Is college preparing students for work? Two new studies find nearly half of all college grads aren’t using their degree.
March 11, 2024
When making decisions about college, many students and families worry about return on investment. Will college costs be offset by future earnings? How great is the return on investment?
For about half of college grads, the answer may be not very great.
Two new jointly released research reports–one from the Strada Institute, the other from Burning Glass–find that roughly half of college graduates are “underemployed,” or working in jobs that don’t require a college degree.
According to one of the studies, published by Burning Glass, most bachelor’s degree holders (52%) are underemployed one year after graduation. Underemployment rates hold high over time too. Even ten years after graduation, nearly half of all bachelor’s degree holders (45%) remain underemployed.
The two studies provide some of the strongest data on underemployment to date. Previous studies largely relied on occupational profiles provided by the federal government, profiles such as those available through O*Net, to determine whether a job requires a college degree. In contrast, the two new studies analyzed millions of job postings and resumes to create more accurate and current portraits of underemployment.
With this data, researchers discovered which factors put students most at risk for underemployment. Some of the most relevant factors were college selectivity, participation in an internship, major, and demographics (such as gender, race, and ethnicity).
Unsurprisingly, students who study in the health professions and engineering had the lowest rates of underemployment (23% and 26% respectively), followed closely by graduates in math-intensive business (29%). Other fields, such the humanities and cultural studies (55% underemployment) and non-math-intensive business (57%), fared much worse.
However regardless of major, internships lowered underemployment rates significantly. For students in some majors, the internship effect was pronounced. Grads in the social sciences, for example, were underemployed at a rate of 55 percent if they didn’t do an internship, and 33 percent if they did.
Earning a graduate degree also appears to dampen the effects of underemployment for college graduates. In the data provided by Burning Glass, underemployment rates were 24% or lower for previously underemployed grads who went on to earn a graduate degree. Previously underemployed grads who earned a graduate degree in math or statistics had the lowest rate of underemployment at just 3 percent.
While the studies suggest actions for individuals—participate in an internship, study in certain STEM fields, or enhance your skills with a graduate degree if needed—they also emphasize that colleges and policies need to be designed to reduce underemployment.
“Higher education should recognize underemployment as an avoidable risk for graduates,” urges the report published by Strada Institute.
To reduce that risk, the researchers suggest that all students have access to at least one internship. The researchers also call on higher ed to offer better career guidance to students and provide transparent data on employment outcomes broken down by college and major. With that data, students can make more informed decisions about what college to attend and which majors are more sought after. They can also determine if they need supplementary education, like a bootcamp, to teach in-demand technical skills.
Together, the two reports indicate widespread misalignment between higher education and employers’ expectations. Moreover, they provide urgency for efforts to ensure college grads have useful skills needed to grow economies.
Michael Dedek is a frequent contributor to the Global Opportunity Forum. 