Education and Earnings in the United States

	Education Index		Median Earnings		Education Expansion
Table 1
Education and Earnings in the United States
Population 25 years and over
	Male	Female	Male	Female	Male	Female
Alabama	88.3	91.2	42,319	28,713	4.79	3.15
Alaska	94.9	101.9	53,670	37,676	5.66	3.70
Arizona	95.9	96.1	41,672	32,074	4.35	3.34
Arkansas	84.4	88.7	39,073	28,275	4.63	3.19
California	99.0	99.0	46,876	35,165	4.73	3.55
Colorado	108.9	110.9	50,168	35,991	4.61	3.25
Connecticut	108.2	111.0	57,550	40,967	5.32	3.69
Delaware	97.5	101.3	47,265	36,561	4.85	3.61
District of Columbia	140.8	139.7	67,715	57,420	4.81	4.11
Florida	95.3	95.2	38,295	30,343	4.02	3.19
Georgia	94.6	99.2	42,672	31,575	4.51	3.18
Hawaii	98.8	101.1	47,105	36,075	4.77	3.57
Idaho	94.2	93.1	41,228	26,111	4.38	2.80
Illinois	100.8	103.4	50,453	34,384	5.00	3.32
Indiana	90.1	92.4	45,081	30,435	5.01	3.30
Iowa	93.2	96.3	46,515	31,681	4.99	3.29
Kansas	99.9	102.7	45,971	31,291	4.60	3.05
Kentucky	86.1	91.7	41,359	29,924	4.80	3.26
Louisiana	83.5	89.2	45,873	28,501	5.49	3.20
Maine	95.6	101.2	41,970	31,135	4.39	3.08
Maryland	110.5	112.7	56,463	43,343	5.11	3.85
Massachusetts	113.4	116.1	58,161	41,848	5.13	3.60
Michigan	96.3	97.6	46,091	30,692	4.79	3.14
Minnesota	102.7	105.7	50,990	36,978	4.97	3.50
Mississippi	82.2	89.7	39,614	27,413	4.82	3.06
Missouri	93.9	97.3	42,781	31,119	4.56	3.20
Montana	97.5	100.3	40,658	28,019	4.17	2.79
Nebraska	97.2	100.2	45,537	31,679	4.69	3.16
Nevada	89.1	89.8	41,005	32,038	4.60	3.57
New Hampshire	104.4	107.9	53,329	36,849	5.11	3.41
New Jersey	107.2	106.4	57,669	40,714	5.38	3.83
New Mexico	92.7	96.5	38,540	27,931	4.16	2.89
New York	102.3	106.3	50,215	38,395	4.91	3.61
North Carolina	94.5	99.1	41,254	31,099	4.37	3.14
North Dakota	92.6	98.6	51,471	33,867	5.56	3.44
Ohio	93.4	95.2	45,676	31,487	4.89	3.31
Oklahoma	88.5	91.2	42,159	29,240	4.76	3.20
Oregon	101.2	103.3	43,015	31,234	4.25	3.02
Pennsylvania	96.4	98.2	48,288	33,256	5.01	3.39
Puerto Rico	77.2	87.9	18,528	18,971	2.40	2.16
Rhode Island	99.9	101.8	50,491	36,896	5.06	3.63
South Carolina	90.8	94.8	40,956	29,606	4.51	3.12
South Dakota	92.4	96.2	42,417	30,494	4.59	3.17
Tennessee	90.1	92.9	41,063	30,258	4.56	3.26
Texas	92.8	93.5	45,026	31,418	4.85	3.36
Utah	106.0	98.2	50,596	28,163	4.77	2.87
Vermont	102.9	111.5	43,620	33,431	4.24	3.00
Virginia	108.7	108.7	52,760	36,939	4.85	3.40
Washington	105.0	105.0	53,287	35,699	5.07	3.40
West Virginia	81.6	85.4	41,371	27,136	5.07	3.18
Wisconsin	94.6	98.5	47,114	32,840	4.98	3.33
Wyoming	93.9	97.2	50,374	30,146	5.37	3.10
United States	97.6	99.4	46,354	32,654	4.75	3.29
Source: U.S. Census Bureau, 2014-2018 American Community Survey 5-Year Estimates and Economic no nonsense calculations.

February 6, 2020

Labor and capital should be remunerated according to their productivity. In general a more expensive capital good is able to produce a higher level or quality of output. Likewise, a more educated individual or labor force should contribute to production in the same way. When an education index was computed for a sample of countries and contrasted with per capita income a clear positive relationship with higher levels of education emerged.

The education level indicator gives a larger weight to higher levels of education. This level of formal education refers to the average education endowment of the population in terms of quantity rather than quality. To construct the scale a larger relative value is given to higher levels of formal education. To conduct the estimates 45 points are assigned to graduate degrees, 25 to bachelor's, 25 to associate's plus high school and 5 to less than high school.

The rewards to education should be symmetrical for the entire population given the assumption of more productivity with more education. The education level was again calculated for females and males for the population 25 years and over in the United States using the U.S. Census Bureau (www.census.gov) data of the American Community Survey for 2018 released on December 19 of 2019.

For females there is a positive correlation coefficient between the level of education and median earnings in 2018 of 1. Thus, in states where females have a higher level of education they have proportionally an equally higher percentage of earnings. The notion that education increases productivity and income seems plausible. In the case of the male population there is also the same positive correlation of 1, reaffirming the previous idea.

Given this relationship, the expectation was that if males had a superior level of education than females then their earnings would also be higher. For the entire country females have an education level of 99.4 while males have one of 97.6.

However, a negative correlation is present here since median earnings for males over 25 years old are 42% greater than for females despite having lower formal education. The reason for the awkward result requires further study in the future. The problem is complex since a complete analysis would require the determination of not only the quantity but also the quality of the education acquired. Nonetheless, because of the way in which the education level indicator is constructed, giving a much bigger weight to graduate degrees this problem tends to be reduced. Indeed, education at higher levels tends to be more alike. Although, the problem of non-homogenous quality may be reduced, someone may still argue that the educational fields chosen by males and females are not comparable.

An indicator denominated Education Expansion was calculated. It illustrates how many times earnings are multiplied with respect to the level of education providing an easy visualization of the problem. The indicator can be thought of as how education propels earnings or income. For females the relationship is 3.3 while for males is 4.6 implying that if education on average was rewarded equally their earnings would be $47,213 instead of $32,654. Again this refers only to the quantity of education, other things being equal.

The Education Expansion is lower for females by 31% for the country. The states with the largest difference are Louisiana and Wyoming where females have a lower education empowerment of 42%. The District of Columbia has the smallest difference, 15%.