The 5 subjects proven to give undergrads the best wage premium

Wage inequality has grown more significantly between college graduates with different skill sets than between those with a high school or college level of education, one study has found.

Despite declining higher education enrollment rates beginning in 2010, undergraduate degrees in engineering and computer science are continuing to see substantial growth most likely due to the high lifetime wage earnings they promise, according to a new study published by Sage Journals.

Wage premiums associated with earning an undergraduate degree declined precipitously following the Great Recession in 2008. Despite the enrollment decline that followed, undergrad enrollment and degree completion in majors such as computer science, engineering and health have increased substantially. Researchers who implemented a series of quantile linear regression models discovered that computer science and engineering had the highest wage premium, followed by business, health and math and science.

Anticipated job growth in information technology and health sectors, combined with changing demands for skills in the labor market, creates the potential for their premiums to remain high.

Researchers believe this study could help higher education stakeholders and policymakers reevaluate their frameworks on financial aid to assist students entering necessary yet low-wage occupations (like education and social work) with their college costs, thus helping cultivate stronger enrollment rates. Additionally, policymakers could help push for increased wage premiums at these targeted positions.

“To date, scholars have primarily examined the overall decline in college enrollment while overlooking substantial variations in enrollment and degree attainment across college majors,” the study read. “These divergent trajectories suggest that while rising costs and time commitments have led to doubts about the value of a college degree, some majors continue to experience significant growth, prompting the question of whether the returns on college education vary across majors.”

Researchers analyzed survey data from 5.8 million high school and college graduates participating in the American Community Survey (ACS) from 2009 to 2021, analyzing data across wage and salary earnings, gender, race/ethnicity, age, marital status, region of residence and level of education. Undergraduate degrees were broken down into 10 major fields of study: biology and life sciences, business, computer science, education, engineering, health, humanities and liberal arts, math and sciences, social sciences and “other majors.” Anyone with an advanced postsecondary degree, such as a master’s or doctorate, was excluded from the study.

The study specifically aimed to compare the internal rates of return (IRR) of U.S.-born working men and women between the ages of 18 and 65 by which undergrad degree they earned and relative to those who’ve only earned a high school degree.

IRR examines the salary and wage premiums designated by each field of study, similar to the more commonly known “return on investment” metric, or ROI. However, IRR is highly sensitive to the costs incurred to obtain a specific degree. Researchers analyzed each student’s tuition and fees and estimated their expenses related to books and supplies, room and board, transportation and other education-related personal expenses. The “direct costs,” such as tuition and fees, were taken from the National Postsecondary Student Aid Study.

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The IRR premiums for specific undergrad fields of study are as follows:

  • exceeding 13%: engineering and computer science
  • 10%-13%: business, health and math and science
  • 8%-9%: biology, agriculture, social sciences and “other majors”
  • less than 8%: education and humanities and the liberal arts

Engineers had higher starting salaries and a steeper growth trajectory than other subjects. However, health displayed a relatively flat earning profile for workers in their later years while others experienced significant declines. Furthermore, male undergraduates experienced faster earnings growth in earlier stages of their careers, despite beginning on relatively equal footing with women.

Nevertheless, researchers found that undergraduate degree earners’ IRR is lower than a similar study conducted in 1988. This is most likely due to the year-over-year growth in college expenses in the last two decades and degrees’ stagnating premiums, they posited. However, earning a bachelor’s still “lifts and stretches the earnings distribution,” more than for high school graduates.


Evidence of students with quantitative-based skill credentials reaping a higher return on investment dates back three decades ago, while earnings for students with a liberal arts and education background began to plateau around the same time.

As the wage premiums for credentials associated with higher levels of cognitive, financial and project management skills in high-growth markets have continued to rise, contemporary studies have found that wage inequality has grown more significantly between college graduates with different skill sets than between those with a high school or college level of education.

“It is also likely that the variations in IRR across college majors will persist or even heighten,” the researchers forecast, due to generative artificial intelligence and other high-tech technological tools threatening to eliminate routine jobs.

Alcino Donadel
Alcino Donadel
Alcino Donadel is a UB staff writer and first-generation journalism graduate from the University of Florida. His beats have ranged from Gainesville's city development, music scene and regional little league sports divisions. He has triple citizenship from the U.S., Ecuador and Brazil.

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