College Degree? Machines Can Still Replace You
Going to college pays off in many ways; but going to graduate school pays off even more. Advanced degree holders reap bigger financial rewards than peers with four-year degrees—a trend that has become more pronounced over the past 15 years.
Since 2000, workers with graduate degrees have seen their wage advantage over those with high school degrees increase 17 percent, while workers with four-year degrees gained just 6 percent over the same period, according to the Federal Reserve Bank of San Francisco, which published a report (pdf) on the topic this week.
Why are workers with graduate degrees—more than their bachelor's-toting counterparts—seeing a bigger bump? Rob Valletta, vice president of research communications in the Federal Reserve Bank of San Francisco, says it could have something to do with what economists call the polarization hypothesis.
The gist: Workers who have routine, task-driven jobs tend to be replaced by technology over time. While we typically associate assembly line gigs with low-skill workers, the types of jobs done by people with bachelor’s degrees can increasingly be outsourced to machines. (Think data entry or bookkeeping.) Those at the bottom and top of the educational totem pole tend to hold jobs that are harder to replace. Many workers with high school degrees do jobs that, for the most part, only a person can do -- manning a security desk, preparing food, or driving trucks. At the other end of the scale, graduate degree holders may be grabbing a greater share of high skill, high-paying jobs like engineering, law, and management—what economists call "nonroutine cognitive jobs"—that happen to be in growing demand, Valletta says.
That’s not to say a bachelor’s degree is worthless. “For the majority of people who get a four-year degree, college seems to be a very good financial investment,” Valletta says. In 2013, workers with four-year degrees took home wages that were nearly 80 percent higher than those of workers who finished only high school. That number looks good on its own. It looks even better when you consider that in 1979, four-year degrees had only a 35 percent wage advantage over high school degrees.
What's clear is that stacking up degrees offers an increasing payoff. While "there's still a pretty good return to holding a college degree," Valletta says, "increasingly, getting a graduate degree on top of that is looking more and more financially attractive as well." If the trend continues to strengthen, who knows? A couple decades down the line, a bachelor's degree might not be enough.