A master’s degree may not lead to better job performance, but employers are still willing to pay extra for employees who have one, according to a new survey.
In a survey of 1,000 hiring managers in the U.S., Resume Genius found that 62% of hiring managers say that employees with master’s degrees perform the same — or worse — at work as employees with a bachelor’s degree and two years of experience.
Despite this, 72% of hiring managers still say they would offer higher salaries to a job candidate with a master’s degree than one without.
Of those hiring managers, 64% would offer a 10% salary increase, 20% would offer a 15% increase, and 23% would offer a 20% or higher salary increase.
So why does a master’s degree still command a higher salary?
“I think we’re in a transition where the symbolic value of degrees still affects salary decisions, even if employers don’t actually think the performance of master’s degree holders matched the credentials,” says Eva Chan, senior PR expert at Resume Genius.
According to Chan, having a master’s degree is often perceived as a sign of potential by hiring managers.
“Even if it doesn’t guarantee better performance, it can show that you’re very driven, you’re disciplined, you’re committed, and that you’ve given your time, money and effort into accomplishing a goal,” she says.
However, she says, the survey results demonstrated that “more and more employers are realizing experience can show a lot of these same qualities.”
Skills-based hiring has become increasingly common: JP Morgan Chase has eliminated degree requirements for most jobs at the bank, prioritizing work experience over credentials. Walmart is also moving towards skills-based hiring for their corporate roles by adjusting job descriptions to “factor in the skills people possess, alongside any degrees they hold.”
Chan says that she and her team were surprised to find that Gen Z hiring managers were twice as likely as Boomer hiring managers to perceive master’s degree holders as stronger performers.
In her view, this could be because Gen Z may be more familiar with the school system than the workplace.
“Some younger managers may still be fresh from school, or they just finished their degree so it’s fresh in their minds,” she says. “Maybe they view advanced degrees as more relevant or even aspirational.”
Around 25 million American adults hold master’s degrees, according to statistics from the Education Data Initiative, and the number of people pursuing a master’s degree doubled between 2000 and 2019.
In addition to higher salaries, having a master’s degree can provide several potential benefits for employees, such as opportunities career advancement.
However, those boosts come at a hefty price: on average, getting a master’s degree costs more than $62,000, and the average federal loan debt balance for graduate students is over $94,000.
According to Chan, whether or not a master’s degree will help your career depends on your individual situation.
Having a master’s degree can be helpful in professions like education and urban planning that are “heavily tied to pay scales, promotions or credentials,” Chan says.
However, for fast-moving industries such as tech, media and marketing, prioritizing real-world experience may be a better choice.
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