Career earnings

What economists can expect to earn in different fields

The U.S. Bureau of Labor Statistics, Occupational Outlook Handbook (online in 2014) reports annual wages for economists in 2010. For economists of all educational levels, the median earnings in 2010 were $89,450 with $48,250 at the tenth percentile and $155,490 at the 90th percentile.

Median Annual Wages for Economists in May 2012 in the Top Five Industries Employing Economists (from the Occupation Outlook Handbook)
Industry Annual Wage
Finance and insurance $110,580
Federal government, excluding postal service $106,850
Scientific research and development services $94,630
Management, scientific, and technical consulting services $91,570
State and local government, excluding education and hospitals $63,880

Source: Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2013-14 Edition, Economists. (Visited July 8, 2014).

Payscale.com reports its survey of people with Baccalaureate degrees (and no more) who are employed full time, showing starting salaries (typically with two-years of experience) and mid-career annual earnings.  Here are selected occupations for the 2012-13 report.

College Major Starting Salary Mid-career Salary
Chemical engineering $67,500 $111,000
Applied mathematics $50,800 $102,000
Statistics $49,300 $99,500
Economics $48,500 $94,900
Mathematics $48,500 $85,800
Finance $47,700 $85,400
Business $41,400 $70,000
Political science $40,300 $74,700
Advertising $37,800 $77,100
Sociology $36,000 $56,700
Psychology $35,200 $60,200

Source: Majors That Pay You Back, Payscale.com

Median earnings of economists by highest level of degree for persons of all ages observed in 2010 by gender.
Highest Degree Women Men
BA $38,000 $42,000
MA $45,000 $38,000
PhD $90,000 $100,500

Source: National Survey of Recent College Graduates

Earnings Differentials for Economics Majors

Thomas Carroll, Djeto Assane, and Jared Busker use a large national sample from the American Community Survey developed by the Bureau of the Census with observations from 2009 to 2012 to estimate earnings differentials for economics majors compared to other college majors.  The table below reports the estimated differential for economics majors compared to non-economics majors, on average, when the statistical estimate adjusts for personal characteristics (age, ethnicity, citizenship, and English proficiency).   

Percentage Earnings Advantage of Economics Majors by Highest Degree Completed Adjusting for Personal Characteristics.
Highest Degree Men Women
BA 14.1% 18.0%
MA 31.6% 24.5%
Professional 5.6% 20.8%
PhD 18.9% 29.5%

Source: Thomas Carroll, Djeto Assane, and Jared Busker, “Why it Pays to Major in Economics,” Journal of Economics Education, 45:3, (2014) pp. 251-261. Table 3.

The BA row reports the average percentage earnings differential for men and women whose highest degree is a baccalaureate.  The MA row reports the differential for those with masters degrees in any field.  The Professional row reports differentials for those who highest degree is an MBA or law degree. The PhD row reports differentials for people who earned academic doctorates in any field.

The analysis also reports differentials while adjusting for occupational choice (not shown here).  The differentials show above fall by about half with adjustments for occupation.  The implication is that about half of the differential show above is accounted for by occupation.  That is to say, about half of the payoff from the economics major is in access to better paying occupations and about half, given occupation.   Differences by location have little effect.

Geographic Difference in Earnings

Winters and Xu also use the American Community Survey (2009-2010) to estimate earnings differentials for economics majors compared to non-economics by state and metropolitan area.   Economics majors accounted for 2.28 percent of college graduates.

Economics majors have a higher earnings differential in densely populated, urban states like New York, Connecticut, California, New Jersey, Illinois, and Massachusetts.  New York accounted for 3.99 percent of economics majors and showed an 889 percent earnings differential for economics majors compared to all others with no other attributes of people or jobs taken into account. Among metropolitan areas, New York, San Francisco, Boston, Los Angeles, and Chicago show high differentials.   

Source: John V. Winters and Weineng Xu, “Geographic Differences in the Earnings of Economics Majors,” IZA Discussion Paper # 7584, Forschunginstitut zur Zukunft der it, (2013).

Stability of Earnings and Employment

The Hamilton Project at the Brookings Institution provides an interactive summary of life-time earnings for people with different college majors. Jordan Weissman compares economics to other disciplines at “Want to Be Stinking Rich? Major in Economics,” Slate. The first figure below shows the  median earnings by years into a career for all BAs in a given major who are employed full-time including those with any subsequent graduate degree. The blue line at the bottom shows median earnings for all holders of BA degrees. The green line shows economics and the orange shows finance majors. The purple line at the top shows electrical engineers.  The economics major starts just above the finance major but shows a stronger trajectory, briefly topping the electrical engineers at about 15 years in the career but does not sustain the level of the engineers in the last two decades of the career.

The figure on Lifetime Earnings below reports the total lifetime earnings on the vertical axis (in terms of present value) with the percentage distribution from the lowest earnings to the highest along the horizontal axis.  At the 50th percentile, the figure below shows the total for each of the four lines in the figure just above.  Although all four groups show a substantial flip up among those in the top ten percent—income distributions are usually skewed right as indicated by the flip here—the economics major has the largest flip.  The economics major exceeds the electrical engineers at about the 65th percentile and widens the gap particularly with engineering but also with finance up to the highest earnings.  The economics major then shows a wider dispersion of earnings but with a much longer right tail, that is, a high probability of very high earnings than the other majors.

During recessions, economics majors and other high-earning majors show more advantage relative to majors with lower average earnings. (See Joseph G. Altonji, Lisa B. Kahn, and Jamin D. Speer,“Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success,” Unpublished essay. The essay is reported by Claire Cain Miller, “A College Major Matters Even More in a Recession,” New York Times Upshot, June 20, 2014. Although most occupations show lower earnings in recessions, those involving college degrees show a lower loss.Economics yields better relative outcomes in recessions.

Mid-Career Earnings

The Center on Education and the Workforce at Georgetown University reports the median earnings of adults working full-time for a full-year whose education stopped with the bachelor’s degree using data from the 2010 Census.   The table below is a subset of a report of 173 majors published on the Wall Street Journal website at http://graphicsweb.wsj.com/documents/NILF1111/#term “From College Major to Career”, October 24, 2013.  The median earnings of economics majors is 32nd among all 173 majors.

The fifteen majors reported below are those with the highest median earnings among the 50 most popular majors. Economics is in ninth place in median earnings in this group.  The table reports the percentage of the majors who are unemployed, the earnings at the 25th percentile (Q1), the median, and at the 75th percentile (Q3).   Economics has the widest dispersion between Q1 and Q3 with Finance in second place.

Major Field Unemployment % Q1 Median Q3
Electrical engineering 5.00% $60,000 $86,000 $111,000
Chemical engineering 3.80% $60,000 $86,000 $117,000
Mechanical engineering 3.80% $60,000 $81,000 $106,000
Computer engineering 7.00% $58,000 $81,000 $102,000
Computer science 5.60% $50,000 $77,000 $102,000
Civil engineering 4.90% $55,000 $76,000 $101,000
General engineering 5.90% $47,000 $73,000 $101,000
Management and statistics 4.20% $47,000 $71,000 $96,000
Economics 6.30% $42,000 $69,000 $108,000
Finance 4.50% $44,000 $65,000 $101,000
Mathematics 5.00% $42,000 $63,000 $95,000
Computer and info systems 5.60% $44,000 $62,000 $86,000
Treatment therapy 2.60% $40,000 $62,000 $81,000
Accounting 5.40% $41,000 $61,000 $94,000
Nursing 2.20% $48,000 $60,000 $80,000