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What careers follow the economics
baccalaureate?
Economics majors are successful
in a wide variety of careers. Although various roles in businesses are most
common, economics majors are successful in law, medicine, government,
non-profits,
and international relations, as
well as in academic roles.
Career Earnings
One way to think about career opportunities is to consider the level of
earnings typically found
with different levels and kinds
of education in different careers.
The Corporate World & the MBA
Most economics majors pursue employment in the private sector. Graduates in
economics succeed in many occupations. Some students plan to earn the Masters
of Business Administration (MBA) degree in time. Others find employment with
the BA is sufficient to fulfill their aspirations.
Economic Consulting
Some economists with BA degrees find employment as research associates with
economic consulting firms. Consultants advise firms on business strategies,
prepare economic evidence
for court cases, and develop
analyses to influence public policy.
The careful reasoning in
economics is a good fit for law and many careers in the law influence
significant economic decisions for firms.
Governments at every level hire
economists for their facility with statistics and analysis.
of the study of economics and
the prospect of teaching and writing about economics as a career.
Career
Earnings
The US Bureau of Labor
Statistics, Occupational Outlook Handbook (online in 2014) reports annual wages
for economists in 2010. For economists of all educational levels, the
median earnings in 2010 were $89,450 with $48,250 at the tenth percentile and
$155,490 at the 90th percentile. Source: Bureau of Labor Statistics,
U.S. Department of Labor,
Occupational Outlook
Handbook, 2013-14 Edition, Economists, on the Internet at
http://www.bls.gov/ooh/life-physical-and-social-science/economists.htm (visited
July 8, 2014).
Median Annual
Wages for Economists in May 2012
in the Top Five
Industries Employing Economists
(from the Occupation Outlook Handbook)
|
Finance and insurance
|
$110,580
|
|
Federal government, excluding
postal service
|
$106,850
|
|
Scientific research and
development services
|
$94,630
|
|
Management, scientific, and
technical consulting services
|
$91,570
|
|
State and local government,
excluding education and hospitals
|
$63,880
|
Payscale.com reports its survey
of people with Baccalaureate degrees (and no more)
who are employed full time,
showing starting salaries (typically with two-years of experience)
and mid-career annual
earnings. Here are selected occupations for the 2012-13 report.
|
College Major
|
Starting Salary
|
Mid-career
Salary
|
|
Chemical Engineering
|
$67,500
|
$111,000
|
|
Applied Mathematics
|
$50,800
|
$102,000
|
|
Statistics
|
$49,300
|
$99,500
|
|
Economics
|
$48,500
|
$94,900
|
|
Mathematics
|
$48,500
|
$85,800
|
|
Finance
|
$47,700
|
$85,400
|
|
Business
|
$41,400
|
$70,000
|
|
Political Science
|
$40,300
|
$74,700
|
|
Advertising
|
$37,800
|
$77,100
|
|
Sociology
|
$36,000
|
$56,700
|
|
Psychology
|
$35,200
|
$60,200
|
Median earnings
of economists by highest level of degree for persons of all ages
observed in 2010
are given in the table below by gender.
|
Highest Degree
|
Women
|
Men
|
|
BA
|
$38,000
|
$42,000
|
|
MA
|
$45,000
|
$38,000
|
|
PhD
|
$90,000
|
$100,500
|
[Viewed 2013].
Earnings
Differentials for Economics Majors
Thomas Carroll, Djeto Assane,
and Jared Busker use a large national sample from the American Community Survey
developed by the Bureau of the Census with observations from 2009 to 2012
to estimate earnings
differentials for economics majors compared to other college majors.
The table below reports the
estimated differential for economics majors compared to non-economics majors,
on average, when the statistical estimate adjusts for personal characteristics
(age, ethnicity, citizenship,
and English proficiency).
