This paper utilizes the 1 percent microdata sample from the 1860 United States Census of Population to examine the patterns of literacy among free adults and document its statistical association with labor market outcomes. Serving as an empirical application of human capital frameworks to a historical context, we evaluate the determinants of literacy and its effects on occupational choice and economic status – the latter proxied by the Integrated Public Use Microdata Series (IPUMS) Occupational Income Score. We model the conditional probability of being literate among free adults using logistic regression to capture how literacy varies across demographic characteristics, including gender, nativity, race, age cohorts, and regional proximity to the institutional structures of slavery. OLS regression models demonstrate a robust, positive relation between occupational income scores and literacy, an association that remains statistically significant when employing a predicted literacy framework to mitigate potential measurement error in reported literacy rates. Our procedure is likely to underestimate the economic value of literacy as it measures the benefits from literacy changing one’s occupation, but it cannot measure the economic benefits from becoming literate within an occupation. Our findings indicate that even in the mid-nineteenth century an individual’s human capital, as measured by literacy, was strongly tied to higher economic standing.