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!


Experience Dominates

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 consistently better pool of financially attractive opportunities in one’s field.


Education Acts Like A Defensive Strategy, to Protect Income


Just as the defense in sports provides protection against the opponent scoring, education smooths the flow of income and reduces gaps in income, by:

  • Easing initial access to employment,

  • Minimizing how often one becomes unemployed,

  • Shortening the duration of unemployment,

  • Providing more financially attractive opportunities within one’s field, where retraining and adjustment costs are minimized or easier, and,

  • Accessing more-profitable industries that pay better.

Experience Acts Like An Offensive Strategy, to Grow Income


Again, as in sports, (where offense provides the main chance to score), work experience produces salary growth. Experience significantly raises one’s annual income by aiding:

  • Earlier and more accurate comprehension of opportunities in one’s field, often accompanied by perceiving actual risk as lower or more readily avoidable than others will see it.

  • Deliberate upward job changes, that is, seeking upward mobility through “job-hopping” to enrich one’s experience.

  • Self-employment and entrepreneurship, which produce experience handling responsibility under pressure.

  • Part-time work, ranging from supplemental side-line work to full-time employment doing part-time jobs.

  • Consulting, to sell specialized expertise or problem-solving skills, for example, selling one’s expertise in the gig economy instead of long-term employment.

Married Couples Can Adopt an Offensive-Defensive Income Strategy.


In this familiar technique, one spouse takes a salary from a steady job and the other goes for the chancy big reward through self-employment, higher-risk employment, or pursuing opportunities in unusual locations or circumstances.


Work experience gets insufficient attention as a crucial source of salary compensation. Work experience can be boosted daily, it connects workers with more people and their networks, and it can be expanded in many ways. Unlike stepping away from work to advance one’s formal education, a worker gaining additional problem-solving skills and productive capabilities gets paid by an employer while gaining valuable experience.

Meanwhile, education seems over-promoted as a salary generator relative to the pay growth it supports. Education is typically obtained in large degree-sized blocks, which are expensive and require a significant time commitment. Since education declines rapidly in salary value, individuals should pay careful attention to studying subjects that have value beyond the workplace and throughout their lives.

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