Income Inequality

Earnings by Level of Education

The value of a college degree is evident in the earnings disparity between those with education beyond high school and those with high school diplomas or less. Nationally, the weekly earnings of individuals with bachelor’s degrees was approximately 65 percent higher than those with high school diplomas and 125 percent higher than those with less than a high school diploma. In Iowa, individuals with bachelor’s degrees earned approximately 60 percent more than individuals with only high school diplomas and 106 percent more than those with less than high school diplomas.5

Disproportionate Income Distribution by Level of Education

There is a distinct income disparity between Iowans who have four-year degrees or higher and those who do not. Nearly 40 percent of the state’s aggregate income is earned by individuals with bachelor’s degrees or higher. In 2014, roughly one out of every four Iowans over the age of 25 (28 percent) had at least a four-year degree. As a result, nearly 40 percent of the state’s income went to one-fourth of its working-aged citizens.7

The income disparity is even more evident among racial and ethnic populations. Median household income in Iowa is highest among racial/ethnic groups with higher levels of education. Median household income is highest for Iowa’s Asian population at $59,028.8 This population also has the largest proportion of working-aged adults with bachelor’s degrees or higher—52 percent. The proportion of other ethnic groups’ populations with bachelor’s degrees break down as follows: 28 percent for whites, 19 percent for blacks and 13 percent for Hispanics.9

Even without taking factors such as cost of living into consideration, a relationship appears to exist between educational attainment and income. States with more educated populations (holding associate degrees or higher) also tend to have higher median earnings. The same holds true for Iowa. Iowa counties with more educated populations tend to have higher median earnings.5

Median annual earnings are highest for Iowans with graduate or professional degrees and lowest for Iowans without high school diplomas.5 For the 9 percent10 of Iowa’s population without high school diplomas, median household income is below the federal poverty guidelines for a family of four.11

Over the past 10 years, earnings in Iowa grew the most for Iowans with bachelor’s degrees or higher. From 2005 to 2014, earnings increased 30 percent for persons with graduate or professional degrees, 31 percent for bachelor’s degrees,
14 percent for some college or associate degrees, 9 percent for high school graduates or those without a high school education.12

5)     U.S. Census Bureau, American Community Survey 5-Year Estimates. (2014). Earnings in the past 12 months (in 2014 inflation-adjusted dollars).
6)     U.S. Bureau of Labor Statistics. (2014). Earnings and Unemployment Rates by Educational Attainment.
7)     U.S. Census Bureau, American Community Survey 1-Year Estimates. (2014). Educational Attainment.
8)     U.S. Census Bureau, American Community Survey 5-Year Estimates. (2014). Median income in the past 12 months (in 2014 inflation-adjusted dollars).
9)     U.S. Census Bureau, American Community Survey 5-Year Estimates. (2014). Sex by educational attainment for the population 25 years and over.
10)   U.S. Census Bureau; American Community Survey 5-Year Estimates. (2014). Educational Attainment.
11)   U.S. Department of Health and Human Services. (2014). Prior HHS poverty guidelines and federal register references.
12)   U.S. Census Bureau, American Community Survey 1-Year Estimates. (2005-2014). Earnings in the past 12 months (in 2014 inflation-adjusted dollars).

 

Printed from the Iowa College Student Aid Commission website on December 15, 2017 at 9:17pm.