Future Wage Premium

Future wage premium is a term used to describe the ratio of wages paid to low-skilled workers relative to those paid to high-skilled workers over the course of a working career. The wage premium is most often discussed in connection with college education and the increased lifetime earning potential derived from education. It is important to note that even the best calculations of future wage premiums are really just estimates; it is impossible to measure what an individual worker will earn in mutually exclusive scenarios—with or without a college education, for example. Wage premiums can also be derived from union membership; that is, union members generally command higher wages than nonunion members in equivalent industries and positions. Of course, one’s lifetime earning potential depends on ...