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THE UNDEREDUCATED AMERICAN: United States Failing to Meet Demand for College-Educated Workers, New Report Finds

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“the demand for college-educated workers is growing much faster than the supply. In recession and recovery, we remain fixated on the high school jobs that are lost and not coming back. We are hurtling into a future dominated by college-level jobs, unprepared.”

Even though the national unemployment rate continues to hover above 9 percent, individuals with postsecondary education are in high demand among employers and will continue to be as the economic recovery takes hold and hiring picks back up, according to The Undereducated American, a new report from the Georgetown University Center on Education and the Workforce. Unfortunately, the United States has failed to meet this demand and has been “underproducing” college-educated workers for decades, the report finds.

According to the report, the shortage of workers with postsecondary education has led to decreased productivity and a growing earnings disparity between those with a college education and those without. To resolve these twin dilemmas, the report calls for adding an additional twenty million postsecondary educated workers by 2025. Meeting this goal would help raise the wages of all workers, reverse the growth of income inequality, boost gross domestic product (GDP) by $500 billion, and add over $100 billion in additional tax revenue, the report finds.

“The data are clear,” said Anthony P. Carnevale, the Center’s director and coauthor of the report, “the demand for college-educated workers is growing much faster than the supply. In recession and recovery, we remain fixated on the high school jobs that are lost and not coming back. We are hurtling into a future dominated by college-level jobs, unprepared.”

The report acknowledges that the temptation to skip college has grown during the current economic climate in which families struggle to pay rising college costs and college graduates have difficulty finding work. It also points out that some commentators have used this opportunity to suggest that the United States has more college graduates than it needs. However, the report also notes that similar arguments were made in the 1970s and 1980s, yet the earnings for college-educated workers grew rapidly throughout the 1980s and 1990s, outpacing the growth in earnings of their less-educated peers.

“The laws of supply and demand are the best single indicator of whether the United States is producing enough, too few, or too many college graduates,” the report notes. “If the relative earnings of college-educated workers rise faster than the earnings of their counterparts, it means the demand is growing faster than supply.”

As proof of the importance of a college education, the report points to the increasing “wage premium” that college-educated workers enjoy over their less-educated peers. In 1979, college-educated workers made 40 percent more than individuals with a high school diploma and no postsecondary education. By 2005, this wage premium had increased to 74 percent, with college-educated workers earning an average of $54,502, compared to $31,242 for those with a high school diploma and no postsecondary education. If left unchecked, the report argues that the wage premium for college graduates will jump to 96 percent by 2025.

Taking the argument one step further, the report analyzes earnings in specific occupations that employ both workers with a bachelor’s degree and workers with only a high school diploma. Time and time again, the report finds that individuals with a bachelor’s degree earned more than individuals with only a high school diploma—even though they held very similar positions. For example, firefighters with a bachelor’s degree earn 25 percent more than firefighters with only a high school diploma. Dental hygienists with a bachelor’s degree earn 76 percent more than those with only a high school diploma. Cashiers with a bachelor’s degree earn 56 percent more than those who only finished high school.

“Many workers with a bachelor’s degree in ‘non-college jobs’ transform these jobs into positions that utilize their skills such that their jobs come to resemble jobs that require a bachelor’s degree,” the report notes. “Even when the titles are the same, the actual job tasks are different and even when the job tasks are very similar, workers with a bachelor’s degree often prove themselves to be more valuable to their employers.”

In order for the United States to remain competitive in the global economy while also following through on the “promise of a decent living wage to those willing to work for it,” the report calls for adding twenty million additional college-educated workers by 2025. At its current pace, the nation is set to add about eight million college graduates to its workforce, meaning that it would need to add twelve million more college graduates to the workforce over the next fifteen years.

“There is clearly room to grow as many students who are capable of college-level coursework never enroll in college,” the report reads. “Moreover, most European countries have higher educational attainment levels that we do in the United States. There is no reason to think that these countries have an inherently more capable population.”

According to The Undereducated American, meeting this goal would have a profound effect on the wage premium, making the difference in earnings between a bachelor’s degree recipient and a high school graduate a more reasonable 46 percent. At the same time, it would raise the wages of high school graduates by 24 percent, individuals with associate’s degrees by 15 percent, and bachelor’s degree recipients by 6 percent.

“Postsecondary education has historically been one of the safest long-term investments we can make in our economic future,” the report notes. “Educated workers are more productive, earn more, and pay more taxes. Not only is higher education a sure return on investment, but access to postsecondary education has been the arbiter of economic success and upward mobility in our society. More postsecondary education will achieve not only a more dynamic and vibrant economy, but a more equitable society.”

The complete report is available at http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/undereducatedamerican.pdf .

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