The Counterintuitive Math of Choosing a College Major for Earnings
Major choice and lifetime earnings are correlated, but the relationship is weaker and more local than most college rankings suggest. New labor data clarifies what actually predicts financial outcomes.
Conventional wisdom holds that choice of college major is one of the most important financial decisions a young adult makes. The evidence is more complicated. A 2025 paper from the Federal Reserve Bank of New York, using detailed labor market data through 2024, examines the link between major and earnings and finds that the relationship is real but smaller than commonly assumed, and that it varies dramatically by region, institution, and individual.
The paper, which has circulated widely among economists of education, finds that choice of major explains roughly 18 percent of the variation in mid-career earnings among US college graduates. Choice of institution explains another 11 percent. Individual factors, including grades, internships, networking, and persistence, explain more than 40 percent.
The 18 Percent Story
The major effect, while smaller than often portrayed, is not trivial. The gap between the highest-earning majors (chemical engineering, computer science, finance) and the lowest-earning (early childhood education, social work, fine arts) reaches roughly $40,000 per year in median mid-career earnings. The gap accumulates to several hundred thousand dollars over a working life.
But the within-major variation is also large. The top 20 percent of education majors in mid-career out-earn the bottom 20 percent of computer science graduates. The bottom decile of finance majors earns less than the top decile of liberal arts majors. The averages mask wide individual variation that suggests the choice of major is far from determinative.
Geography Matters More Than Major Choice
One of the paper’s striking findings is the role of geography. The premium for high-earning majors varies by region. Computer science graduates working in major tech hubs (San Francisco, Seattle, New York, Austin) earn substantially more than computer science graduates working in regions without dense tech employers. Engineering graduates near concentrated manufacturing or aerospace industries earn similarly higher.
For lower-earning majors, the geographic effect operates in the other direction. Education majors working in regions with strong public sector pay and pensions (Massachusetts, New York, California) earn closer to the median engineer than to the median education major in lower-paying states.
The Institutional Effect
Choice of institution also produces a measurable but smaller effect than many rankings suggest. Within the same major, graduates of more selective institutions earn a premium, but the premium is concentrated at the top end of the distribution and varies by field. Engineering graduates from non-elite engineering programs often earn similarly to graduates of elite programs, while business graduates from elite programs earn substantially more than business graduates from non-elite programs.
The paper attributes the difference to network effects in finance and consulting, where access to elite-affiliated employers is a significant career amplifier. In engineering, the dominant employers (Boeing, General Electric, energy companies) hire across a wider range of institutions.
What Predicts Earnings Within a Major
The paper’s most useful contribution may be its analysis of within-major variation. Across nearly all majors, three factors stood out as predictive of mid-career earnings: internship experience during college, the cumulative GPA in major courses (not overall GPA), and post-graduation persistence in the field for at least four years.
Students who completed at least two substantive internships earned 14 percent more in mid-career than students who completed none, even when controlling for major and institution. Students who maintained higher GPA in their major (regardless of overall GPA) earned 9 percent more. Students who stayed in their field of training for four years after graduation earned 11 percent more than students who switched fields early.
What This Means for Major Choice
The findings suggest a more nuanced framework for major choice than the standard ranking by average earnings. For a student who is genuinely interested in education or social work, the within-field variation suggests that being a high-quality practitioner in those fields produces better financial outcomes than being a mediocre engineer. For a student who is genuinely interested in engineering, the regional and institutional factors matter as much as the major choice itself.
“The right question is not which major pays the most on average,” said Dr. Yusuf Cetin, who co-authored the paper. “The right question is which major lets you accumulate the experiences and quality that produce strong earnings within that field.”
Implications for Younger Students
For high school students choosing colleges and considering majors, the practical guidance from the research is to focus less on the abstract earning potential of a field and more on the within-field track that the institution supports. Programs with strong internship pipelines, active alumni networks in the relevant industry, and high in-field persistence among graduates are better bets than programs that rank highly on aggregate measures.
The research is also a corrective to the most aggressive versions of the major-equals-destiny argument. The major matters. So do many other things, including some, like internship experience and individual persistence, that students can influence directly.
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