"When Graduating College Doesn’t Pay Off"
People with college degrees make more than people who only graduate from high school. But if you graduate college and end up in a low-wage job, you’ll likely end up paying a price.
Wages for graduates who end up in jobs that don’t require a college degree, or those who are “overeducated,” will suffer long into the future, a new paper from Brian Clark, Clément Joubert, and Arnaud Maurel finds. Each year spent in a job where you’re over-educated will mean a 6.9 percent hit to your income. These spells mean docking 2.6 percent to 4.2 percent from future pay for the next four years. In particular, the researchers found that people who had a two-year or four-year degree, but got jobs that didn’t need them at the beginning of their careers, will experience a “very persistent” penalty to their wages. And while spells of unemployment reduce wages even more than over-education, the impact tends to diminish more quickly, while the impact of over-education lingers.
Those who were previously in jobs they were overqualified for but got better ones will also feel the impact. This means that over-education harms the growth of future wages, the researchers note.
On top of this, experiencing a spell of over-education increases the chances that someone will stay in a job that doesn’t use her degree. About two-thirds of over-educated workers will be stuck in those jobs a year later. While that likelihood decreases as workers’ careers progress, it “remains sizeable 12 years after the first job,” according to the paper. It’ll drop from a likelihood of 62.3 percent to 50.4 percent in that time, which is still very high. At the same time, the probability of getting a job that makes use of a degree drops from 39 percent to just 20 percent three years in, and then to 15 percent after five years and 10 percent after 10. This decline even holds true after controlling for a variety of other characteristics.
The barriers aren’t the same for all groups, however. Black workers are both more likely to be over-educated and also less likely to get into jobs that use their degrees. About 50 percent of black workers who recently graduated from college have ended up in low-paying jobs that don’t typically require a four-year degree since 2003. The paper notes that black graduates with a four-year degree are 15.9 percent more likely than their white peers to be over-educated. And once they end up in those lower-quality jobs, they have a harder time getting out. “[O]vereducated blacks are much less likely than whites to transition to matched jobs,” or those that match their level of education, the paper notes, and “these matched spells are less persistent for blacks than for whites.” Hispanic students with a four-year degree are also 12.2 percent more likely to be overeducated than white ones.
Women are also about 5 to 13 percent likely to be over-educated than men. “[G]iven the existence of a substantial and persistent wage penalty of being overeducated,” the researchers note, “this result implies that overeducation is an important aspect of the gender wage gap.”
These problems affect a wide swath of people. Their research found that 37.4 percent of college graduates work a job that only requires a high school degree. The most common jobs the over-educated end up in are secretaries and sales positions, while cashiers and food preparers also make the top ten.
Given that the cost of attending college keeps skyrocketing and more and more students are taking on debt to finance their educations, this research means a bleak economic future for those who don’t end up in jobs that use their degrees.