New reports show states with highest educational attainment have highest personal income

New reports show states with highest educational attainment have highest personal income

New state personal income data for 2019 shows the importance of educational attainment in state economic prosperity.

States with higher percentages of their populations completing educational benchmarks, such as high school graduation, any postsecondary education, and four-year degrees, consistently have higher average income for people in their states.

While the impact of the COVID pandemic is not yet known it seems unlikely to change these results in the future.

Kansas ranks in the top 20 out of 50 states in educational attainment. Kansas income levels rank slightly above average but increase into the top 20 states when adjusted for cost of living differences. Improving high school graduation and postsecondary attainment are key goals in the State Board of Education’s Kansans Can vision and school redesign project.

State educational attainment and per capita income

The U.S. Bureau of Economic Analysis released a new report in March on state per capita personal income for 2019. Personal income is the total income from all residents of a state from all sources (wages, investments, government transfer payments like social security and other income). Per capita income divides that amount by the total population of the state, so it provides the “average” income of each state resident.

KASB compared those results to educational attainment for each state provided by the U.S. Census Bureau for 2018, the most recent year data is available to provide a statistical correlation. A positive correlation occurs when one variable (such as educational attainment) increases, and another variable (such as per capita income) also increases. A zero means no relationship exists between the two variables. A 1.0 or –1.0 means a perfect “one to one” relationship, either positive or negative.

Comparing the percentage of each state’s residents over 24 who have completed high school to the dollar amount of per capita state income resulted in a positive correlation of 0.359. The percent of residents with any postsecondary education, whether they had completed a degree or not, had a stronger positive correlation of 0.621. Comparing those who had completed a four-year degree or higher, had a very strong correlation of 0.836.

In other words, increasing high school graduation alone is associated with higher average income, and completing higher levels of postsecondary education appears to have an even greater positive impact on income.

Another way to consider the impact of educational attainment is to look at states in groups of ten, ranked by the percent of population over 24 with a four-year degree or higher. The top 10 states’ average per capita income is $66,387 per year; the next 10 average $56,234; the third 10 average $52,728, the fourth 10 average $49,822 and the bottom 10 average $47,326. The top ten states all have at least 36 percent of residents with a four-year degree. The bottom 10 have fewer than 27.1 percent with four-year degrees.

Other income measures

KASB also looked at the correlation between state educational attainment and two other measures of income: median household income and median family income for 2018 (2019 data is not yet available.)

Household income is the income of all people ages 15 years or older occupying the same housing unit, regardless of relation, including a single person living alone. Family income is income only of households occupied by two or more people related by birth, marriage or adoption. Per capita income is the average income earned by each person in the area being measured. Therefore, household income is higher than per capita income because it excludes children under 15 who rarely have income; and family income is higher than household income because it excludes single individuals.

Despite these differences, the correlation between educational attainment and both household and family income are just as strong, or even stronger, than per capita income.

KASB also wanted to see if cost of living made a difference, by adjusting state income averages by the Bureau of Economic Analysis’s Regional Price Parity index. This process lowers average state income in states that have higher living costs and raises incomes for states with lower living costs.

This adjustment slightly lowers the positive correlation between income and population with a four-year degree or higher, but slightly increases the correlation for high school completion and any postsecondary education. The overall result is the same: completing any level of secondary postsecondary education is associated with higher income, and the higher the level of education attained, the higher the income that can be expected.

Individual education attainment, employment and earnings

While correlation does not prove causation, causation is more likely to indicated if there are reasons to believe one factor influences another. In this case, there is strong reason to believe the education levels of states influences state income because there is a strong relationship between individual educational attainment, earnings and employment.

How Kansas compares to all states

In 2018 Kansas ranked 19th in the percent of adults over 24 who have completed high school, 15th for any postsecondary education, and 18th in four-year degree completion or higher.

The following chart shows all states, ranking by their average rank in high school, any postsecondary or bachelor’s degree attainment. State with higher educational attainment, or higher per capita or adjusted income, are shaded in green.

Kansas ranked 25th in per capita personal income (2019), 31st in median household income, and 27th in median family income (both data points from 2018). This would indicate Kansas somewhat underperforms in income based on educational attainment rankings. But when adjusted for cost of living differences, Kansas ranks 18th in per capita income, 23rd in household income and 20th in family income – closer to educational attainment ranking.

How Kansas compares to states in the region

Among states neighboring Kansas or in the Plains region, similar patterns exist. Colorado and Minnesota have the highest overall educational attainment and highest income levels. Oklahoma has the lowest educational attainment and lowest income levels. Missouri and South Dakota are generally on the lower end of both education and income. Iowa, Kansas, Nebraska and North Dakota are generally in the middle range.