Relying on a unique data set from the Bureau of Labor Statistics, CCAP has written extensively (here, here and here ) about the growing trend of underemployment for our nation’s college graduates. We estimate that approximately 17 million Americans with college degrees are employed in jobs that do not require college-level skills. The majority of our previous work has examined college graduates in general, lumping together those with bachelor’s and graduate degrees. Recently, I disaggregated the data and found that rampant underemployment is not limited to those with just a bachelor’s degree.
In 2008 (the last year data are available), 7.87 million graduate degree holders were underemployed (that is, employed in jobs requiring less than a graduate degree). Further breaking the data down, 6.98 million held masters and another 1.18 million had PhDs or professional degrees. A full 59% of those employed holding a masters degree were classified as underemployed. PhD and Professional degree holders did better at 22% underemployed. Yet that is still a shockingly high figure considering the level of education that these individuals have attained. To further put things in perspective, the number of underemployed masters degree holders was more than the total number of masters degrees produced between 1998 and 2008 (5.75 million). Similarly for the PhDs/Professionals, 80% of the incremental increase in the total number of degree holders over that same period were considered underemployed.
It should be noted that the underemployment estimate for PhDs is on the conservative side. In calculating the totals, I did not count as underemployed the PhDs/Professionals working in jobs that the BLS classifies as requiring “a bachelor’s degree or higher” or “master’s degrees.” Workers in these fields were given the benefit of the doubt in whether or not they were truly underemployed because of the small ambiguities with these BLS classifications (i.e., are professional degree holders really underemployed if they work in a job requiring a master’s degree?). Had these two BLS classifications been included, PhD/Professional underemployment would have risen to 1.59 million.
A few thoughts come to mind when looking at this data. First, not all graduate degrees are created equal. Those with graduate degrees in finance, economics, and engineering for example likely have a better employment outlook (and are less likely to be underemployed) than those with graduate degrees in anthropology, English or sociology. This is not to say that no one should enter the latter type of fields, but that obtaining one of these degrees should be considered carefully. Secondly, as a recent book, has detailed, a significant number of undergraduates are learning little in college. A likely consequence of this is that more and more people are finding it “necessary” to get graduate degrees. The credential inflation problem associated with this issue could be alleviated somewhat if undergraduate education (and K-12 for that matter) was more rigorous and effective. Lastly, universities should take note of the employment opportunities for graduate degree holders. Graduate students are frequently subsidized (through tuition waivers, stipends, etc.) by their undergraduate counterparts. With an often bleak employment outlook for many graduate degrees/programs, universities should rethink their graduate degree subsidization. Reducing subsidies for graduate education will likely help realign the supply of graduate degree holders with realistic demand from employers.
This blog originally posted on CCAP's "Higher Education and the Economy" blog space at Forbes.com.