Percentage
Earnings Advantage of Economics Majors by Highest Degree Completed
Adjusting for
Personal Characteristics.
|
Highest Degree
|
Male
|
Female
|
|
BA
|
14.1
|
18.0
|
|
MA
|
31.6
|
24.5
|
|
Professional
|
5.6
|
20.8
|
|
PhD
|
18.9
|
29.5
|
Source: Thomas Carroll, Djeto
Assane, and Jared Busker, “Why it Pays to Major in Economics,” Journal of Economics
Education, 45:3, (2014) pp. 251-261. Table 3.
The BA row reports the average
percentage earnings differential for men and women
whose highest degree is a
baccalaureate.
The MA row reports the
differential for those with masters degrees in any field.
The Professional row reports
differentials for those who highest degree is
an MBA or law degree.
The PhD row reports
differentials for people who earned academic doctorates in any field.
The analysis also reports
differentials while adjusting for occupational choice (not shown here).
The differentials show above
fall by about half with adjustments for occupation.
The implication is that about
half of the differential show above is accounted for by occupation. That
is to say, about half of the payoff from the economics major is in access to
better paying occupations and about half, given occupation.
Differences by location have little effect.
Geographic
Difference in Earnings
Winters and Xu also use the
American Community Survey (2009-2010) to estimate earnings differentials for
economics majors compared to non-economics by state and metropolitan
area. Economics majors accounted for 2.28 percent of college
graduates.
Economics majors have a higher
earnings differential in densely populated, urban states like
New York, Connecticut,
California, New Jersey, Illinois, and Massachusetts. New York accounted
for 3.99 percent of economics
majors and showed an 889 percent earnings differential
for economics majors compared
to all others with no other attributes of people or jobs
taken into account. Among metropolitan areas,
New York, San Francisco, Boston, Los Angeles,
and Chicago show high
differentials.
Source: John V. Winters and
Weineng Xu, “Geographic Differences in the Earnings of Economics Majors,” IZA
Discussion Paper # 7584, Forschunginstitut zur Zukunft der it,
(2013)
http://hdl.handle.net/10419/89939
Stability of
Earnings and Employment
The
Hamilton Project at the Brookings Institution provides
an interactive summary of life-time earnings for people with different college
majors. Jordan Weissman compares economics to other disciplines at “Want to Be
Stinking Rich? Major in Economics,”
Slate. The first figure below shows the
median earnings by years into a career for all BAs in a given major who are
employed full-time including those with any subsequent graduate degree. The
blue line at the bottom shows median earnings for all holders of BA degrees.
The green line shows economics and the orange shows finance majors. The purple
line at the top shows electrical engineers. The economics major starts
just above the finance major but shows a stronger trajectory, briefly topping
the electrical engineers at about 15 years in the career but does not sustain
the level of the engineers
in the last two decades of the
career.
The figure on Lifetime Earnings
below reports the total lifetime earnings on the vertical axis
(in terms of present value)
with the percentage distribution from the lowest earnings to the highest along
the horizontal axis. At the 50th percentile, the figure below shows the
total for each of the four lines in the figure just above. Although all
four groups show a substantial flip up among those
in the top ten percent—income
distributions are usually skewed right as indicated by the flip here—the
economics major has the largest flip. The economics major exceeds the
electrical engineers at about the 65th percentile and widens the gap
particularly with engineering but also with finance
up to the highest
earnings. The economics major then shows a wider dispersion of earnings
but with a much longer right tail, that is, a high probability of very high
earnings than the other majors.
During recessions, economics
majors and other high-earning majors show more advantage relative to majors
with lower average earnings. (See Joseph G. Altonji, Lisa B. Kahn, and Jamin D.
Speer,
“Cashier or Consultant? Entry Labor Market Conditions,
Field of Study, and Career Success,” Unpublished essay. The essay is
reported by Claire Cain Miller,
“A College Major Matters Even More in a Recession,” New York Times Upshot, June 20, 2014.
Although most occupations show
lower earnings in recessions, those involving college degrees
show a lower loss. Economics
yields better relative outcomes in recessions.
