Some College Graduates Are Taking Lower-Paying Jobs

The promise of higher education is to equip students with new ideas and skills that will help them land higher-paying jobs. For many students, this dream comes true—but that is not what happens across the board. As college degree attainment has risen over time, many graduates find themselves taking jobs that traditionally belonged to those without a college education—with no increase in salary.

New data from the 2023 American Community Survey illustrates this phenomenon. In 1980, 29% of prime-age workers earning between $60,000 and $80,000 (in today’s dollars) held a bachelor’s degree or higher. Workers without a four-year degree made up the vast majority of this income bracket. But that is no longer true: today, 52% of this group holds a bachelor’s degree or higher.

We see the same pattern in other income categories. In 1980, 42% of workers earning more than $100,000 (in today’s dollars) had no four-year college degree, meaning it was possible to reach the upper income brackets without college. But that path is now closing: today, only 21% of workers earning six figures lack a college degree.

The phenomenon of employers requiring degrees for jobs that did not previously need them is called degree inflation. For instance, in 1990 only 9% of secretaries and administrative assistants held a bachelor’s degree—but by 2023 that fraction had risen to 35%. This is especially concerning because secretaries earn a median salary of $46,010—below the median for all workers.

Research from the Burning Glass Institute has found that around half of college graduates are underemployed in their first job, meaning they are working in an occupation that has typically not required a degree. Underemployment comes at a cost. Underemployed college graduates earn about a third less than their peers who work in a job where a degree is typically necessary. In fact, underemployed graduates’ salaries are closer to those of high school diploma holders than workers employed in college-level jobs.

Students who bear the costs of college but land jobs paying salaries well below college level may not fully earn back the cost of their education. While college is still a good financial bet on average, a substantial minority of students do not see a return on investment. This contributes to struggles with student loan repayment and the perception that college is no longer “worth it.”

In addition to harming these college graduates, degree inflation closes job opportunities to the 64% of Americans who do not have a college degree. As college graduates creep into lower income brackets, those without a bachelor’s degree slowly disappear from the upper echelons. For instance, it used to be common for those without college degrees to land promotions to higher-paid managerial roles; now, most managers and administrators must have degrees.

Employers have woken up to this problem. Many companies are dropping degree requirements from job postings, as are state governments. This trend is encouraging, but these expanded opportunities for workers without degrees aren’t showing up in the aggregate data yet; the share of workers with college degrees continues to tick upwards in all income brackets. Dropping degree requirements on paper may not work if hiring managers maintain a conscious or unconscious preference for college-educated job candidates.

Reversing degree inflation will require more effort than simply excising the words “bachelor’s degree required” from job postings. Employers will also need to address bias in hiring practices against people without college degrees. Policymakers must focus on creating more non-college pathways for these individuals to develop and prove their capabilities. A job market that values skills over degrees is possible. But there’s still a long way to go.