Key facts
- California has the largest earnings gap at 58.5% between bachelor's degree holders and those with some college or an associate degree.
- South Dakota has the smallest earnings gap at 17.1%.
- Nationwide, bachelor's degree holders earned 38.6% more than adults with some college or an associate degree.
- States with major cities and professional job markets showed wider earnings gaps.
- Rural states with economies reliant on agriculture, energy, manufacturing, and skilled trades had smaller earnings gaps.
A Business Insider analysis of Census Bureau data reveals significant variations in the financial payoff of a bachelor's degree across U.S. states. California leads with the largest earnings gap, where individuals with a bachelor's degree earn 58.5% more than those with some college or an associate degree, amounting to a median annual difference of $29,843. In contrast, South Dakota shows the smallest gap at 17.1%, with a median annual earnings difference of $8,509. On average nationwide, bachelor's degree holders earn 38.6% more than their counterparts with less than a four-year degree. States with major urban centers and robust professional job markets, such as New York, Massachusetts, Illinois, Georgia, and Washington, generally exhibit wider earnings premiums. Conversely, states with more rural economies and a stronger reliance on industries like agriculture, energy, manufacturing, and skilled trades, including Montana, Wyoming, and the Dakotas, tend to have smaller differentials. The analysis ranked all 50 states based on this percentage difference, highlighting how economic structure influences the financial incentive for obtaining a four-year degree. A separate WalletHub study also ranked states by income, considering factors like the average income of the top 5%, bottom 20%, and the overall median household income. This study found that states like New York and California did not take the top spot, with factors like income disparity and high-wealth individuals leaving the state impacting their rankings. New York's median annual income was reported at $96,000, while California's was $133,974, though high earners are reportedly leaving California for more tax-friendly states.