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Are Underemployed Graduates Displacing Nongraduates?

The current recovery’s failure to produce robust job growth has focused attention on workers who are temporarily getting by in positions that are not good matches. One mismatch is formally measured in the count of part-time workers who want full-time work. Another frequently discussed, but less measured mismatch is those who hold a college degree but must take a job that does not require their degree because they cannot find employment in their field. For example, we hear anecdotes of recent college graduates serving coffee and stocking shelves.

We looked at data that could reflect this trend and found that college graduates are in fact becoming more prevalent in occupations that do not require a degree. The trend actually started before the recession, though it has, if anything, increased during the slowdown. Also, a few very-low-skilled occupations have seen a jump in college graduates during and after the recession. While other ongoing structural changes in the economy could be driving all of these trends in the data, they are consistent with the stories of educated people rolling down into mismatched positions.

Mismatches are not the only reason that we might see more educated people in some occupations. Employers cutting payrolls during the recession, for example, might intentionally retain their graduates while letting nongraduates go. Or a new technology may require that people have a degree to provide a product or service for which a degree was unnecessary 10 years ago. Within the categories we will examine, the lowest-skill occupations may be declining while the higher-skilled occupations are growing. These shifts in the labor market, combined with the time it takes the workforce to increase education levels, could explain some of the wide spread in unemployment rates that are observed between the college degreed and nondegreed. In 2010, workers without a college degree experienced 10.4 percent unemployment, while those with a bachelor’s degree or greater were unemployed at 4.7 percent.

To begin our analysis, we sorted all the occupations tracked in the Current Population Survey into two groups, those where the majority of workers hold less than a bachelor’s degree (BA) and those where the majority are college graduates. High school drop outs and associate’s degree holders are in the first category, and graduate degree holders are in the second. For the sake of simplicity, we’ll refer to the groups as non-BA occupations and BA occupations. We observe 388 non-BA occupations (for example, secretaries, retail sales workers, and drivers) and 115 BA occupations (such as teachers, nurses, and accountants). Most non-BA occupations have some degree holders working in them. In 198 of these occupations, 10 percent or more of the workers hold a college degree. Many BA occupations also have substantial shares of non-BA holders working in them.

We do have to recognize that some of what appears to be substitution or competition between workers with different education levels could be imprecision in the definitions of the occupations. Occupations such as “medical services manager” have similar percentages of workers with and without college degrees. Perhaps workers with degrees are performing significantly different, higher-skilled tasks, which fit best under the title “medical services manager,” along with simpler management tasks.

Levels and Changes in the Percent of Workers in Occupations That Mainly Employ People with a Different Level of Education

2004 2007 2010 2004–2007 change 2007–2010 change
Less-than-bachelor’s degree holders in college-degree-majority occupations 25.82 23.89 23.70 −1.92 −0.19
Degree holders in less-than-bachelor's degree occupations 16.30 17.12 18.20 0.82 1.08

Source: Authors’ calculations from the CPS data.

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