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Conventional wisdom has it that the demand for workers with college degrees is growing rapidly in the United States and will escalate. But the issue of what job qualifications will be important in the future and for whom is complex, with several threads of argument intertwined.
First comes the very important question of how an individual can best prepare educationally to do well in the future labor market. Coupled with that question is the need for citizens to have an equal opportunity to attend and complete college, such access being key to the nation’s major problem of income inequality among racial and ethnic groups. Second is the question of how many college graduates the nation needs to produce, and with what skills, to ensure our national prosperity in an age of rapid technological change, globalization, and strong international competition.
The Benefits of College to Individuals
It is clearly settled that, on average, people who earn college degrees and other postsecondary certification are paid more than people who do not—a lot more. Economists refer to this as the wage premium. Lisa Barrow and Cecilia Rouse have shown that the wage premium has risen since 1980, although the rate of increase slowed in the mid-1990s. So even while the costs of going to college have increased, it still pays an individual to go to college.
It is also clearly established that some individuals in this society have more access to college and hence to the wage premium than others, depending on race, ethnicity, socioeconomic status, and geography, among other variables. For example, while 31 percent of white 25- to 29-year-olds have attained a bachelor’s degree or higher, only 19 percent of blacks and 10 percent of Hispanics have done so (Condition of Education, Table 8, 2006). Given both the financial and non-financial benefits of college, this inequitable access to a better life goes against the ideal of meritocracy that is so central to American ideology.
The rising wage premium, however, is due largely to the sharply falling earnings of high-school graduates and dropouts rather than to higher earnings for college graduates, which means that there is a higher relative demand for college graduates. However, this is often taken to mean that the absolute demand for college graduates is rising, and thus that the economy needs a higher proportion of people to get a college degree. That people with college degrees earn more than people without them says a lot about what is good for individuals and whether education is a good private investment, but it says little about how many and what kind of college graduates the economy and the national job structure demand.
The Need for College-Educated Workers in the U.S.
Without a doubt, the quality and quantity of higher education available is critical to the nation’s future economic well-being—which makes it important that we gain a clear understanding of how many students colleges and universities need to educate, and with what skills and knowledge. However, getting a fix on the present situation and making useful predictions about the future are dismayingly complex propositions.
There is little doubt that the last five or six decades have seen growth in the educational requirements of jobs. Research done since World War II suggests that there has been a very gradual rise in the educational skills and literacy required for work—but not a rapid expansion. Moreover, in the future we are likely to face shortages of skilled workers in certain fields as a result of baby-boomer retirements. Meanwhile, there is understandable nervousness about the fact that several countries have surpassed us in the percentage of their population getting an advanced education. Nevertheless, compelling evidence does not exist that there will be a rapid rise in the general demand for college graduates and a damaging shortfall in their supply sufficient to cause the United States to falter in the world economy.
Confusion about the demand for college graduates runs throughout discussions of national workforce needs. Statements such as the second sentence of the report of the Spellings Commission on the Future of Higher Education—“Ninety percent of the fastest-growing jobs in the new knowledge-driven economy will require some postsecondary education”—reflect one of the most common sources of confusion. Here, a false conclusion about growing demand is reached by looking at occupations with the fastest growth rate, rather than looking at all occupations. So what does a broader view of the employment outlook tell us about the demand for college graduates?
Paul E. Barton is an education writer, consultant, and senior associate in the Policy Information Center at the Educational Testing Service (ETS). He has served previously as director of the ETS Policy Information Center, president of the National Institute for Work and Learning, a member of the U.S. Secretary of Labor’s Policy Planning Staff, a staff member in the Office of Management and Budget, and associate director of the National Assessment of Educational Progress.
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