Proof a College Degree Won’t Help You Get a Raise

"I think I'm due for a raise. I have a college degree..." Photo: bpsusf

There's little doubt that obtaining a four-year college diploma is a real necessity in today's job market, despite the rising cost of higher education. Sadly, once college graduates join the ranks of the gainfully employed, their salaries tend to stagnate – just like everyone else's.

Salaries haven't risen in over 10 years
As many states and the federal government consider raising the minimum wage, it's notable those workers earning the least aren't the only ones that haven't had a raise in several years. Even college graduates have found their salaries have flatlined over the past decade or so.

A study published last August by authors Lawrence Mishel and Heidi Shierholz of the Economic Policy Institute shows just how little salaries have budged since the years 1979, 2000, and 2007. While pay for persons with a bachelor's degree increased by 2.4% from 2000 to 2007, wages actually decreased by 1.3% between 2007 and 2012. From 2000 to 2012, college graduates saw their pay increase by a measly 1%.

Workers with less than a four-year college fared much worse, though the differences between high-school graduates and those with "some" college are surprising: the former group saw pay dip by 1.6% between the years 2000 and 2012, but the latter endured wage disintegration of 5.1% during the same time period.

Productivity and corporate profits rise
At the same time as workers' pay levels have flattened, their productivity has increased. The EPI study notes, during the aforementioned 12-year period, productivity grew by 25%. While college-educated workers' pay was falling during the 2007 to 2012 time period, productivity grew by 7.7%.

So, why haven't workers been rewarded? If you think employers can't afford to give out raises, think again. In manufacturing, for instance, net profits have more than tripled since 2009, while the pay for workers in the sector has actually fallen by 3%.

Manufacturing isn't alone. As this chart from the Federal Reserve Bank of St. Louis shows, U.S. corporate profits have been growing steadily since about 2000 or so, except for the Great Recession:

Unfortunately, this trend shows no signs of abating, and workers themselves have few options in the still-tenuous economic climate. Currently, the only remedy is for college students to pursue graduate degrees – the one group, according to EPI, that has seen wage appreciation in the years 2000 to 2012 of 5.4%.

Hopefully, an increase in the minimum wage will prompt a boosting of all salaries to some extent, in a sort of trickle-up scenario. Otherwise, wage stagnation looks like it is here to stay.

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Amanda Alix

Foolish financial writer since early 2012, striving to demystify the intriguing field of finance -- which, contrary to popular opinion, is truly what makes the world go 'round.

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