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Winners and Losers in this Business Cycle

Posted by: Michael Mandel on August 26

Assuming that the boom ended in 2007, the new census data allows us to identify the big winners and losers in this business cycle. Obviously a high school or a college degree by itself was not enough to make you a winner.

The big surprise: Even a mere masters degree was not good enough to give you a gain in this cycle. Only a professional degree or a PhD let you avoid a real loss in in come.

Here’s the chart of the change in real median earnings from 2000 to 2007, for full time workers.


(trying out a new chart style).

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Reader Comments


August 26, 2008 03:34 PM

A Master's degree has always been a false positive. A degree that takes just 1 year, on top of a 4-year Bachelor's degree, can't add that much. That it was considered a significant jump above a BS degree for so long is itself surprising. It is merely correcting to its natural market level.

How can someone who spends 5 years in college be considered so much more advanced than someone who spends 4 years? Just because the word 'Master's' sounds impressive?


August 27, 2008 12:26 AM

While this probably depends on the institution, I would doubt that the difference between BS and MS is generally just a year (which is pretty much the time it takes to prepare the thesis). There are probably differences in the level of coursework.

My school (not US) didn't have the Bachelor/Master distinction, but I was issued a document/transcript certifying some two years worth of coursework as equivalent to a "pre-diploma" that is commonly considered Bachelor equivalent.

Joe Cushing

August 27, 2008 08:31 AM


While I understand your point there is one thing to consider. In order to get a 4 year degree, one has to study lots of things that have nothing to do with the degree. For example: in order to get a BS degree in management, I had to take geology, humanities, psychology, physical education etc.

In addition to these classes I also had to take classes that were related but actually management classes. For example: I had to take accounting, intro finance, economics, marketing, etc.

So in four years of school dedicated to get a degree in management I might have only spent 1 year actually studying management. The rest of the time, I was building up an education foundation to prepare me for my study of management.

Lets compare that to my experience in graduate school. I'm 3/4 complete with a masters degree in finance. So far I have taken: Financial management, public finance, financial statement analysis, international finance, investments, portfolio analysis, real estate finance, credit analysis and commercial lending, and financial theory and practice.

Nowhere in that list was there a class on Egyptian culture. The masters degree assumes you already have a foundation education to start with. You spend the entire year focused on your major. In the end, I will have spent the same amount of time studying finance as a person with a BS did. I will have done so in a class full of students who more motivated to learn than BS students. Nobody is skipping class, dropping out, giving up, or sluffing off. This makes for a different learning environment and it also shows that grad school is a filter.

Mike Mandel

August 27, 2008 11:09 AM

Joe, Kartik

I usually think of a masters degree as taking two years, not one (though I am sure there are exceptions).

A lot of masters degrees are also related to education, which I'm sure has an impact as well.


August 27, 2008 02:07 PM

In Engineering, Master's degrees are generally 9-12 months. There is no thesis any longer - it was phased out in the 90s.

Stanford, which grants the greatest number of Master's degrees in Engineering of any US institution, has no thesis, and it takes 9-12 months there.

Joe Cushing

August 28, 2008 02:00 AM

My MSF is 36 credits. That would be pretty tough to do in just two semesters. Actually it would be impossible. Most of us go all year and there are 4 evenly timed semesters (terms) in the year--instead of 2 long ones and two crammed ones in the summer. One could finish in a year by going full time for 4 straight terms. That's why they advertise masters degrees can be achieved in a year. I'm taking a lot longer than that because I work long hours out of town. That's pretty much the case with everyone. 3 classes, 2 sessions to go.

Brandon W

August 28, 2008 01:14 PM

My Master's degree was 2 years long (going full-time), required substantial research and writing, and a final research project. A solid Master's degree requires that a student learn thorough research, analysis and synthesis skills in addition to subject matter. I can't speak to the difficulty or educational attainment of engineering Master's degrees, but I can tell you that those I'm familiar with are quite rigorous.


August 28, 2008 04:08 PM

Again, in Engineering (which, among all Master's Degrees, is the one field where a distinct and guaranteed increase in starting pay, over a BS degree, is assured), the thesis is optional since the early 1990s, and 95%+ of the students don't do it (only those who want to get a leg-up in a subsequent PhD do it).

Stanford and MIT (the two top engineering colleges, both in rank and number of graduate students), don't have thesis requirements, and students usually complete it in 9-12 months, full time. Stanford, being a quarter system, makes this quite easy to do.

Then again, since engineering MS degrees are designed to meet private-sector demand, ROI is the foremost calculation, rather than pure unfettered 'learning', which could by why the thesis was made optional.

Brandon W

August 28, 2008 06:46 PM

You originally stated, "Master's degree has always been a false positive. A degree that takes just 1 year, on top of a 4-year Bachelor's degree, can't add that much."

We were responding to that assertion. If you want to assert that engineering MS degrees are only one year long, and aren't any legitimate increase in education, so be it; I know little about the educational requirements of the engineering field. But your original assertion was broadly aimed at all Master's degrees. You state that because of the "one year engineering Master's degrees" that Master's degrees (broadly) aren't really worth anything. That's a false correlation and an incorrect assertion. The rest of us were just trying to clarify that.


August 28, 2008 09:20 PM

Kartik: Not to beat my own drum, but I'm surprised that one can be issued a Master title without having to submit a thesis (which I understand to be the academic equivalent of the "masterpiece" (perhaps formerly?) required for a Master in the trades).

But then "ROI is the foremost calculation" is just a different way of saying "credentialism". But we have been knowing that for a while.

Where I work, we have a mix of bachelors, masters, and PhDs, and the practical differences are not that great IMO. Or should I rather say job performance does not seem to be that great a predictor of title.

At some point a related topic was discussed, and my colleagues were shocked to learn that I wasn't holding a PhD.

I have also been participating in various independent conversations with different individuals about the merit/value of a PhD title. I find it noteworthy that the overall and surprisingly universally held opinion is that at least the "signaling value" is not so much for a supposedly high level of competence/"skill" as rather "proof" of determination, stamina, and ability to complete a tough process that has its adversities.


August 29, 2008 03:16 PM


A thesis was the norm for engineering until the early 1990s. After that it became optional, and 95% don't do it. Stanford grants over 1500 MS Engineering degrees a year, almost none of which are with a thesis. Silicon Valley employers don't need a thesis, but they do need a large volume of incoming grads.

There is certainly social and professional value to being able to put the prefix of 'Doctor' on your name wherever you go.

Brandon W,

For Engineering, a Master's (without a thesis) usually grants a $10K higher salary than a Bachelor's. While the BS earns $55K to start, the MS earns $65K.

As far as I can tell, no other field (except maybe Accounting) is guaranteed to grant a starting salary bump over the BS. It can happen, but often does not. So the one type of Master's degree that does not require a thesis is in fact the one with the more assured/highest ROI.

I consider the MBA to be a professional degree, not a 'Master's' for the purposes of the above graph.

Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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