For many students ending their school years, decisions are hard to make especially when you have limited life experience. Do you go on and study? Do you go and get a job?

Everyone else seems to know what's best for you but how do you make the best decision? Let's take a look at the alternatives;

The Labourer

A labourer is technically someone who is employed in some form of manual labour. Examples are brick labourers, car mechanics, plumbers, electricians etc. The prerequisites for finding a job or traineeship in these fields are fairly nominal and so long as you turn up on time, work hard and don't give the boss too much cheek you're pretty much guaranteed a job.

Most young people leave school when they're fourteen or fifteen realising that their abilities are wasted in academia. They enjoy earning some dollars and work hard to get it.

The Graduate

A graduate is someone who has gone on to tertiary studies, or beyond, qualifying for a degree that allows that person to operate in a certain field. Graduates may have sourced degrees in accounting, medicine, teaching, engineering etc. Depending on your marks and competition within your chosen field most graduates are able to find employment soon after gaining their accreditation.

So, Who Makes the Most Money?

Labourers start earning money from day one whereas a graduate won't earn anything until they have completed their degree. Graduates will invariably start their careers with a large student loan as well that will be paid off over time.

The chart above shows the earnings of both groups over a period of 25 years starting from the year the labourer commenced her trade. The labourer is the blue line that starts earning immediately whereas the graduate won't earn for another 5 years (2 years left at school and then 3 at university).

At this stage in their life both the labourer and the graduate are now 40 years old. Earnings for the graduate should continue to increase with age and experience while the labourers may begin to fall as the body is unable to withstand the onset of fatigue.

But, what if we were to add the savings component of each worker and assume they were able to earn a minimum 8% per annum on 10% of their income. Would the labourer end up in front because she has a bigger head start in earnings potential? Or, will the graduate's increased salary make up the difference?

As you can see, it's made very little difference. While the labourer was certainly ahead for a while the graduate has caught up and will exceed the labourer within the next year or two.

Conclusion

In the short term, the labourer makes the most money. However, after working for 25 years the graduate has caught up and will now make more money than the labourer as she suffers from a body that is slowing down with still 20-25 years before retirement.

The labourer will begin to earn less and the graduate will make more money due to their increased knowledge and experience.