Mid-Career
Earnings
The Center on Education and the
Workforce at Georgetown University reports the median earnings of adults
working full-time for a full-year whose education stopped with the bachelor’s
degree using data from the 2010 Census. The table below is a subset
of a report of 173 majors published
“From College Major to
Career”, October 24, 2013.
The median earnings of
economics majors is 32nd among all 173 majors.
The fifteen majors reported
below are those with the highest median earnings among the 50
most popular majors. Economics
is in ninth place in median earnings in this group.
The table reports the percentage
of the majors who are unemployed, the earnings
at the 25th percentile (Q1),
the median, and at the 75th percentile (Q3).
Economics has the widest
dispersion between Q1 and Q3 with Finance in second place.
|
Major Field
|
Unemployment %
|
Q1
|
Median
|
Q3
|
|
ELECTRICAL ENGINEERING
|
5.00%
|
$60,000
|
$86,000
|
$111,000
|
|
CHEMICAL ENGINEERING
|
3.80%
|
$60,000
|
$86,000
|
$117,000
|
|
MECHANICAL ENGINEERING
|
3.80%
|
$60,000
|
$81,000
|
$106,000
|
|
COMPUTER ENGINEERING
|
7.00%
|
$58,000
|
$81,000
|
$102,000
|
|
COMPUTER SCIENCE
|
5.60%
|
$50,000
|
$77,000
|
$102,000
|
|
CIVIL ENGINEERING
|
4.90%
|
$55,000
|
$76,000
|
$101,000
|
|
GENERAL ENGINEERING
|
5.90%
|
$47,000
|
$73,000
|
$101,000
|
|
MANAGEMENT INFORMATION
SYSTEMS
AND STATISTICS
|
4.20%
|
$47,000
|
$71,000
|
$96,000
|
|
ECONOMICS
|
6.30%
|
$42,000
|
$69,000
|
$108,000
|
|
FINANCE
|
4.50%
|
$44,000
|
$65,000
|
$101,000
|
|
MATHEMATICS
|
5.00%
|
$42,000
|
$63,000
|
$95,000
|
|
COMPUTER AND INFORMATION
SYSTEMS
|
5.60%
|
$44,000
|
$62,000
|
$86,000
|
|
TREATMENT THERAPY
PROFESSIONS
|
2.60%
|
$40,000
|
$62,000
|
$81,000
|
|
ACCOUNTING
|
5.40%
|
$41,000
|
$61,000
|
$94,000
|
|
NURSING
|
2.20%
|
$48,000
|
$60,000
|
$80,000
|
Corporate World & The
MBA
Although the economics major
does not provide training for specific occupations, it provides
the logical structure that pays
off in understanding the big picture, the context for entering several fields
in the corporate world. Its emphasis on logical thought and problem solving
skills
has universal value. Many
employers seek to hire graduates with these skills.
Some students aspire to earn
Master of Business Administration (MBA) degrees, typically expecting to
complete a two-year program in a graduate business school. Leading MBA programs
expect applicants to have had several years of significant business experience
before enrolling.
The average age of students
entering top MBA programs is 27 years.
The better MBA programs give
some preference in admission to applicants with technical backgrounds including
engineering, physics & math, and economics. Some areas of study in business
like finance use a significant amount of mathematics. Undergraduate study in
business then
is not a primary or even
necessarily a desirable path to an MBA. Of course, people who have developed
their own successful businesses or enjoyed considerable success in other ways
also tend to be attractive to
MBA recruiters. The schools value success in many forms.
Students intent on careers as
managers often seek a strong, general education. They want to learn effective
communication skills, to develop habits of logical thought, and to practice
their problem solving skills. Many undergraduate programs do this well;
economics is often particularly effective.
In addition to careers as
general managers and entrepreneurs, economics majors also often pursue careers
in specific occupations common to the corporate world. Economics majors with
the BA degree find jobs in the
financial world, in marketing, and consulting. Some pursue one-year post
baccalaureate programs for entry into a target career. The Master of
Accountancy (MAc),
for example, will launch an
accounting career and go a long way toward completion of requirements for the
Certified Public Accountant title.
