College graduates initially earn more than twice as much per year as workers with only a high school diploma, but that advantage shrinks over the course of a career, according to a Federal Reserve Bank of St. Louis analysis published in August 2026. The report examines how the so-called college premium—the earnings gap between college and high school graduates—evolves differently depending on whether you measure annual income or hourly pay. While the annual earnings advantage declines as workers gain experience, the hourly wage premium actually grows slightly over time.
The research, which analyzed Current Population Survey data from 1975 to 2025, reveals that the college earnings premium starts above 2.0 near labor market entry, meaning new college graduates earn more than double what new high school graduates make annually, then generally falls toward about 1.8 over the career. The hourly wage premium follows the opposite path, beginning around 1.6 to 1.7 and rising somewhat with experience. Among college graduates, nearly 80% work full time for the full year within the first several years after entering the workforce, and that share stays near that level throughout most of their careers. High school graduates follow a different trajectory: their full-time, full-year employment share climbs more gradually, taking several decades to reach the mid-70% range. Full-time, full-year high school graduates earn roughly $57,000 annually on average, compared with about $23,000 for other high school graduates who work part time, part of the year, or both. For college graduates, those figures are approximately $97,000 and $40,000, respectively.
The report finds that both annual earnings and hourly wages climb most rapidly early in workers' careers before slowing down, with college graduates earning more by both measures at every experience level. However, the size of the gap behaves differently: for annual earnings, it's especially wide near labor market entry and becomes somewhat smaller with experience, while for hourly wages, it appears to increase over much of the career. The analysis notes that potential experience is defined differently for the two groups—age minus 18 for high school graduates and age minus 22 for college graduates—because college graduates tend to enter the labor market later.
Why does the college premium decline when measured by annual earnings but rise when measured by hourly wages? The report explains that annual earnings reflect both how much a worker earns per hour and how much the worker actually works during the year, while hourly wages remove much of the difference in hours worked. College graduates shift toward the higher-earnings, full-time group very early in their careers, so after that point, most of their earnings growth comes from growth in hourly wages. High school workers also move toward the higher-earnings group, but much more slowly. As high school graduates gradually shift toward greater labor force attachment, their average annual earnings continue to climb because this group works more hours, helping them catch up somewhat to college workers in annual earnings. This mechanism doesn't have the same direct effect on hourly wages, which more closely reflect what workers are paid for each hour of their time. By that measure, high school graduates don't appear to catch up—instead, the college wage premium increases modestly over the life cycle, possibly because college graduates experience faster wage growth as they learn on the job or benefit more from changing employers or moving into jobs with steeper wage profiles.