The Connection Between Educational Attainment and Earnings, Amplified by the Four-Year College Degree

In Educational Attainment by Dan Hurley

In her State of the State Address, Governor Gretchen Whitmer announced an ambitious and much-needed goal for Michigan to increase its postsecondary education attainment level to 60 percent by 2030, as measured by the proportion of Michiganders with a college degree or high-quality certificate. It’s good that the Governor recognizes the link between state income and education levels. It’s even better that the state’s CEO seeks to capitalize on the connection between earnings and education even further.

Across the states, the relationship between educational attainment levels and per-capita income is absolutely clear: the more a state population collectively learns, the more it earns.

The chart below shows that all of the top 10 states in per-capita earnings (excluding the two oil-pumping states of Alaska and Wyoming) are among the top 15 states in educational attainment (bachelor’s degree or higher).

Also listed on the chart are the standings of Michigan and its Midwest counterpart Minnesota. Here again, the education-income relationship is overwhelmingly evident. Michigan ranks 31st in both bachelor’s degree attainment and per-capita income. Minnesota comes in at 9th in attainment and 13th in income. It cannot be ignored that Minnesota’s standing is not by accident: it ranks 18th in higher education state investment per-capita, compared to Michigan, at 44th. You get what you pay for. When it comes to higher education, the returns on states’ investment in higher education are clear.

State

2017 Ranking: Per-Capita Income

2017 Ranking: Bachelor’s Degree Attainment or more (age 25+)

2017 Ranking: Associate’s Degree Attainment (age 25+)

Connecticut

1

5

32

Massachusetts

2

1

43

New York

3

10

23

New Jersey

4

3

49

Maryland

5

4

48

California

6

15

40

New Hampshire

7

8

10

Washington

8

11

11

Wyoming

9

34

21

Alaska

10

38

7

Virginia

11

6

38

Colorado

12

2

31

Minnesota

13

9

3

Michigan

30

31

17

The Additional Value Proposition of the Four-Year Degree 

What the table above also shows is the enormous additional value that bachelor’s degree attainment yields beyond that which is generated by associate degrees. Among the top ten states in per-capita earnings (among non-oil producing states), seven have associate degree attainment levels that rank in the 30s or 40s, showing little alignment between the production of two-year degrees and personal earnings.

By no means is this an argument against earning an associate degree. It’s quite the opposite. Our state, our communities, our economy needs more individuals with all types of postsecondary degrees and credentials. But the data show that the biggest growth in prosperity comes when more individuals continue their education beyond a two-year degree. Michigan’s community colleges and its public universities are collaborating extensively to maximize the efficiency with which students can transfer among and between institutions throughout the state.

But while our state has smartly increased investment in its community colleges over the last decade by 36.4 percent, it has moved in the other direction as it involves its public four-year universities—cutting support by 1.9 percent.

There is a reason why 41 other states have set educational attainment goals. Governor Whitmer is to be commended for setting a bar and setting it high. Michigan has a lot of catching up to do to boost its educational attainment levels—and its future economic prospects. Setting a statewide educational goal and proposing state scholarship programs to make it happen are good steps in the right direction.

Sources: Per-capita income data—U.S. Bureau of Economic Analysis; educational attainment data—American Community Survey. State per-capita support for higher education—State Higher Education Executive Officers. Michigan higher education state funding—Michigan Senate Fiscal Agency. 

Daniel J. Hurley is the Chief Executive Officer at the Michigan Association of State Universities

@Daniel_J_Hurley     @MASUmichigan