Students who have a specific
occupational goal will often do well in enrolling in a program of training
specific for that occupation. For example, accounting majors readily get jobs
as accountants
on completing a BA. Finance
majors have a good chance of being employed as financial analysts
or budget officers. The broader
horizons of the economics major are certainly not for everyone.
Economic Consulting
Economics graduates with good
analytic and communication skills find employment with consulting firms.
McKinsey & Company, Boston Consulting Group, Bain & Company, Accenture,
Charles Rivers Associates, Mathematica Policy Research, and NERA Economic
Consulting are examples.
Analysts with consulting firms
often work with data, develop models of specific markets, and provide testimony
in public hearings and in lawsuits. Many graduates find that a few years
experience
with a consulting firm is a
good lead into an MBA, law program, or graduate study in economics. Many
consulting firms invite application for employment through their websites.
Law and Other Professions
The economics major is one of
many common paths to law school. The
Law
School Admission Council provides the official guide to law schools
for the American Bar Association.
The Guide emphasizes extensive
reading and library research, skill in synthesizing large amounts
of information, and logical
thinking. In addition to general skills, the Guide points to breadth
of knowledge of history,
politics, finance, human behavior, and diverse cultures.
Many careers in law involve
shaping economic decisions. Writing and interpreting contracts, supporting
mergers and acquisitions, dealing with the tax system, addressing disputes of
workers, landlords, and vendors; all involve decisions with significant
economic content and implications.
A recent analysis of scores on
the LSAT test for law school admission reported for students
who apply to at least one ABA
accredited law school shows economic majors earned relatively high mean LSAT
scores as shown in table 2. The LSAT score ranges from 120 to 180
with mean and median near 151.
The first quartile is near 144 and the third quartile is near 157;
the 90th percentile is about
165. The LSAT score along with undergraduate grade point average
and the quality of the
undergraduate college are important influences in the admissions decisions
of competitive law schools.
Table 2: Average
LSAT Scores by Major, 2012-13.
|
Rank
|
Major Field
|
Average Score
|
No. of Students
|
|
1
|
Economics
|
159.1
|
2,468
|
|
2
|
Philosophy
|
158.8
|
1,879
|
|
3
|
Engineering
|
157.3
|
1,127
|
|
4
|
History
|
156.7
|
3,323
|
|
5
|
English
|
155.8
|
3,728
|
|
6
|
Finance
|
154.6
|
1,817
|
|
7
|
Political Science
|
154.3
|
12,215
|
|
8
|
Psychology
|
153.3
|
3,335
|
|
9
|
Accounting
|
153.1
|
1,106
|
|
10
|
Marketing
|
152.2
|
1,106
|
|
11
|
Liberal Arts
|
151.9
|
1,177
|
|
12
|
Communications
|
151.6
|
1,729
|
Source: Michael Nieswiadomy,
"LSAT Scores of Economics Majors: The 2012-13
Class Update," Journal of Economic Education
45 #1, Jan 2014. Pp. 71-74 and
“Law School Admission Test,”
Wikipedia, viewed Sept. 2, 2014.
Among the six disciplines with
more than 2,000 students taking the LSAT, the 2,468 economics majors received
the highest average score at 159.1 as shown in the table. Looking more broadly
at groups of similar majors
with at least 325 takers in each group, economics ranked second
behind physics/math (418 takers
with mean 161.7) and just ahead of philosophy/religion
(2,174 takers with mean 158.6).
Some economics majors enroll in
medical and dental programs by adding enough science courses
to their undergraduate career
to qualify for admission. Many undergraduate economics programs include courses
on health economics and students often report that the physicians like talking
about economic policy issues when they interview applicants to their medical
schools.
Government and
Not-for-profits
Governments at every level hire
economists to manage and evaluate their operations.
about Federal employment
opportunities. Their
USAJobs
site lists thousands
of openings of all kinds in many locations across the country. Search on
"economist" to find information about specific current opportunities.
