Talentworks Recruitment Search Group found that “61% of all full-time ‘entry-level’ jobs require 3+ years of experience”,1 which may seem like a Catch-22 situation for graduates fresh out of college. Your job search targets ‘entry-level’ positions, but many roles require having more than two years of work experience. How are you supposed to get your foot through the door when you do not even have the required two or more years of industry experience? You may have a college degree and a lot of passion for the industry, but you are not qualified enough for the most junior positions.
The inability of college graduates to join their respective industries has several consequences to the economy at large. Jobs that are mismatched to their skill level, financially inadequate and taken out of necessity will impact graduates’ future earning potential, ability to purchase property, delay starting a family and cause higher rates of student loan default, with the latter placing a burden on the U.S. taxpayer.
Due to a difficulty in creating an objective set of indicators which could be used in monthly household surveys, the Bureau of Labor Statistics announced there are no official government statistics that could show a total number of people who may be perceived as underemployed.2
A few companies attempted to quantify the number of underemployed individuals, whether by the means of a survey or by analyzing their own data. A 2017 survey by Accenture found that 54% of 2015/16 graduates who have recently entered workforce in the last one to two years viewed themselves as underemployed.3 In 2018 Burning Glass and Strada Institute published findings which found that 43% of college graduates were underemployed in their first job, out of which 29% were still underemployed after five years. The cycle of underemployment continues with 21% were still underemployed after 10 years.4 Similarly, the Federal Reserve Bank of New York determined that the underemployment of recent graduates is at 42.2% as of June 2018. However, among the total number of college graduates aged 22 to 26 with a bachelor’s degree or higher, underemployment goes down to 34.2%.5
Depending on which estimates we look at, the truth holds that about a third of all degree-holders remain underemployed and having earned their degree, they are not adding value to the labor force. We can only speculate as to how much in lost earnings this is costing the U.S. economy. Burning Glass report found that “on average, underemployed recent graduates earn ~$10,000 (27%) less per year than fully employed graduates.” U.S. economy loses out not only due to diminished expenditure potential of this particular group, but also by carrying the burden of spending billions of dollars per year to support colleges and universities teaching skills which may not be applicable in the workplace.
Recent college graduates who increasingly compete with experts for entry level jobs are more likely to be underemployed for some part of their lives. Researchers from Burning Glass found that college graduates who are underemployed in their first job after graduation are more likely to remain underemployed after five years, than those who were not underemployed in their first job. 6
Being underemployed out of necessity to pay back student debt rather than holding back for an ideal job may be one of the reasons why unemployment rates have been historically low among degree-holders, as compared to groups with different educational attainment such as ‘less than a high school diploma’, ‘high school graduates, no college’ and ‘some college or associate degree’.
(1) Includes persons with a high school diploma or equivalent.
(2) Includes persons with bachelor`s, master`s, professional, and doctoral degrees.
Currently, the majority of jobs in the United States do not require post-secondary degrees. The Chart below shows the top ten occupations in the U.S. by the number of people employed. One does not need a college degree to become a truck driver, retail sales worker or a cashier. With the growing supply of degree-holders, the labor market seems disconnected. Supply outstrips demand for the jobs requiring a degree from a higher education institution.
Includes part-time and full-time workers
At the same time, companies around the world are increasingly exploring the use of technology to replace repetitive human tasks. Amazon just opened their fourth cashierless store with plans to open up to 3,000 such stores by 2021.7,8 Walmart is testing floor scrubbing robots in 360 stores in the U.S.9 A shift towards unmanned services is happening all around the world. Moreover, Chinese internet giant Tencent opened its first cashierless pop-up store in Shanghai in January this year and Henn-na Hotel in Nagasaki, Japan is partly staffed by robots, since it opened back in 2015.10, 11
These trends could be showing us a global shift towards evolving job types of the future. Jobs are changing as well in their degree of complexity. Occupations that used to be easy to get are not easy anymore. Manufacturing jobs which may have not historically required certified skills have become more specialized and, in many cases, require college degrees. Moreover, the technology boom has created entirely new jobs. The World Economic Forum reports that jobs such as cashiers and ticket clerks, data entry clerks and financial analysts may become redundant in the future. Roles such as data analysts and scientists, innovation professionals and new technology specialists will become increasingly important
What other jobs will exist in the future? Blockchain Architects? Human-Machine Training Specialists? One thing is for sure. Some repetitive jobs may disappear, but specialized roles will remain. Someone must teach the algorithms. Machines can do the work, but it is up to us as humans to make decisions. Universities and their offerings will have to adjust to offer new models of higher education that are better suited to the job market and the changing global economy.
Adrianna Kowalczyk is an economist and the market research analyst for the Global Knowledge Center. She conducts market research and data analysis, identifies market trends and develops industry insights. Adrianna explores a wide spectrum of current and new technologies affecting real estate and the future of work and has done extensive research on the application of blockchain technology.