PBS investment advisor and author Jonathan Pond says one of your best investments is in your career, and what he is really recommending is education. Education level is one of the major factors determining lifetime earnings because it impacts the available career options, job levels and salary, and even employment vs. unemployment.

Educational levels have been increasing throughout the 20th and into the 21st century. In 1940, only 25% of Amercans over 25 had a high school education or more, and only 5% had completed 4 or more years of college. By 2000, over 80% of Americans over 25 had completed high school (or more) and over 20% had completed 4 or more years of college. So, having a "higher education" (some college or better) has become less of a competitive advantage than it was in the past.

A high school diploma is now a minimum requirement for many jobs, as reflected in the data below. Clearly, the more education, the better the salary, and the smaller the likelihood of unemployment.

Education Impacts Employment and Income

A study by the US Census Bureau in 1999 shows the correlation between level of eduction and employment (vs. unemployment) and annual income. Professional degrees (medical doctors and lawyers, for example, both of which are technically doctorate degrees) have the highest payoffs in terms of both employment and income.

Full Time Employment       Education                    Annual Income

  83.6% w/full-time jobs       Professional degree               $109,600
  80.9% w/full-time jobs       Doctoral degree                      $89,400
  76.1% w/full-time jobs       Master's degree                      $62,300
  76.7% w/full-time jobs       Bachelor's degree                   $52,200
  74.9% w/full-time jobs       Associate's degree                  $38,200
  73.9% w/full-time jobs       Some college                          $36,800
  73.1% w/full-time jobs       High school graduate               $30,400
  65.3% w/full-time jobs       Not high school graduate:         $23,400

Education and Earnings Over a Lifetime
Multiplying this data over an average working life of 40 years, shows very impressive differences in lifetime earnings.

  Professional degree -        $4,384,000 in lifetime earnings
  Doctoral degree -             $3,576,000 in lifetime earnings
  Master's degree -             $2,492,000 in lifetime earnings
  Bachelor's degree -          $2,088,000 in lifetime earnings
  Associate's degree -         $1,528,000 in lifetime earnings
  Some college -                  $1,472,000 in lifetime earnings
  High school graduate -      $1,216,000 in lifetime earnings
  Not high school graduate - $936,000 in lifetime earnings

The average person with a Master's degree earns twice as much over a lifetime as the average person with a high school diploma ($2,492,000 vs. $1,216,000). Assuming that education costs $25,000/year and a Master's degree takes 2 years to earn, that additional $1,277,000 in income cost $150,000. No surprise - Jonathan is right - that's a VERY good investment!

Bottom Line

These are not hard and fast rules about what will absolutely happen. This is just data with my analysis. It should be correct, on average. You could be, or know, many people who are exceptions. Education is only one (very important!) predictor of employability and income earning ability.