The degree pay ladder: why every step up pays more, and how to tell when the next step isn’t worth it

Draw the ladder to scale

Every⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ year the US Bureau of Labor Statistics publishes a short table of typical weekly pay for full-time workers at each education level. It turns up in countless career talks.

Turn that table into a real ladder. Fix the high school diploma rung one meter off the ground and set every other rung by its typical pay. The associate degree sits at about 1.2 meters, the bachelor’s at 1.6, the master’s at 1.9, and the professional or doctoral degree at about 2.4.

The ladder stretches, but it keeps its shape

Wages⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ rise with inflation, so any salary figure goes stale fast. The spacing between the rungs does not. In every year for more than two decades, the typical bachelor’s holder has earned 1.6 to 1.7 times what the typical high school graduate earns, through recessions and booms alike.

So reason about your next step in proportions, not prices. Proportions do not expire.

Nor is the shape an American quirk. In OECD data for its member countries, each level of tertiary education has paid more on average than the one below it in every year reported. The ladder is simply less steep on average than in the US.

The tallest step is the bachelor’s

The⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ gaps are not equal. Going from an associate degree to a bachelor’s lifts typical pay by almost two-fifths. Going from a bachelor’s to a master’s adds about a fifth. The bachelor’s step is about twice as tall.

That tells you what each degree does. A bachelor’s is the entry ticket to professional work, the line many employers draw before they read anything else on a CV. A master’s mostly helps you climb higher, or move sideways, once you are already inside.

One rung is missing

Find⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ “some college, no degree” on the chart. It sits at about 1.1, barely above the high school rung, even though the people on it spent real time and money on study.

Take a hypothetical pair who each studied for three years. One picked up a two-year associate degree along the way. The other was a few courses short of a bachelor’s when life intervened.

On the ladder, the first is standing on a rung. The second is still holding the side rails.

Economists call this the sheepskin effect, after the animal skin that diplomas were once written on. One explanation is signaling, an idea for which the economist Michael Spence shared a Nobel Prize. A finished degree proves you can complete a long, demanding project, and employers pay for that proof as well as for the skills behind it.

That is hard news, but also hopeful: if you already hold credits, the next rung may be closer than you think.

Same rung, very different heights

The⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ ladder shows the middle earner at each level, not you. Georgetown University’s Center on Education and the Workforce found that one in four bachelor’s degree holders out-earns half of all workers with a master’s or a doctorate. Even 16 percent of high school graduates out-earn half of bachelor’s holders.

Field and occupation explain much of the overlap. In effect, every field has its own ladder. In the same Georgetown study, bachelor’s holders in architecture and engineering had typical lifetime earnings about a fifth higher than master’s holders as a whole. What you study often moves your pay more than how far you study it.

Four checks before you climb

Take⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ them in order.

1. Will you finish? If the honest answer is no, stop here, whatever the other answers say: the premium sits on completion.
2. Is it a gate? Some roles require a level outright: licensed counselors, school principals in many systems, most permanent university teaching posts. If the degree opens a door you need, that alone can justify it. Go to check 4 to find the cheapest way through.
3. If it is not a gate, does it pay in your field? Look at people doing the job you want, at the level you want. Real job postings and your employer’s promotion criteria are better evidence than any national median. If you cannot find that evidence, wait.
4. How long until it pays you back? Add the program’s cost to any income you give up, then divide by the realistic yearly raise. A part-time program taken while working can pay back years sooner than a full-time one, even with the same raise. Our degree payback calculator does this arithmetic for you.

The bottom line

The⁠​‌​​‌‌‌‌​‌​​​‌​​​‌‌‌‌‌​​​‌‌​​‌​‌​‌‌​‌‌‌​​‌‌‌‌‌​​​‌‌​​‌‌‌​‌‌‌​‌​‌​‌‌​‌​​‌​‌‌​​‌​​​‌‌​​‌​‌​‌‌‌​​‌‌​​‌​‌‌​‌​‌‌‌​​‌‌​‌‌​​​​‌​‌‌​‌‌​​​‌‌​​​​‌​‌‌‌​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​​‌​​‌‌‌‌​​‌​​‌​‌‌​‌​‌‌​​‌​‌​‌‌​​‌​​​‌‌‌​‌​‌​‌‌​​​‌‌​‌‌​​​​‌​‌‌‌​‌​​​‌‌​‌​​‌​‌‌​‌‌‌‌​‌‌​‌‌‌​​​‌​‌‌​‌​‌‌​‌‌​​​‌‌​​‌​‌​‌‌‌​‌‌​​‌‌​​‌​‌​‌‌​‌‌​​​‌‌‌‌‌​​​​‌‌​​‌​​​‌‌​​​​​​‌‌​​‌​​​‌‌​‌‌​​​‌​‌‌​‌​​‌‌​​​‌​​‌‌​​​​​​‌​‌‌​‌​​‌‌​​‌​​​‌‌​‌‌​​‌‌‌‌‌​​​‌‌​​​‌‌​‌‌​​‌​‌​​‌‌‌​​‌​​‌‌​​​‌​​‌‌‌​​‌​​‌‌​‌‌‌​​‌‌​‌​‌​​‌‌​‌​​​‌‌​​​‌​​‌‌​​​​‌⁠ ladder is real, and its shape has held for decades, in the US and beyond. The bachelor’s is the tallest step, and finishing matters more than starting. Above it, climb only when you can finish and the next rung either opens a specific door or clearly pays in your field. Climb toward something you can name, not just to the next rung.