How Education Effects Starting Salaries

There has always been an undisputable relation between educational attainment and pay scale.  The salary of a career person is based on many factors, but the one factor that is considered as the dividing gap is educational attainment.  The starting salary for a teacher will differ from the starting salaries for doctors: this is due to the amount of education involved in achieving such career goals.  In this economy, a bachelor’s degree is an extremely important prerequisite in getting a good starting salary.  This follows the unwritten rule that starting salaries increased based on education and experience.

Starting Salaries and Media Salaries of Degree Holders

A study by the U.S. Department of Education’s National Center for Education Statistics shows that between 1980 and 1985, people with at least a bachelor’s degree has a higher starting salary and median earnings compared to those with high school diplomas.  In the 2005 survey, male workers from 25-34 and with a high school diploma receives a median income of $29,600.  On the other hand, male workers with a college degree earn an average salary of $48,400.  Women with college degree earn an average salary of $39,000, compared to $23,000 for women without college degrees.  These numbers show almost a 110% difference in salaries between high school graduates and degree holders.  The same pattern holds true for all demographics including Whites, Blacks, Hispanics, and Asians.

The earning difference between those who have a bachelor’s degree and those with a high school diploma increased from the 1980’s until today.  The rate of increase in earning difference softened from 2000 to 2006.Nonetheless, we can say that a worker with a college degree can potentially earn $2.1 million more in the course of his life compared to a worker without a college degree.

The gap in starting salaries also differs between the two sets.  In most companies, educational attainment is already integrated as a factor in the pay scale of the employee.  The conventional wisdom is, the higher educational attainment reached equates to a higher level of experience.  That is why people with continuing education have a better chance of getting promoted.

Starting Salaries for Master’s Degree Holders

The earning gap is even larger for people with graduate degrees.  The most popular graduate course today is the Master’s of Business Administration, more popularly known as MBA.  An MBA degree holder is in a better position to receive higher starting salaries compared to a Master’s degree holder in other fields.  Today, the gaps of salaries between Master’s degree holders and bachelor’s degree holders have lessened, although it is still a large factor.  Many companies do not consider an employee for management positions if he does not have a Master’s degree, especially an MBA.  With Master’s degrees becoming a prerequisite for promotion, it is not unusual for graduates to extend their studies and earn a Master’s degree.

Choosing the Right Major and Career

Completing an undergraduate or a graduate degree is not the sole reason for getting quality starting salaries.  As we quickly learn, deciding on a major does not necessarily mean that you have chosen your career path, and in many cases, it is the career that decides your starting salary.  A high rate of graduates goes to jobs that are not directly related to their major. 

There are certain degrees that provide specific skill sets that one can use to command higher salaries.  For example, a degree in marketing and communications gives people specialized skills to handle public relations for a company.  A degree in journalism can also accomplish the same thing, but specialized degrees allow people to shortcut the process.  On the flip side people with specialized degrees may command higher salaries, but they are also unable to shift careers when their skills are not needed anymore.  That is why it is important for people to have continuing education to make themselves more valuable to companies in the long run.

There is also a large variance in starting salaries and pay scale if you get broad degree such as liberal arts degrees.  For example, a degree in economics can give you different career opportunities.  You can be a professor, a researcher, a high school teacher, or a consultant for small businesses and earn a modest salary, or you can work for a bank and pull in around $60,000 per year.  In these cases, your skill set will differentiate you from other candidates regardless of your college degree.

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Starting Salaries for Doctorate Degree Holders

The best example of a Doctorate degree that command high average starting salaries is Doctor in Medicine.  Generally, people with Doctorate degrees are paid much higher than those with Master’s degrees, but the range of variance is large enough such that someone with a bachelor’s degree in a profitable field can beat the starting salaries of those with a PhD.  The average starting salaries for medical doctors can be between $60,000 and $120,000 per annum.  Elite medical doctors or those belonging in the top ten percent in their field can command upwards of $600,000 per year. 

The best paying salary for someone with Doctorate degree holders are senior software engineers, developers, and programmers.  University professors with Doctorate degrees are automatically given a salary averaging $90,000 per year.  Researchers in cutting edge fields like biotechnology and engineering also provide large average starting salaries, especially if you have a Doctorate degree. 

The common denominator for people with a Doctorate degree is experience or length of service.  Rarely do you find a Doctorate degree holder who does not have prior experience in the industry that he or she is in.  If you are a Doctorate degree holder with only one year of experience, the median salary is around $60,000.  Meanwhile if you have at least 20 years of experience, you can get a median salary of $99,000 per year.

As we can see, there is a large gap in average starting salaries based on educational attainment.  Degrees that teach specific skill sets can get you a higher paying job, but it also limits your potential to shift careers during economic cycles.  The starting salaries for Doctorate degree holders are higher among for people who are medical doctors, although there are also Doctorate degree holders who move on to become highly-paid consultants, and researchers.  All in all, educational attainment goes hand in hand with work experience, know-how, and market supply, which are the three main reasons why people with higher educational attainment command higher starting salaries.