In life it’s easy to conflate our occupation with our changes of success in life. A recent study, conducted by researchers from the University of Kentucky, suggests that our occupation may not actually be the best indicator at all.
Instead, the research suggests that a cross-sectional annual earnings snapshot taken at certain points in time can have a much better predictive insight into that person’s 20 year earnings potential. Education was also a strong indicator, and proved more reliable than the individual’s occupation in predicting their future success.
The researchers used data from the Survey of Income and Program Participation to determine the 20-year accumulated earnings of participants between 1990 and 2009. Their sample consisted of over 6,000 men and nearly 5,500 women who were all aged between 25 and 45 in 1990.
They then tested the predictive power of a number of variables captured in the data, including the occupation, education level and various short-term earnings achieved over a 20 year period.
Long-term earnings are crucial and are widely associated with a range of outcomes, including secure retirement, feelings of self-worth and even life expectancy and overall health.
The team believe that whilst education has been widely appreciated as a key factor, it has traditionally been seen as a stepping stone to the occupation that is really the key factor rather than a factor in its own right.
They go on to suggest that stability could be the key reason why education is a better predictor of long-term earnings, as a good education makes someone less likely to have periods of unemployment.
“Less-educated people are more likely to be out of the labor market than highly educated,” they explain.
As such, the higher the person’s level of education in the first 20 years of their career, the more likely they are to see higher earnings per month and fewer periods of unemployment. These in turn are crucially important in predicting someone’s earnings over their lifetime.
What’s more, it seems as though the actual field of study is not all that important. It’s a finding that the team hope will lead to more insightful research into areas such as inequality and social mobility.
“The key message is a person’s annual earnings are a better measure of their long-term earnings than their detailed occupation,” they conclude. “The results do not vary by respondents’ age. If you want to know your long-term earnings prospects for the next 20 years, check your current earnings.”