Education is an investment. While some are not able to make a financial investment in education, it is an investment that has proven to pay itself off. According to “The Demographics of Wealth,” the cycle of poverty can be broken with more education after high school. The study shows that someone with a high school diploma has a 1 in 18 chance of becoming a millionaire, which is a sizable chance provided they are striving to achieve that goal. However, the chances increase to 1 in 4.6 with a postsecondary education—a much larger probability.[1]
What if you are not trying to become a millionaire? What if you just want to get out of poverty? Well, education is directly linked to higher wages and better paying jobs. The US Census Bureau reports that the poverty rates for people over the age of 25 who had a bachelor’s degree was 5% while those who did not finish high school was at 29%. Higher education leads to a stable income, and with more income, you can make economic decisions that include but are not limited to investments that build wealth, completely breaking the cycle of poverty for you and future generations.
While higher education is an essential component in alleviating poverty, educating yourself about how your personal finances work and how your finances can grow is just as important as obtaining a college or professional degree. Education is wide-ranging, so it is essential to learn as much as you can about managing your income to save, invest, and generate wealth to escape poverty.
The Impact of Postsecondary Education on Income
In the United States, current generations are having trouble keeping up with the income of their predecessors. The chances of out-earning our parents is decreasing because higher education is not made accessible to everyone.
Educational achievement has an impact on income—the higher your education level, the higher your income. In 2009, statistics showed that “people with professional degrees earned 6x as much as people who did not graduate from high school.”[2] Additionally, unemployment rates are significantly higher for people who complete high school but do not go on to college. According to the US Census Bureau, the unemployment rate for high school graduates in 2011 was at 14.3% compared to 4.3% for those who completed college or more. While these statistics are certainly evidence of effects on the individual, they also prove effects on the American economy too.
When unemployment rates are high for any community, they are less likely to put their money back into the economy. They simply cannot afford to do it. Conversely, educated workers have more opportunities to circulate currency. In fact, workers who earned a postsecondary education experienced upward mobility in their careers and, in turn, their incomes. Educational and training requirements are rising in steady professions. Where the high school diploma used to be expected as a qualification, now the bachelor’s degree functions as its replacement. The number of jobs requiring a postsecondary degree is on the rise, and those jobs are guaranteed to pay more.
[1] Boshara, Ray; Emmons, William R. and Noeth, Bryan. “The Demographics of Wealth: How Age, Education, and Race Separate Thrivers from Strugglers in Today’s Economy.” May 2015
[2] Strauss, Steven. “The Connection Between Education, Income, Inequality, and Unemployment.” Huffington Post. Jan 2012.