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Census: Education Has Greater Effect on Earnings than Race, Gender

A worker's level of education has a greater effect on his or her earnings over the course of a 40-year career than any other demographic factor, including gender or race, according to a new study released this week by the U.S. Census Bureau.

Based on an analysis of 2006 to 2008 data from the nationally representative survey, Census researchers found that the difference in annual earnings between getting a professional degree, such as a master's or doctoral degree, and dropping out of high school was about $72,000, five times the $13,000 annual wage difference between genders. Those with higher levels of education were also more likely to be employed full time and year-round.

The study comes as policymakers revisit the importance of higher education at a time of rising tuition and sinking job prospects for new graduates.

Race and gender still played a strong role in lifetime earnings, however. White men had higher earnings than any other group at each education level below a master's degree, where they were out-earned only by Asian men. Moreover, workers of some racial groups got more value from higher degrees than others did. For example, while Asian, Hispanic and non-Hispanic black workers with just a high school diploma made roughly similar earnings over a 40-year career span, an Asian man with a master's degree could expect to earn nearly $3.5 million during his career, while, with the same academic credentials, a Hispanic man would earn $2.8 million, and a non-Hispanic black woman would earn only $2.3 million during the same time frame.

The Census researchers also compared the data to previous educational attainment data and found that the overall level of education in America has risen dramatically in the past. As of 2008, 85 percent of adults ages 25 and older had at least a high school diploma, up from 24.5 percent in 1940.

However, they found those who speak English as a second language had an annual decrease in earnings, after accounting for education and other issues. Those who spoke English "very well" still saw $989 less each year compared to workers who spoke only English.

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