WRITER: JESSICA DOWNS
CONTACT: GEORGE MCCRORY
100 Old Public Library
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: Nov. 1, 1999
Math, verbal skills, combined with college education,
lead to high income
IOWA CITY, Iowa A recent study by two University
of Iowa economics researchers shows that college-educated workers with mathematical
and verbal skills have the potential to earn the biggest paychecks.
The study, based on the skill levels of workers and
their incomes from 1971 to 1998, found that education level is not the only
predictor of income level; skill level also is an important factor determining
a workers future income.
"For generations, conventional wisdom has held
college degree has been the ticket to the world of highly skilled and highly
paid employment. But its becoming apparent in todays high-tech
workplace that a college degree is no guarantee of a high-wage job. You need
the skills to analyze technical information and be able to communicate your
findings as well," said Beth Ingram, associate professor of economics
at the UI Henry B. Tippie College of Business.
UI economics professor George Neumann, who co-authored
the study, said college-educated workers have enjoyed great wage gains over
the past 25 years, and policy makers have argued that access to higher education
is the solution to stagnant wage growth for unskilled workers.
In order to determine if this was in fact true, Ingram
and Neumann focused on skill levels in four different worker groups: high
school graduates working in technical jobs; high school graduates working
in non-technical jobs; college graduates working in technical jobs; and college
graduates working in non-technical jobs. Using demographic information from
the Census Population Survey and job characteristic information from the Dictionary
of Occupational Titles, they attached to each the appropriate skill level
required for each type of job.
Technical jobs are defined as those requiring math
and fine-motor skills, including doctors, engineers and teachers. Non-technical
jobs are defined as those requiring manual labor, including factory work.
The study showed that of the four groups, the group
that has fared the worst in earning wage increases over time has been college
graduates working in non-technical jobs. This finding contradicts what some
academics and policy makers have believed: that education alone is enough
to boost earning power. Most estimates cite an employees return on their
education investment to be 13 percent per year, but Ingram and Neumann find
the return to be 6 percent after adjusting for the return to skill levels.
According to the study, the two most important skills
for a worker to possess are verbal and math skills, both of which are associated
with a formal education. Workers with fine motor skills, (including clerical
ability) also had some income gains, along with those who are in physically
demanding or hazardous jobs.
Since 1971, real wages (adjusted for inflation) for
college-educated skilled workers have gone up 40 percent, Ingram said. But
incomes of college-educated workers without job skills stagnated, performing
no better than those without education and job skills.
Neumann said he and Ingram will continue their research
focusing on this group of educated but unskilled workers, but also examine
how workers are learning skills without a college education, possibly through
company training programs or in a vocational college setting. They will also
study how vocational training programs outside the United States teach skills.