Education or Work Experience? Which is More Valuable
We estimated the salary value of work experience and of education and compared the two by combining measurements from nine respected sources. Here’s the surprise we discovered: work experience explains more than eight times as much variation in salary as education explains. This is news you can use!
In most fields, and especially in the technical fields Massachusetts has in abundance, experience contributes much more to salary than education does. Across industries, occupations, job titles, and for both sexes, experience had more than eight times the explanatory power of education in determining salary (21.1 percent to 2.6 percent). Even more surprising, for experienced workers, education is not among the top-30 explanatory variables affecting salary. This observation comes for a study of 200 variables across 4,000 observations examined in a 2018 study of advertisements for experienced workers to fill over 4,000 technical positions in Spain.
Project Management Skills Are Valuable.
Two project management-related variables—project leadership (ranked second) and PMP (Project Management Professional) certification (ranked fifth)— when combined place second behind work experience as determining salary. Project management skills are usually learned on the job, so we counted them as work experience in our estimate.
The Salary Value of Education Diminishes Rapidly
Education’s usefulness in generating salary starts high for new graduates. Once they start working, their work experience grows rapidly in value while their education declines in relative value. Even so, education never loses all its salary value. New Jobs estimates that the half-life of the salary value of a college education is 3.5 years. That means the value of salary attributable to education declines 50 percent every 3.5 years.
In practice, education is virtually always taken into account during hiring. As time passes, education affects pay levels less than work experience does in the eyes of those who make hiring decisions.
The true salary benefit of formal education is cumulative, not year to year. Advanced education provides steadier duration of employment and a consiste