By John F. Sase
Gerard J. Senick, general editor
Julie Gale Sase, copyeditor
William Gross, researcher
As a Forensic Economist, I have come across and employed several methods for forecasting Earnings Growth by Age and Level of Education. The long-time, go-to method for determining expected Wage Growth has followed various U.S. Census studies of rates of earnings increase with some distinction for Age and Level of Education Attainment.
Using data from the U.S. Bureau of the Census American Community Survey, I have refined the method to include the Relative Earnings employing standard levels of 0 to 5. Given the level at which Earnings and degree levels of education coincide, we find that Lifetime Earnings tend to reach their peak for each of the nine levels of education and average income levels.
The Census Bureau has tracked earnings from ages 25 to 64. Studying this data, we find that Lifetime Earnings at the various levels of Educational Attainment do not appear to intersect.
Therefore, we find that Lifetime Earnings for groups identified as None to 8th Grade, 9th to 12th Grade, High School or GED, Bachelor, and Masters Degree completed reaching their relative apex in differing age ranges.
Those attaining a High-School/GED education or less appear to have peak earning power between 45 and 50 years of age. In effect, those with None through 12th Grade educational completion hit their peak earnings between 45 and 54 years of age. However, we find that those without a High School degree appear to flatten out until retirement age at levels between .9 and 1.2 until retirement.
Curiously, those with a Post-12th Grade through a Masters’s Degree reach their earnings peak between 45 and 54 years of age before going into decline. On a scale of 0 through 5 in relative earnings, those with a High School/GED appear to drop slightly by about .1 points before the “average” retirement age.
Those attaining a Graduate Certificate or an Associates Degree may see their earnings in their early to mid-50s at Relative Earnings.
The first significant increase peaks appear for those with Bachelor Degrees at relative earnings of 2.6 for Bachelor Degree holders through Master Degrees at relative earnings of 3.1. However, gains then appear to decrease for both groups during the ages of 50 and beyond through retirement.
The highest earnings appear for those earners who complete a Doctorate or a Professional Degree. The Professional Degree designation applies to professions that include Engineers, Medical Doctors, Attorneys, and a mix of others.
For those who have earned Doctorates, their earnings begin to significantly escalate beyond those who have completed a Master’s Degree when both groups have reached their early 30s through age 40. At this point, earnings for those with a Master’s level off through age 50 before declining in later years. However, Those with Doctorates tend to hit a plateau from their late 40s to age 60.
Others with Professional Degrees by their late 20s appear to start with earnings similar to those with Doctorates at a relative earnings level of 2.0. However, Professionals’ incomes appear to rise faster than those with Doctorates until their early 40s. In the range of 40 to 44 years of age, those with Professional Degrees appear to reach a relative earnings level of about 4.4 compared to those with Doctorates, who have advanced to 3.1 in their relative earnings. Beyond this mid-forty age, the relative gains of Doctorates and Professionals appear to increase more or less parallel through age 64. Those with Professional Degrees tend to reach a relative earnings level of 4.6. Meanwhile, those with Doctorates hit their late-term peak of 3.9. These high-end groups appear to increase in their earnings from their mid-50s through age 64, while those with Master’s Degrees or lower tend to have incomes that either decrease or remain at the earnings plateau enjoyed during their late 40s or early 50s.
Those with Doctorates or Professional Degrees appear to experience increases in earnings through age 64. Meanwhile, those in the educational range of those with less than an 8th-grade education through a Master’s Degree appear to have incomes that either flatten out (12th Grade and below) or decrease in their later years (High School through Master’s Degree).
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Dr. John F. Sase teaches Economics at Wayne State University and has practiced Forensic and Investigative Economics for twenty years. He earned a combined M.A. in Economics and an MBA at the University of Detroit, followed by a Ph.D. in Economics from Wayne State University. He is a graduate of the University of Detroit Jesuit High School (www.saseassociates.com).
Gerard J. Senick is a freelance writer, editor, and musician. He earned his degree in English at the University of Detroit and was a supervisory editor at Gale Research Company (now Cengage) for over twenty years. Currently, he edits books for publication (www.senick-editing.com).
Julie G. Sase is a copyeditor, parent coach, and empath. She earned her degree in English at Marygrove College and her graduate certificate in Parent Coaching from Seattle Pacific University. Ms. Sase coaches clients, writes articles, and edits copy (royaloakparentcoaching.com).
