Will Learning a Foreign Language Make You More Money?

A lot of the rationale behind learning a second language in schools is the prospect of increase job opportunity and the ability to make more money.  However, is that really true?  Will people who know second languages earn higher wages?  And if so, by how much?  There has been a few intriguing economic studies that seeks to answer the question.

25% of people in the United States claim they speak a foreign language.  And many of them hold onto the belief that having a foreign language handy will come in handy in the work force.  This belief isn’t unfounded as there is a positive return on investment for learning a foreign language according to Albert Saiz, economist at MIT.  However, you will not make that much more money.  According to his research, there is only a 2% return on investment for learning a foreign language.  Of course this is an overall average and different languages will offer different rates of return: Spanish has a subpar return rate of 1.4% and French is 2.7%. However, more uncommon languages spoken in English-speaking countries will offer higher rate of return.  For instance, learning Germany will offer a 3.8% rate of return.  

So if your annual salary is $40,000, you can expect to earn an extra $800 per year if you learn Spanish and $1,520 per year if you learn German.

Learning a second language has long been part of the educational framework of the United States and is required to graduate high school and college.  But is a 2% return on investment isn’t much.  This leads some economists to surmise that learning a foreign language is a waste of time, and time is much better spent learning something with a higher rate of return, like technical skills or skills that are directly related to the intended career choice of the student.

However, Bryan Caplan, professor of economics at George Mason University does not take such a bleak view when looking at the study done by Albert Saiz.  Instead, Caplan offers an alternative viewpoint—not many people who say that they can speak a foreign language have achieved fluency.  In the study conducted by Saiz, 1% of the foreign-speaking participants said they know a second language “very well.”  However, since people seem to overvalue their skills, Caplan seems to think that the percentage of people who actually know a second language “very well” is much less than the state 1% of second language-speaking people.  So this data seems to tell Caplan that many people fail to reach the level needed to obtain a higher rate of return.

Lifetime Value of Learning a Foreign Language

Taking into account the numbers provided by Saiz, we can explore the total worth of a foreign language over a 40 year career assuming a starting salary of $45,000 (in 2014) with regular raises.  The chart provided below shows how much learning French, German, and Spanish is worth over your whole career.  It also provides an average worth.

Chart provided by: The Economist

As you can see, the average worth of a foreign language is about $67,000, Spanish is worth $51,000, French is worth $77,000, and German is worth $128,000.  All these numbers are in 2014 dollars.  And again, these numbers assume a starting salary of $45,000 with regular raises.

The Foreign Language Worth Double-Digit Returns

Albert Saiz also noted that English seems to be the foreign language that offers the highest rate of return.  The study noted that the return on investment for learning English as a foreign language is anywhere between 10 to 20%, depending on the country of the speaker.  Of course, this due to the fact that English is a widely spoken language is is adopted as the language of business and travel.  As so, learning English (as a foreign language) will open many doors in terms of career prospects.

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So what is the verdict on learning a foreign language?  Will learning a foreign language help you in your future?  Yes, it will give you a positive return on investment of 2% on average.  That rate of return is probably a lot lower than many of us expected.  However, you can increase that return on investment by learning more uncommon languages (according to Saiz) and by increasing your fluency (according to Caplan).  So learning a foreign language may not make you as much money as expected, but it will make you more compared to someone who doesn’t know a foreign language.