The Over-Under on Underemployment

By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute

I am a product of higher education and my 10 years of postsecondary study have served me well. My college degrees gave me the opportunity to access better jobs and a better lifestyle. The College Plan worked for me, and it continues to help millions of others across the US, Canada, and beyond. What we are learning, however, is that it doesn’t help everyone in the same way. And for some, it doesn’t help at all.

Over the years, I’ve been known to suggest that there exists—dare I say—a “cultish” personality within higher education. People who have completed college have a high perception of the value of their investment because, like me, it has served them well. The cult is perpetuated to a higher level by those who work in higher education. They are the missionaries looking to entice future students into the religion of higher education because it has done so much for them. Thus, they must enlist others into the dogma of how college can change lives. As well, people working in the college world have a certain self-interest in propelling both the truth and the myth that higher education is a panacea for all things. More students produce enhanced job security. Given what is happening at so many small colleges right now with regard to low enrollments, there are a lot of worried faculty and staff around the country.

A higher education can, of course, help remedy difficult circumstances for many people, especially those who are first-generation college students or from low-income backgrounds. An education has the ability to alter seemingly imminent life courses and allow people to break out of their social class through better jobs and higher pay, which in turn increases the health and welfare, living conditions, and future trajectory of their family.

But the gloss of reporting which suggests that everyone benefits equally or better from a higher education is grossly mistaken. The value of a higher education depends on many factors. For instance, we know that the type of institution that a student attends matters greatly. The returns to a two-year certificate or degree are not, on average, as high as those who earn a BA. As well, the perception and selectivity of the institution have a massive impact on future earnings and other outcomes. People who attend Ivy and similar institutions tend to have access to much better jobs with much better pay. A third factor is the amount of debt that a student incurs during college. While students at expensive, selective institutions incur large debt amounts, they also have an enhanced ability to pay these obligations due to higher incomes. Those who incur relatively large debt loads at lower-cost institutions may have more trouble repaying their loans because the returns on investment are not equivalent to their more affluent peers. And finally, there is a large differing impact on those who complete their degree program versus those who do not. Ability to finish means everything in higher education, and those who do not finish their degree program are arguably no better off than had they not started at all. And this become the crunch: simply stating wonderful things about the returns on higher education without a thought to the whole picture does a great disservice to society. We need to be frank about the great things that come from the college experience as well as the not-so-great things, especially since the student and parents are responsible for a larger and larger piece of the price tag.

By the way, I know many people who disagree with me on this issue. I have spoken with legislators who were visibly angry that I would suggest that “some college” could actually have a negative impact on students. My point being that there are those who go to college, incur extreme debt, and fail to complete their degree. In the end, they are worse off than when they started. A lot of debt; not piece of paper to pay for it. Thus, I challenge people who think some college is better than no college at all to take on the debt of those people and walk a few miles in their shoes. It isn’t always better.

This week, Burning Glass Technologies, in partnership with Strada Education Network, released a report on the underemployment of college graduates, and it provides some fodder to the “not for all” discussion. Burning Glass is an analytical company that collects labor market information from millions of workers. In this case, they focused their analysis on what happens to bachelor’s degree recipients after graduation. The findings are illuminating.

Note that this new report does not focus on unemployment. Rather, it focuses on “underemployment,” defined as bachelor’s degree recipients who work in a job that does not require a bachelor’s degree. This is a tough one because determining what is “under” and what is “just right” is a fine line, to be sure. It may be okay to conjure up a number of jobs that do not require the skills of a BA, but the problem is that almost all of the non-blue collar jobs require a BA just because those employers use the BA as a filter. Even if the work could theoretically be done by a ninth-grade student, at least in cognitive ability, employers throw on the layer of a BA because there are so many of them looking for jobs. In fact, the Burning Glass/Strada report says this “Analysis of employer demand shows a rapid increase in upcredentialed jobs, where employers request a bachelor’s degree in occupations that we have classified as noncollege jobs.” Thus, this trend of overevaluation of educational requirements for positions is increasing.

This is something I have argued loudly for several years. Read my previous Swail Letters, including Beware the Rhetoric About the Over Importance of a BA, Debating How Much Education Society Really Needs,” and my piece from January 7, 2013: Eyes Wide Open: Pulling Back the Curtain on Jobs and Education.

Underemployment is a significant issue that is not being addressed. For students that spend gross totals of over $100,000 towards a career degree program, and many whose net spending is at least a quarter of half of that, this can have a significant impact on return on investment for the individual.

According to the Burning Glass/Strada report, 43 percent of recent graduates in their first job out of college are underemployed. After five years, two thirds of that underemployed group remain underemployed, and after 10 years, almost half of the underemployed remain so. Overall, 21 percent of graduates are underemployed after 10 years. This doesn’t say that their college degree didn’t help them get a job or keep them employed, but it does say that the equity in what a bachelor’s degree provides is certainly unequal for all. For some, the degree becomes the golden ticket to a life of relative wealth, health, and happiness, knowing that all of those things are a fortune of life by situation, opportunity, DNA, or simply fate. For others, starting low can mean keeping low, regardless of degree.

181031_SwailLetter

SOURCE: Burning Glass Technologies and Strada Institute for the Future of Work (2018), “The Permanent Detour: Underemployment’s Long-Term Effects on the Careers of College Grads.”

The report also illustrates that graduates who were underemployed earned approximately 23 percent less in earnings than their appropriately employed peers. For women, the outcomes are worse, with higher levels of underemployment (47 percent compared to men’s 37 percent) and larger gaps in earnings. STEM majors fair better than non-STEM majors, and half or more of the graduates in Education, Health Professions, Public Administration, and Liberal Arts are underemployed in their first job.

Given that over two thirds of college students borrow to support their studies and 70 percent of students have remaining debt obligations four years after graduation (averaging $23,200 in 2012), this is a serious issue for a large group of graduates. The reality is that a large percentage of underemployed graduates tend to stay underemployed and earn less than their peers. This is a problem. They start earning less and they always earn less. In a world that has traditionally said that the first job doesn’t matter very much, it seems it does.

The best way to negate this underemployment issue is to turn our focus from degrees to competencies. To be fair, if I am an engineering firm hiring for an engineer, I need to see the engineering degree. Same for medicine, accounting, and lawyering, to a degree.[1] There is just too much knowledge, let alone licensing, that goes with professional degrees. I could argue for teaching and other jobs as well.

But if employers are sifting out most of the workforce by the bachelor’s degree for jobs that either used to go to high school graduates or new jobs that never did really need college, why are we supporting that type of system? The end result is too many people with a degree that won’t pay for itself. Or, if not pay for itself, will not meet the expectations of that degree.

Like many other organizations and experts, I want everyone to have a chance to work towards their potential, whatever that may be. If they want a job and career that requires a college degree, then our society should help them get there, regardless of income or class or any other demographic. But if the degrees and hiring procedures are skewed, the system falls apart.

 

[1] There are still a handful of states that allow people to take the bar exam without a law degree.

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About Educational Policy Institute

The Educational Policy Institute (EPI) is a Virginia-based research think tank on education and the social sciences. EPI conducts evaluation and policy studies on various educational issues from Pre-K to workforce outcomes in the United States, Canada, and beyond. Visit us at educationalpolicy.org.
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One Response to The Over-Under on Underemployment

  1. Steve Markl says:

    Excellent. Very well stated.

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