For decades, a four-year college degree has been viewed as the golden ticket to economic prosperity, with study after study documenting that college graduates enjoy better employment prospects, earn higher wages, and receive superior benefit packages than workers without a degree.
However, the reality is that while the typical college graduate has better job opportunities than peers without a degree, a bachelor’s degree doesn’t guarantee occupational success. In fact, a new report finds that among workers who’ve earned a BA/BS, only about half are employed in a college-level job one year after graduating.
What about the other half? They’re underemployed—working at jobs that either don’t require a degree or fail to make meaningful use of the skills associated with it. That’s one main takeaway from the just-released Talent Disrupted: Underemployment, College Graduates, and the Way Forward, 2024, a report prepared by researchers for the Burning Glass Institute and the Strada Institute for the Future of Work.
That topline takeaway might seem to support the rampant hostility towards college, especially on the right. But the findings don’t support that view. According to the report, underemployed college graduates still earn, on average, 25 percent more than those with only a high school degree. Moreover, the researchers paint a profile of the underemployed—they disproportionately graduate from for-profit colleges, with majors in less-rigorous fields of study, and without opportunities for paid internships—that suggests the need for specific higher-ed reforms rather than outright opposition.
Combining publicly available data with employment and résumé information from sources like the Lightcast Career Histories Database, the Bureau of Labor Statistics, and the Census Bureau’s American Community Survey, the researchers identified the 2022 employment status of 18.6 million individuals completing college between 2012 and 2021—10.8 million had a bachelor’s degree, 6.3 million held a master’s and 1.6 million had earned a doctorate or equivalent.
They then examined underemployment among this sample, the factors associated with the problem, and several characteristics related to college graduates transitioning from underemployment.
One year after graduation, 48 percent of terminal BA/BS graduates are employed in college-level jobs; 10 years after completion, the percentage climbs to 55 percent. The 52 percent of terminal baccalaureate graduates who are initially underemployed—defined as not holding a job where most workers have or are required to have a bachelor’s degree—also improves over time, declining to 45 percent after ten years.
However, to a surprising extent, the die is cast with that first job. Most graduates who begin in college-level jobs stay in them over time, while initially underemployed graduates largely remain underemployed. About 27 percent of underemployed graduates escape underemployment between one and 10 years after graduation, while 21 percent of graduates in college-level jobs fall into underemployment.
As a result of those diverging paths, graduates who start out underemployed are about 3.5 times more likely to remain underemployed 10 years after college than those who began in a college-level job.
The majority (88 percent) of initially underemployed graduates were what the researchers termed “severely underemployed” five years after college. They were working in jobs requiring a high school education or less. Examples include office support, retail sales, food service, blue-collar construction, transportation, and manufacturing jobs.
Not only is underemployment persistent, it’s also costly. A recent graduate employed in a college-level job earns an average of $60,000 annually, about 88 percent more than someone who’s only finished high school, $32,000. There’s still a wage premium for underemployed college graduates, who earn an average of $40,000 annually. However, it’s only about 25 percent higher than the earnings of someone with no education beyond high school.
What factors are associated with underemployment?
In addition to demographic and geographic differences, the odds of securing college-level jobs are also affected by the type of college that graduates attended, what they studied, and other factors. Here are some examples.
Degree Field. Graduates with degrees in public safety and security, recreation and wellness studies, and less math-intensive business fields are more than twice as likely to be underemployed than those with health, engineering, or math-intensive business fields. Underemployment rates also are low for those studying education.
Although the common wisdom is that STEM (Science, Technology, Engineering, Math) degrees almost guarantee a college-level job, that’s not true for all STEM majors. Graduates with degrees in the most quantitatively rigorous fields are likelier to take college-level jobs than those majoring in other STEM fields.
For example, computer science and engineering graduates fare better than those with biology and life sciences degrees. Likewise, math-intensive business fields such as accounting and finance yield higher rates of college-level employment than general business, human resources, and marketing.
Higher Education Sector. The type of institution attended is also linked to graduates’ likelihood of underemployment. Five years after completion, 58 percent of graduates from for-profit institutions are underemployed, substantially higher than the proportion of graduates from public colleges (46 percent) or private, nonprofit schools (43 percent).
The chances of being underemployed also differ for graduates of schools serving specific racial/ethnic groups. Graduates of Historically Black Colleges and Universities are 15 percent less likely than graduates from other institutions to be underemployed, and graduates from Hispanic Serving Institutions are 3 percent less likely to be underemployed.
Institutional Selectivity. Graduates of more selective colleges fare better at landing college-level jobs, which is unsurprising given the better-resourced career services and more extensive networks of influential alumni such institutions typically enjoy. In addition, as the report notes, they are advantaged because “employers assume that the college’s selection process is a proxy for intelligence, motivation, industry, and talent.”
