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Dallas Fed: 'You earn what you learn'

For immediate release: May 12, 2005

of education and experience are growing swiftly in America’s increasingly knowledge-based economy—rewarding workers who continually update their skills and leaving behind those who don’t, according to the Federal Reserve Bank of Dallas’ 2004 annual report essay.

Working 40 years, high school graduates earn an average of $1.5 million. That grows to $2.6 million for a bachelor’s degree, $3 million for a master’s, $4 million for a doctorate and $5.3 million for a professional degree.

Simply put: “You earn what you learn.

In “What D’Ya Know? Lifetime Learning in Pursuit of the American Dream,” Senior Vice President and Chief Economist W. Michael Cox and economics writer Richard Alm contend the market is pushing workers toward progressively higher levels of skill by financially rewarding those who meet the economy’s expectations.

The financial benefits of education and experience also are extending further into life, with 55- to 64-year-olds earning the highest wages.

“The most important tool we have to achieve the American Dream isn’t the computer, the Internet or any of the other innovations sure to dazzle us in the future. It is the brain,” according to the authors. “Its development through lifetime learning is the key to opportunity, upward mobility and rising living standards.”

Lifetime learning—both formal and informal—is fundamental to the nation’s overall economic growth, according to the essay.

“The U.S. economy can only create good jobs if it can supply the qualified workers to fill them,” Cox and Alm write. They present data showing the United States lags other countries in educational quality and point out that school reforms would help fuel the knowledge-based economy.

The authors stress that ultimately a nation cannot transform knowledge into prosperity without economic freedom: “In turning learning into earning, America’s free enterprise system matters as much as education and experience.”

In her annual report letter, First Vice President Helen Holcomb says that while the Eleventh District’s economy expanded in 2004, “rising energy prices haven’t propelled the Texas economy ahead of the nation’s the way they did in the 1970s and ’80s.”

Dallas Fed research indicates that climbing energy prices benefit Texas only by about a sixth as much as they did in the early 1980s.

“The Texas economy is in transition. However, the good business climate, strong sense of entrepreneurship and optimism, and reliance on free market principles that underpin the state’s economy will help it remain dynamic and prosperous,” she writes.

The 2004 annual report can be found on the Dallas Fed web site at

Media contact:
James Hoard
Phone: (214) 922-5307