The Economics of Education

By Elizabeth Klemick — May 12, 2010 2 min read

A recently released analysis from the EPE Research Center for Diplomas Count 2007: Ready for What? Preparing Students for College, Careers, and Life After High School provides new evidence regarding the economic value of education in the workplace. The original research explores the relationship between education and pay using two large-scale databases—the Occupational Information Network, or O*NET, provided by the Bureau of Labor Statistics, and the American Community Survey (ACS), conducted by the U.S. Census Bureau.

The O*NET database classifies over 800 civilian occupations into a series of five “job zones” along three dimensions—education, experience, and training. Job Zone 1 is the lowest level and includes occupations that require little or no preparation, while jobs in Zone 5 require the most extensive preparation. ACS provides a range of demographic, economic, and geographical information using a sample size of about 3 million people. Combining those two sources allowed the center to investigate the educational attainment and income levels within each job zone at the national and state levels, and to map the availability of high-quality jobs in more than 2,000 localities across the country .

The EPE Research Center analysis found that education levels rise steadily with job zones. Seventy percent of workers in Job Zone 1 have a high school diploma or less, while 77 percent of those employed in Job Zone 5 have at least a bachelor’s degree. And, not surprisingly, higher job zones translate into higher income levels.

Jobs in the middle zone, Zone 3, typically require some postsecondary education, although not necessarily a bachelor’s degree, one to two years of on-the-job training, and previous work experience. Examples of occupations falling into this zone include an electrician, legal secretary, or preschool teacher. While these jobs do not fall into the highest-paying tier, they typically offer competitive pay and are predicted to demonstrate strong growth in the future. The median annual income for Job Zone 3 was just over $35,000.

The most common educational background for workers in this zone was some college or postsecondary work. Thirty-seven percent of the workforce in Job Zone 3 had completed some college. Just over a quarter of the Job Zone 3 workforce had a bachelor’s degree while a similar proportion was composed of high school completers. Only 9 percent of workers in this zone had less than a high school degree.

The EPE Research Center findings suggest that a high school diploma, without further postsecondary education, does not lead to jobs that provide individuals and families with economic stability in the 21st century. In the words of Anthony P. Carnevale, an economist and research professor at Georgetown University, “in the new knowledge economy, learning and earning are cumulative.”

Educational Attainment of Zone 3 Workforce

Source: EPE Research Center, 2007


Annual Income of Zone 3 Workforce

Source: EPE Research Center, 2007