Ten years after graduation, 38 percent of graduates from more selective colleges were underemployed, compared to 45 percent from selective colleges and 50 percent from inclusive institutions.
Internships. One of the strongest factors associated with graduates securing college-level jobs was whether they participated in an internship. Multiple advantages are conveyed by internships—particularly ones that are paid—including practical on-the-job training, a fuller network of workplace connections, and what often amounts to a supervised “tryout” for a position with the entity sponsoring the internship.
The researchers discovered the odds of being underemployed after completing a bachelor’s degree are 49 percent lower for students who participated in an internship during college compared to those who did not, a boost found across all different kinds of institutions and many different majors.
Gender and Ethnicity. Ten years after completing college, 49 percent of male and 44 percent of female graduates were underemployed, mirroring gender-related differences in college enrollment and completion rates. Ten years after college, 53 percent of Black graduates were underemployed, compared to 49 percent of Hispanics/Latinos, 46 percent of Whites, and 38 percent of Asians.
How can college students avoid or escape underemployment?
Underemployment does not have to be a permanent detour for college graduates. Talent Disrupted outlines five factors that students can take to help pave the road to better careers either for those still in college or for graduates underemployed in their first jobs.
Pick your college major wisely. Although students choose their majors for many legitimate reasons, preparing for a good job remains a primary motive for most. For graduates wanting to maximize opportunities for well-paid, college-level jobs, a math-intensive major provides one of the surest means to that end. If not majoring in one of these fields, students can enhance their job prospects by taking electives in statistics, data analysis, and other quantitative reasoning courses.
Earn a short-term certificate. Students not interested in STEM fields or math-rich business majors can still position themselves for better job prospects if they complete a short-term certificate (15 credits or less) emphasizing quantitative techniques and data analysis.
Complete an internship. Regardless of major, college graduates who complete at least one internship fare much better in the labor market than those without that experience.
Paid internships, in particular, lead to better employment. A 2022 survey by the National Association of Colleges and Employers found students who had paid internships in college received 1.61 job offers on average, while unpaid interns had an average of .94 offers. Students with no internship experience averaged only .77 job offers.
In addition to more job offers, paid interns are also offered higher starting pay. According to the same survey, paid interns earned a median starting salary of $62,500 compared to unpaid interns, who reported a median starting salary of $42,500.
Go To Graduate School. Many underemployed graduates earn an advanced degree. In some fields, like biological sciences, education, and psychology, an advanced degree is vital to securing a well-paid position. In others, taking on the additional expense of graduate school is a riskier proposition that may not lead to better occupational outcomes, but leave students still dissatisfied with their job options and deeper in debt instead.
Take a starting job with better long-term prospects. Not all forms of initial underemployment are dead ends. Some are more likely to serve as eventual on-ramps to college-level employment. Graduates who are severely underemployed initially are less likely to move up to college-level jobs (16 percent) than those who are moderately underemployed (26 percent). On the other hand, underemployment in health care, education, life and physical sciences, social sciences, and community service is more likely to be followed by transitions to college-level jobs.
What should policymakers and college leaders do?
Students exert the greatest influence on the trajectories of their post-college careers. Still, policymakers and university leaders can also reduce risks of underemployment if they embrace four policies recommended in Talent Disrupted:
- Increase student access to paid internships.
- Provide detailed data about specific occupational outcomes of individual degree programs.
- Enhance personalized education-to-employment coaching and guidance by investing more in college advisors, mentors, and career services staff.
- Fund colleges so that students have affordable access to more expensive degree programs, many—like computer science, data science, engineering, and nursing—also lead to the best employment outcomes. Noting the “strong correlation between programs with high delivery costs and those with strong restrictions to access,” the report suggests revising state funding formulas so institutions can expand enrollment in high-cost programs.
It’s become fashionable these days to question the worth of attending college. Witness a recent Wall Street Journal article proclaiming that Americans are losing faith in the value of college and that most families are “looking for alternatives.” Gloom-and-doom has become de rigueur for many commentators despite overwhelming evidence that college graduates are more economically secure, enjoy better health, and participate more fully in civic life than those with less education.
In contrast, too many college leaders have a knee-jerk rejection of any criticism of higher education despite abundant evidence that colleges cost too much, leave too many students behind, spend more money on non-academic activities than they can afford, and have lost the confidence of many employers and members of the public.
The reality is more complicated than either extreme, which may be among the most important lessons in the Talent Disrupted report. People who care about higher education must find a voice between the Cassandras, who predict its eventual demise, and the Pollyannas, who are happy to defend the status quo.
Higher education isn’t broken but needs significant improvement to remain one of our nation’s most essential institutions. Acknowledging—and then reducing—the problem of college graduate underemployment is a good place to start.
Editor’s note: The Strada Education Foundation is a funder of the Washington Monthly’s higher education coverage.
