It is well-known that wages and educational attainment are positively correlated. As a person’s level of education increases, their wages also tend to increase. The chart below shows how median hourly wages have changed over time for people with a given education level compared to those with a bachelor’s degree. The percentages represent how much more or less each group earns relative to bachelor’s degree holders.
The chart offers two important insights. The first insight is that the gap in median hourly wages between advanced degree holders and those with a bachelor’s degree increased nationally and in the District. Nationally, in 1980, an advanced degree holder earned an hourly median wage approximately 22 percent higher than someone with a bachelor’s degree. By 2024, that number increased to 31 percent. While the gap has fluctuated more in the District, the gap widened by a similar amount, or roughly 10 percentage points.
The second insight is that, between 1980 and 2024, the gap in median hourly wages between individuals without a bachelor’s degree and those with one widened, and especially in the District of Columbia. In 1980, the median hourly wage of a high school graduate in the District of Columbia was 35 percent lower than that of a bachelor’s degree holder. By 2024, high school graduates earned 52 percent less. This trend underscores the importance of adequately preparing high school students for college and supporting them through college graduation.
While the gap between high school graduates and bachelor’s degree holders grew nationwide, the increase was more modest. In 1980, high school graduates earned 30 percent less than those with a bachelor’s degree. By 2024, high school graduates earned 41 percent less.
What explains the widening gap in the District? Further analysis shows that the gap arises from increasing median hourly wages for bachelor’s degree holders, while wages for those without a college degree—whether it be high school graduates or individuals with some college education—have stagnated. While the broader forces driving these trends are complex, economists often cite skill-biased technological change–where advancements in technology often benefit the educated—as a key force.
It is also the case that large cities offer higher wages. One possible reason for this is that large business services firms—which rely heavily on communication and information technology—tend to locate in big cities. The use of communication and information technology has increased the productivity of workers at these large firms, which, in turn, has led to higher wages.[1]
Data notes
The data used in this analysis comes from the Economic Policy Institute’s (State of Working America Data Library) extracts of the Current Population Survey. One can access the data here or here.
[1] Lisa Camner McKay, “Big city, higher pay,” Federal Reserve Bank of Minneapolis, April 10, 2024.