Economy: Money on the Table
Postsecondary education pays off, both for the individual and for the state.
Postsecondary education pays off. That’s true for Georgians who earn college degrees as well as for Georgia’s economy as a whole. And it’s true during good economic times and bad ones.
Despite COVID-19, the payoff is likely to increase in the decades to come. The strong link between educational attainment and individuals’ lifetime earnings transcends the business cycle as well as many demographics and personal and geographic characteristics.
In addition to the benefits accruing to degree holders, there are less well-known but equally important benefits that a higher level of postsecondary educational attainment conveys to Georgia’s overall economy. For example, stepping up from a high school diploma to a bachelor’s degree not only increases a person’s lifetime earnings, it simultaneously increases Georgia’s potential gross domestic product (GDP), the monetary value of all finished goods and services made within the state.
Recognizing the benefits of postsecondary education is important because it may help motivate individuals to obtain more college degrees and policymakers to provide more support for higher education. The bottom line is that greater recognition of the benefits of college degrees should help ensure that Georgia does not leave a significant amount of potential GDP on the table by failing to reach postsecondary educational attainment benchmarks.
For Georgians, earnings over a working lifetime increase dramatically with education level. Based on data for 2018, the work-life earnings of Georgians with an associate degree will be $1.8 million, $415,570 more than the work-life earnings of individuals with only a high school diploma. The work-life earnings of those with a bachelor’s degree will be $2.6 million, $1.2 million more than for those with only a high school diploma and more than the estimate for the U.S. as a whole.
The larger premium for Georgians with bachelor’s degrees suggests that it’s difficult for employers to find enough sufficiently trained workers to fill open positions. Indeed, high school graduates who obtain a bachelor’s degree will boost their work-life earnings in Georgia by 87%, which exceeds the 79% increase estimated for the nation as a whole.
The estimated payoff in terms of work-life earnings for Georgians who go to graduate school is positive, but smaller than estimated for the U.S. For example, work-life earnings for Georgians with a master’s degree will be $2.8 million – a boost of only $211,305, or 8% more than for those with a bachelor’s degree. The boost pales in comparison to the $443,170 (16%) increase in work-life earnings estimated for the U.S. as a whole.
In Georgia, the work-life earnings for individuals with a professional degree, such as law or medical degrees, will be $3.6 million. That’s $1 million or 39% more than for those with a bachelor’s degree. For the nation as a whole, the payoff is nearly twice as large, $1.9 million. In Georgia, the increase in work-life earnings for those who earn a Ph.D. compared to a master’s degree is $643,385; for the U.S., the estimated payoff is $754,955.
Not only do degree holders benefit financially from their postsecondary degrees, but Georgia’s overall economy and people in the state without college degrees also benefit when more people attain higher levels of postsecondary education. The estimates show that for every 1% increase in the proportion of Georgians aged 25 to 64 with a bachelor’s degree or higher, the state’s GDP will rise by about 0.5%. That’s potentially a huge impact for Georgia and its people.
Increasing postsecondary education attainment to various benchmarks could boost Georgia’s GDP substantially. In 2018, 33.4% of Georgia’s population aged 25 to 64 held a bachelor’s degree or more. The additional potential state GDP from raising the proportion of the population with a bachelor’s degree or more to 40% would be $18 billion, or 3% higher than Georgia’s actual GDP.
Similarly, increasing the proportion of the population to 50% would increase Georgia’s potential GDP by $46 billion, or 8% higher than Georgia’s actual GDP. The gain in potential GDP from raising the proportion of the population with a bachelor’s degree or more to 60% would be $73 billion, 12% higher than actual GDP.
Although Georgia is closely tracking the nation’s level of postsecondary educational attainment, we stand to gain a lot from substantially increasing postsecondary educational attainment. Doing so would make the state even more competitive when it comes to landing economic development projects, increasing our productivity and raising our standard of living. Degree holders will see higher lifetime earnings, employers will employ a more productive workforce, profits will increase and tax revenues will rise.
Postsecondary educational attainment is a panacea that brings prosperity. Let’s not miss out and leave potential GDP on the table.