Employment and Earning Prospects of Non-college-bound Workers Depend on Training, Occupation, and Where They Live

Roughly 66 percent of workers in the U.S. did not have a 4-year college degree in 2011. According to recent research, the employment and earnings prospects of these workers will vary widely depending not only on their subsequent training and occupations, but also on where they live.

In a new study, Federal Reserve Bank of Cleveland researchers Francisca G.-C. Richter and Lisa Nelson look at how the patterns of employment, wages, and education of eight metro areas in the Bank’s district—Akron, Cincinnati, Cleveland, Columbus, Dayton, Pittsburgh, Toledo, and Youngstown—compare to the 100 largest metros in the nation (see table)

Among their findings:

• A college degree does not necessarily lead to higher wages; training and occupation choices also matter. In 2011, the top 30 percent of workers with a high-school degree earned more than 50 percent of workers with an associate’s degree, and 25 percent of workers with bachelor’s degrees.
• Higher-paid high-school-degreed workers are represented more heavily in occupations that require technical post-secondary education attainable through certificates or apprenticeships.
• The average wages of high-school-degree workers tend to be higher for metros with a higher share of workers holding a bachelor’s degree. This is consistent with research on “knowledge spillovers”—the positive effects of education beyond the individual level, such as increased innovation within and across industries that increases worker productivity.
• The 100 largest U.S. metro areas exhibit a wide variation in the education of their labor force. The share of individuals in the labor market under the age of 35 with a bachelor’s or post-graduate degree, for example, ranges from just above 10 percent to 45 percent.
• Among the eight metro areas highlighted in the Cleveland Fed study, Pittsburgh had the highest share of workers younger than 35 with at least a bachelor’s degree, with 38 percent, and Youngstown had the lowest share, at 19 percent. Pittsburgh ranks 7th–highest in young college-degreed workers and has the 3rd-lowest share of young high-school-drop-out workers. Dayton, on the other hand, has about twice the share of high-school dropouts and half the share of college graduates.
• While average wages are higher for more-educated versus less-educated workers, there is quite a bit of variation in this “wage premium” at the metro level. Among the 100 largest metro areas studied, the average wage of workers with a bachelor’s degree was anywhere from 40 percent to 120 percent higher than the average wage of high-school-degreed workers in 2011. In the Cleveland Fed’s region, the Cincinnati metro had the highest premium, at 84 percent, and Youngstown the lowest, at 54 percent.

The authors conclude that, “Investments in education at the lower levels -- high school and younger -- clearly matter. Increasing high-school graduation rates and facilitating access to post-secondary education that is in line with local labor demands should give non-college-bound workers higher chances of reaping the social returns to education.“

Read The Prospects of Non-College-Bound-Workers in the Fourth District. Also check out our related data briefs for the Cleveland, Cincinnati, and Pittsburgh MSAs as well as for metro areas in Kentucky.

Workforce development system in Ohio fragmented and complex, according to Cleveland Fed report

In addition to analyzing the relationship between education and job prospects, we also set out to learn more about Ohio’s workforce development system. The Cleveland Fed’s Community Development team talked with individuals across Ohio about the biggest challenges facing employers, educators, and job seekers. Read their findings in Workforce Development Challenges in Ohio.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.218.1892