In the previous blog post, I looked at how multiple skills can boost earnings. Everybody is familiar with the concept that higher-skill jobs pay better. But I was able to show that use of Excel gives an extra earnings boost to high-skill occupations.
Then I started wondering: What if I used level of education as a proxy for skill level? Would use of Excel be linked to higher earnings at different education levels? Could the payoff for Excel be as high for high school-level jobs as it is for college-level jobs?
This question takes on urgency in the wake of a new report, Left Out. Forgotten? Recent High School Graduates and the Great Recession (PDF), about the work experiences of young people with only a high school diploma. Researchers at the John J. Heldrich Center for Workforce Development at Rutgers University surveyed 544 graduates from the high school classes of 2006 through 2011 and asked them about their jobs and their career expectations.
One of the most interesting findings was the young people’s response to this question: “Can you have the successful career you want with a high school degree, or will you need more education?” Seventy percent of the respondents said they will need more education.
I agreed with the 70%, but I wondered whether college is the only hope for these high school grads. If they could just learn Excel and move to a job that uses this skill—even if the job still required no diploma beyond high school—how much would their earning power increase?
Using the Department of Labor’s O*NET database and earnings data, I compared two sets of occupations: All those that require no more than a high school diploma and the subset of these that also use Excel. I computed the weighted average earnings of each group of jobs. Then, just for the sake of comparison, I did similar computations for the occupations that require an associate degree and a bachelor’s degree. The graph below shows what I found:
As you can see, Excel provides an earnings boost at all three education levels. Although the pay increase is larger in absolute terms at the two college-degree levels, the percentage increase is fairly similar for all three levels: 13% at the level of high school or less, 11% at the associate level, and 14% at the bachelor’s level.
Sure, the 13% boost that Excel provides for high school grads is nowhere close to the 117% increase that an associate degree achieves. But a college degree also requires a huge investment of money and time. Learning just one practical skill—in this case, Excel—costs ever so much less, takes much less time, and can produce a substantial payoff. In bang-for-the-buck terms, learning just one skill may be more productive.