There are often openings for economists with BA, MA, and PhD degrees.
The OPM website also gives
general information about
Federal pay scales. BA
economists with
little experience are (to
simplify a bit) at grade GS-7, with MAs at GS-9, and new PhDs start at GS-12.
Although pay does differ with the cost of living in different locations,
BA economists started at
$31,209 or above in 2006.
and research assistants at
various levels of education. Skill with statistics and in managing data will be
helpful for many entry jobs.
Economists are valued in the
Foreign Service and civil service in the
State
Department,
State governments have similar
websites that list public service jobs with pay scales and application
procedures. Searching the Internet for "state employment" will
usually yield an appropriate link.
International agencies of many
kinds hire economists for a variety of roles. Additional languages, strong
communication skills, experience with diverse cultures, and statistical skills
are often important.
The
World Bank, for example,
offers jobs for economists.
The Bank has an internship
program as well.
One way to learn about
employment with non-profits is to go to the
Idealist
website
and look for roles in economic
development or other areas of interest.
Professors, Teachers and
Researchers of Economics
The Doctor of Philosophy degree
(PhD) in economics is necessary for a faculty position in economics at most
four-year colleges in the US. A masters degree is the typical credential for
faculty
at two-year colleges. Although
some students complete masters programs before entering PhD programs, many go
directly from BA programs into PhD programs. Completion of a PhD requires about
six years of full-time study. See the AEA website for information about
graduate study. Holders of the Ph.D. often
also choose research careers outside of academics, including roles
at the Federal Reserve,
international agencies, and government policy and evaluation departments as
well as in private banks, investment houses, and other for-profit ventures
There are about 100
universities in the US who together produce about 1,000 new PhDs each year.
About half of the graduates are US citizens and the other half come from
abroad. [John J. Siegfried and Wendy A. Stock, "The Undergraduate Origins
of Ph. D. Economists," Working Paper, May 2006] Although
the number of economics majors has grown significantly over the decades, the
number
of new PhDs who intend to
pursue careers in the US has declined. As a consequence, employment
opportunities for PhD economists in academia should be excellent in the decades
ahead.
The Commission on Professionals
in Science Technology (mentioned above, page 8) reports starting salaries for
assistant professors by field. At $78,567, economics is well above the average
of $65,205 of all fields in 2006-07. The table below reports average salary
offers to newly hired economists
at each academic rank by type of
institution.
Average Academic
Salary Offers for Senior Level Economists by Rank and Type of Institution,
2006-07
|
Rank of
Academic Economist
|
All PhD
Granting Institutions
|
BA & MA
Institutions
|
|
Senior Assistant Professor
|
$95,995
|
$80,167
|
|
Associate Professor with
Tenure
|
$128,600
|
$82,333
|
|
Full Professor
|
$204,800
|
$97,500
|
Source: Nathan E. Bell, Nicole
M. Di Fabio, and Lisa M. Frehill, “Salaries of Scientists, Engineers
and Technicians: A Summary of
Salary Surveys.” The Commission on Professionals in Science
and Technology (CPST:
Washington, DC 2007) selected curricula from page 268.
Academic economists at PhD
granting institutions play leading roles in the development of new ideas in
economics and publish their work in the journals and books mentioned on the
publications page. As teachers, economists
play an important role in supporting the undergraduate major in economics and
the various graduate programs.
A number of PhD economists hold
faculty positions in MBA programs, law and medical schools, public policy
programs, and in a number of other fields. Economists on the faculty of leading
professional schools often earn premium salaries.
A number of for-profit and
not-for-profit enterprises hire research economists as do many government and
international agencies.
The
National Association of Business Economics provides information about business
careers for economists. The career sites for government and
not-for-profits mentioned above
also point to opportunities for researchers.
Current job openings for
economists in academia
https://www.aeaweb.org/students/Careers.php
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