’s median wage is strong and positive, but it varies across the different regions of the United States.

Overall, Idaho’s standing in terms of wage and education is relatively poor, but that must be taken in the context of the country’s different regions.

Excluding the District of Columbia, Alaska and Hawaii, the highest postsecondary degree rate was in Massachusetts at 47 percent of people over age 24 in 2013. Massachusetts also has the highest median wage at $21.07. West Virginia had the lowest percentage of residents over age 24 with postsecondary degrees at just over a quarter and the third lowest median wage at $13.96. Mississippi had the 45th lowest postsecondary degree rate at just over 28 percent and the lowest median wage at $13.57.

In Idaho, under 35 percent of people over age 24, still one in every three, held postsecondary degrees to rank 33rd nationally, and the median wage at $14.67 ranked 42nd among the states excluding Alaska, Hawaii and the District of Columbia.

Education and Wages

This supposition is strengthened when looking at the percentage with postsecondary degrees and the state’s median hourly wage (see below). There is the strong relationship between the rate of people over age 25 with an associate or higher degree and the state’s median wage. Excluding Alaska and Hawaii, over 67 percent of the variation in a state’s median wage can be described by the percent of people over age 25 who hold postsecondary degrees. Including Alaska and Hawaii, the percent of variability in wage described by the percent of people holding postsecondary degrees drops to 62 percent. This is likely due to the proliferation of the fishing and oil industries, extractive industries that pay high wages independent of knowledge and skills gained in an academic setting, and to the high cost of living that puts upward pressure on wages.

SCATTER GRAPH

Next, economic regions as defined by the Bureau of Economic Analysis are broken out by color and symbol shape, illuminating significant regional differences in education and wage levels and the extent to which education level influences wages.

second scatter graph

States in the southern region have both low levels of education and low wages. Moving progressively up in both education and wages are the Southwest, Great Plains and Great Lakes states. At the top, northeastern states in the Mideast and New England regions tend to have both the highest education levels and the highest wages.

There are exceptions in each region. For example, Virginia follows the national trend of higher education rates and higher wages but is out of character for the southern region, likely due to its proximity to Washington, D.C., which eclipses all states in terms of both wages and education rates. The entire Midwest has slightly higher education rates for the expected wage rates, indicating that there are perhaps other factors influencing wages there than in other regions.

Finally, the West and Mountain West have the weakest relationship between education and wages. The Mountain West tends to have lower wages and education rates with Wyoming and Colorado the exceptions. The higher median wage for the education level in Wyoming is likely a result of oil and gas development. These are jobs that pay well and do not require a college education as in Alaska. Colorado’s low median wage for its education rate is likely a result of amenity migration, a phenomenon where people move to a place because of natural and/or cultural amenities and are willing to accept lower wages in exchange. In many of Colorado’s resort towns, people with master’s and bachelor’s degrees work as servers in restaurants so that they can recreate year round.

Compared with other western states, Idaho ranked 10th of 11 in percentage of population over age 25 with a postsecondary degree. Idaho ranked fifth of 11 for percentage over age 24 with associate degrees, eighth for bachelor’s degrees and 10th in graduate or professional degrees. Idaho has the lowest median wage of all western states

green bar graph

Increasing the number of people with a college education, while not the entire solution, may play a role in increasing the relatively low wages in Idaho’s economy. A recent report from Education Week ranked Idaho 46th in overall education. For college attendance and graduation rates, the report ranked Idaho 47th. Correlation does not necessarily equal causation, and there are certainly other factors at play. But given the fact that Idaho’s median wage ranked 45th, nearly parallel with its education rank, and given the strong correlation between postsecondary graduation rates and median wages, the importance of a strong education system – prekindergarten through college – is clear.

Comparing Degree Completion over Time

From 2006-2013, the percentage of the population over age 24 with an associate, bachelor’s or graduate or professional degree in Idaho has increased 3.5 percentage points. Nationally, the increase was roughly the same at 3.3 percentage points. Idaho experienced a dip during the recession that was not captured nationally. It is possible that this phenomenon had more to do with sample size than anything else.

25 plus postsecondary

Broken down by age groups, data show that in Idaho a key component of the workforce, millennials between age 18 and 34 who are finishing school and beginning careers, have increased their postsecondary degree completion rate by 4 percentage points over the past eight years, nearly a full percentage point higher than the national increase of 3.1 percentage points.

18-34

The percentage of those between ages 35 and 64 who hold a postsecondary degree has also increased. The national increase at 2.1 percentage points is on par with Idaho’s 2.3 percentage points.

35-64

Finally, the rate of those 65 and older with a postsecondary degree is much higher in Idaho than the nation. This could indicate an influx of educated retirees to the state or reflect a well-educated group of those in their late 50s and early 60s aging over time to fall into the 65 and over category. Given the unlikelihood that there was a particularly well-educated age population in their late 50s in 2006, it seems that retirement-aged migration into Idaho is made up of people with a higher than average level of education. Since people who are better educated tend to have more mobility, it is likely a better educated retiree group would choose to live in Idaho.

65 plus

Overall, the rate of people with degrees in Idaho is growing faster than the national trend.

degree rate and median wage table

Ethan.Mansfield@labor.idaho.gov, regional economist
(208) 332-3570 ext. 3455