NCPA - National Center for Policy Analysis


August 5, 2004

The data on the benefits of higher education in the United States are overwhelmingly convincing, says economist Jeff Madrick.

While the incomes of those with a high school degree have not grown on average since the 1970s, after adjusting for inflation, according to the 2000 census:

  • The median income of an American man with a college degree was about $52,200, 60 percent higher than the $31,600 for those with a high school degree.
  • The median annual income for men with graduate degrees was more than $66,300, more than twice the high school graduate's earnings.
  • The proportions are about the same for women.

Yet, the National Conference of State Legislatures reports that California is cutting its general fund appropriations for higher education by 8.9 percent, Texas by 5.4 percent and New York by 2.3 percent. In all, nearly half of states are making outright cuts, and, over all, state spending on higher education will fall by an average of 2.6 percent in fiscal 2004 after also falling in 2003.

Higher levels of education are critical to economic growth. A new study by two economists, Edward L. Glaeser of Harvard University and Albert Saiz of the University of Pennsylvania, published by the National Bureau of Economic Research, analyzed the statistical relationship between education levels and the economic growth of cities.

"Aside from climate, skill composition may be the most powerful predictor of growth," they write.

Source: Jeff Madrick (Challenge Magazine), "Why Higher Learning Gets the Ax," Economic Scene, New York Times, August 5, 2004.

For NBER study


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