• October 30, 2014

Millions of Graduates Hold Jobs That Don't Require a College Degree, Report Says

Students who graduated into the Great Recession have struggled to find work that fits their learning. But according to research released on Monday, millions of college graduates over all—not just recent ones—suffer a mismatch between education and employment, holding jobs that don't require a costly college degree.

The study, from the Center for College Affordability and Productivity, says that nearly half of all American college graduates in 2010—some three years after the recession began—were underemployed, holding relatively low-paying and low-skilled jobs.

According to a report on the study, "Why Are Recent College Graduates Underemployed? University Enrollments and Labor Market Realities," out of 41.7 million working college graduates in 2010, 48 percent—more than 20 million people—held jobs that required less than a bachelor's degree. Thirty-seven percent held jobs that required no more than a high-school diploma.

The report's authors—Richard Vedder, Jonathan Robe, and Christopher Denhart—used employment data from the U.S. Bureau of Labor Statistics to calculate that the number of college graduates is growing at a rate disproportionate to the number of jobs requiring a college degree. They question whether America spends too much on higher education, and ask whether society can afford to subsidize higher education for graduates who end up in jobs they could have landed without going to college.

"Student-loan programs and federal assistance programs are based on some sort of implicit assumption that we're training people for the jobs of the future," Mr. Vedder, director of the center and a professor emeritus at Ohio University, said in an interview. "In reality, a lot of them are not."

The Bartender With a B.A.

While most of the analysis centers on broad categories, such as college graduates compared with high-school graduates, the authors also studied differences in graduates' success rates by university and major, using salary data from Payscale.com.

The report notes variations in earnings depend on the type of college graduates attended and the type of degree they obtained. Those who graduated from elite private institutions fared better than those from state flagship universities and other public universities, on average, and those who majored in engineering and economics earned more than those in the humanities.

One way the authors tracked the growth of what they call underemployment was by comparing statistics from the 1970 Census to the 2010 figures from the Bureau of Labor Statistics. The authors selected six occupations in which, they say, the skills required have not drastically changed over the last 40 years—taxi drivers, shipping and receiving clerks, salesmen and retailers, firefighters, carpenters, and bank tellers. In 1970 less than 5 percent of firefighters held a college degree, but by 2010 the share had jumped to 18 percent. Similarly, only 1 percent of taxi drivers in 1970 were college graduates, but by 2010 more than 15 percent were.

The report also cites other research to generalize the trend of underemployment among college graduates. For example, one study based on data from the Current Population Survey calculated that the percentage of underemployed college graduates rose from 10.8 percent in 1967 to 17.5 percent in 1990.

"We have noted for several years a disconnect between the number of graduates and the realities of the labor market," Mr. Vedder said. "It isn't like underemployment was growing slowly and shot up in the last five years. It has been a steady rise."

Mr. Vedder said the number of college-level jobs is growing at a slower pace than the number of college graduates, and it will continue to grow more slowly if government data prove to be true.

Mr. Robe, a research fellow at the center, said that the "bartender with a bachelor's degree" is a classic example of the lack of jobs that require a college education. Many college graduates who take jobs as bartenders or taxicab drivers have better options, he said. But vacancies in those occupations tend to be filled by other college graduates, a trend that slowly crowds out high-school graduates and dropouts.

"Maybe we should incentivize colleges to more accurately counsel students," Mr. Vedder said. "If you get a degree in business administration, you may not necessarily walk into a middle-class life. There's a good chance you may end up being a bartender."

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