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How STEM degrees pay off

“You earn what you learn,” President Bill Clinton said. That aphorism is true, but the data show that what you learn and firms that value that learning really make the difference when it comes to good wages and wage growth.

That’s the lesson from a recent Brookings Institution report by Jonathan Rothwell and Mark Muro. The researchers looked at wage growth in “advanced industries” vs. the rest of the economy. They defined industries as advanced if at least $450 was spent on research and development per worker (which put them in the 80th percentile of all industries) and if their share of workers with backgrounds in the STEM fields–science, technology, engineering, and math–was higher than the national average. The authors note that 50 industries meet this two-part test, including manufacturing industries such as autos and aerospace, energy industries such as oil and gas extraction, and high-tech services such as computer software and computer system design (counting those for health applications).

This advanced industry amalgam employed 12 million workers in 2013, or about 9% of all U.S. workers, while accounting for $2.7 trillion in value added, or 17% of U.S. gross domestic product–more than any other sector, including health care, finance, and real estate.

The real eye-opener, though, is how real (inflation-adjusted) wages have performed in the advanced industries. Since 1980, they have almost doubled, compared with a 50% increase for the economy as a whole (and less than 40% for non-advanced industries).

The market is telling us something–and has been for more than three decades. It pays to get a degree in a STEM subject, not just for a tech start-up job in Silicon Valley but in a range of industries where firms hire people with STEM backgrounds and the businesses are in the forefront of innovative activity. Those worrying about Americans’ economic future ought to absorb that message.



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