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Data show more education equates to higher wages
Michigan’s and metro Grand Rapids’ biggest economic challenge is not enough good-paying jobs. It is the prime cause of the Michigan Association of United Ways’ finding that across the state, around 40 percent of Michigan households, even in a strong economy, cannot pay for basic necessities. A preponderance of those households has at least one working adult.
The association found 60 percent of Michigan jobs pay less than $20 an hour. The median wage in Michigan is $17.62. In metro Grand Rapids, it is $16.84.
The recently released 2017 American Community Survey (ACS) provides data on median earnings from work of those 25 and older. Earnings included in the data are wages and salaries from a job, plus net self-employment income. Employer-paid benefits are not included.
The data make it clear, once again, the typical worker earns more from work as education attainment increases. For a worker, the most reliable path to a good-paying job is increased education attainment, particularly a four-year degree or more. The ACS provides up-to-date data on the reality that workers with a four-year degree or more earn the most, despite way too many business and political leaders telling us the opposite.
Without exception, the pattern is the higher the education attainment, the higher the earnings from work. This is true for the nation, the state of Michigan and the Grand Rapids region.
In metro Grand Rapids, the median earning from work is $38,116. The median for those with a high school degree is $31,102, which is about $9,000 more per year than those with less than a high school degree. The wage premium for having some college or an associate degree compared to just a high school degree is about $4,000.
The biggest premiums, by far, are from earning a bachelor’s degree compared to some college or associate degree, and for earning a graduate or professional degree compared to a bachelor’s degree. The metro Grand Rapids median is more than $14,000 higher for those with a bachelor’s degree compared to some college or associate degree, and the median is about $13,000 higher for those with a graduate or professional degree compared to a bachelor’s degree. The median earnings from work are 1.8 times higher with a graduate or professional degree ($62,334) compared to those with some college or associate degree ($35,264).
The data also provide more evidence Michigan and metro Grand Rapids are lagging the nation, even in a strong economy with a low unemployment rate and a strong domestic auto industry. Nationally, the median worker 25 and older earns $40,069 compared to $38,116 in Michigan and $38,258 in the Grand Rapids metropolitan area.
The gap between Minnesota and Michigan — the Great Lakes’ most prosperous state — is even larger: $43,424 compared to $38,116. The same holds true between metro Minneapolis — the Great Lakes’ most prosperous region — and Grand Rapids: $47,507 compared to $38,258.
The main reason is that more Minnesotans have a four-year degree or more, which is where high-earnings jobs are concentrated: 36 percent of Minnesotans 25 and older have a bachelor’s degree or more compared to 29.1 percent of Michiganders and 32 percent of all Americans; 41.1 percent of those 25 and older in metro Minneapolis have a bachelor’s degree or more compared to 33.7 percent in metro Grand Rapids.
The data also show that at every education attainment level, Minnesotans have higher median earnings from work. Minnesota is a state with wages above the national average; Michigan is below.
The same is true for metro Grand Rapids compared to metro Minneapolis. The difference between the two metros is small until you get to those with a four-year degree or more, where it grows to more than $11,000 for those with a bachelor’s degree and to more than $13,000 for those with a graduate or professional degree.
This same pattern holds true for metro Grand Rapids compared to the nation. Median earnings from work are near the national average at every education attainment level until you get to those with a four-year degree or more. Then the gap becomes substantial, with metro Grand Rapids having medians nearly $3,000 lower than the national average for those with a bachelor’s degree and nearly $9,000 lower for those with a graduate or professional degree.
Lou Glazer is president of Michigan Future Inc.