For some time, some in the media have blamed workers themselves for their low and stagnate wages. We now have a technology intensive economy, they said, and to get ahead you need a college education. Well, the trends, as illustrated in the following two charts from the Federal Reserve Bank of New York are clear: college grads are also struggling.
The chart below shows underemployment rates for college graduates with a bachelor degree or higher. A college graduate is considered underemployed if they work in a job that typically does not require a college degree. The red line shows the percent of recent college graduates, 22 to 27 years of age, that are underemployed. The blue line shows the percent of all college graduates, 22 to 65, that are underemployed.
As we can see, approximately 44 percent of all recent college graduates with a bachelor degree or higher are currently working in what the Federal Reserve Bank of New York calls “non-college” jobs. The same is true for roughly one-third of all college graduates.
While the percentage of underemployed college graduates has largely remained unchanged, the same is not true about earnings trends for college graduates employed in non-college jobs. The following chart highlights the share of college graduates in what the Federal Reserve Bank of New York calls good non-college jobs–those paying an annual salary of $45,000 or more–and low-wage jobs–those paying an annual salary of $25,000 or less.
As we can see, the percentage of college graduates employed in good non-college jobs has steadily declined since 2001. For recent college graduates (dark red line), the rate fell from approximately 50 percent down to 35 percent. The percentage with low-wage jobs rose, over the same period, from roughly 10 percent to 13 percent.
There are many good reasons to pursue a college education. But there is little evidence that employers are now busily creating jobs that require high skill or that a bachelor’s degree or higher is some automatic ticket to a financially rewarding job.
As shown above, a significant share of college educated workers are unable to find jobs requiring a college education. And those workers are finding it ever harder to land a “good” non-college job. The problem is not with US workers—it is with the job creating strategies of most businesses operating in the US.