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Why are Recent College Graduates Underemployed? University Enrollments and Labor Market Realities

February 8, 2013

Why are Recent College Graduates Underemployed? University Enrollments and Labor Market Realities

Source: Center for College Affordability and Productivity

Political leaders, prominent foundations, and college presidents have argued that the nation must increase the proportion of adults with college degrees in order for America to remain competitive in the global economy. Supporting those positions, some have issued studies demonstrating that there is a significant earnings premium associated with the possession of a college degree. That is, college graduates tend to earn more in the labor market compared with those with only a high-school education, a differential that is large enough to justify the expenditure of increasingly large sums of money necessary to finance a college degree. A less optimistic story points out that, while there are undoubtedly many who benefit —even quite substantially economically, from higher education, a not inconsequential number of Americans who obtain higher education do not achieve the economic gains traditionally accompanying the acquisition of college-level credentials. This study uses empirical evidence relating to labor markets to argue that a growing disconnect has evolved between employer needs and the volume and nature of college training of students, and that the growth of supply of college-educated labor is exceeding the growth in the demand for such labor in the labor market.

Hat tip: PW

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