Labor Force Mismatch Leads to College Grad Underemployment

February 7, 2013

College education continues to be touted as the ticket to a better economic future, though roughly 48 percent of employed college graduates are in jobs that the U.S. Bureau of Labor Statistics (BLS) says require less than a four-year college education, say Richard Vedder, director of the Center for College Affordability and Productivity (CCAP), Christopher Denhart, an undergraduate at Ohio University, and Jonathan Robe, a research fellow at CCAP.

  • One argument for higher education traditionally assumes that critical knowledge is imparted during college that is useful in the workplace, but this fails to recognize that the labor market rewards experience more so than educational attainment.
  • Another argument for higher education posits that college diplomas are signaling devices that convey information about an individual's intelligence and persistence to an employer.
  • A third argument contends that college is an effective method of socialization for youth.

Although these arguments comprise a compelling argument for higher education, the empirical data does not suggest that pursuing college education is a steadfast guarantee of a good labor market outcome.

  • Eleven percent of employed college graduates are in occupations requiring more than a high school diploma but less than a bachelor's and 37 percent are in occupations requiring no more than a high school diploma.
  • There are approximately 5 million college graduates that are in jobs the BLS says require less than a high school education.
  • Past and projected future growth in college enrollments and the number of graduates exceeds the actual or projected growth in high-skilled jobs, which explains why many college graduates are underemployed with no relief in sight.

From 2010 to 2020, CCAP estimates that 19 million more Americans will earn a bachelor's degree or more while only close to 7 million new jobs will require a bachelor's degree.  The report also states that not all colleges and not all majors are equal. The labor market tends to reward private school graduates more generously than their public school counterparts, and grads with majors in engineering and economics will likely earn more than double what recent social work or education graduates will earn.

CCAP concludes that there is a mismatch between what skills and requirements the job market will demand and the number of graduates expected to enter the job market in the next decade.

Source: Richard Vedder, Christopher Denhart and Jonathan Robe, "Why Are Recent College Graduates Underemployed?" Center for College Affordability and Productivity, January 2013.

 

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