Underemployment - The Problem that We Shouldn't Have (Part One)

        One firmly held belief of most people in our society is that education is the key to a better quality life. This is especially true when it comes to higher education. It affords us opportunity which can be the difference between the haves and the have nots. A college degree can be the primary factor in bringing down barriers in many industries as well as lead to higher wages and lower unemployment rates. For many people, the American Dream depends on the ability to complete a bachelor’s degree more than any other factor.

               While there’s plenty of data to back the importance of a college degree, students are failing to reap the full benefits of their education. Tuition rates are constantly going up causing students to accumulate more student loan debt than ever before. In fact, student loan debt is now a trillion dollar industry. Even worse, despite an evolving job market with higher demand than supply in many emerging and growing industries, this generation is experiencing unprecedented levels of underemployment and are the first generation expected to make less than their parents.

               So, what exactly is underemployment? It’s when skilled workers occupy jobs far below their full range of abilities which, naturally, lower their earning potential significantly. While underemployment can affect any person at any level of their career, underemployment for recent college grads typically refers to students who, upon graduation, enter the workforce in jobs that don’t require a college degree. Essentially, not only do they forego the benefits of gaining a college degree, they are now also receiving a negative return on investment from their degree.

First, in order to attend school, they likely took on student debt which would not be necessary if their work was attainable without a college education. The entry-level or below market wages the underemployed college graduate makes are unlikely to be suitable in order to repay their debt. Second, had they skipped college and gone straight into the workforce full-time, they would have more experience in their field. This experience could have led to promotions, higher wages, access to company perks, and other benefits that come with the territory of seniority and having more skills under their belt. So not only did the underemployed student take on the burden of college without accessing the benefits of college, they are also further behind in their career than their colleagues who went straight into the workforce.

Approximately how many recent college graduates are underemployed? According to a recent analysis conducted by Steven Rose of the Urban Institute, approximately 25 percent of all college students are overqualified for the jobs they find themselves in after graduation. With underemployment occurring in such large scale, despite the fact more people are gaining college degrees than ever before, it explains why the average millennial is expected to earn less than their parents. It has other implications other than just salary.

From an economic perspective, the underpaid underemployed now have less discretionary and disposable to put back into their local economy. They are also more likely to default on their student loans which negatively impacts their credit and, ultimately, their purchasing power in the future. From a personal standpoint, they are less likely to demand higher wages over the course of the career the longer they are underemployed. Additionally, they may run the risk of employers devaluing their degrees if they don’t enter the field and gain experience within a certain timeframe.

Job creation has been a central hot topic in our politics since the 2008 recession and is seemingly favorite subject of our current president Donald Trump. However, unlike the people within our workforce, not all jobs are created equal. In fact, based on their credentialing, some people can have more to gain while others have significantly more to lose in occupying the same role, working in the same company, and earning the same wage. There are no promises that can be made simply by the virtue of going to college and it’s certainly not an entitlement to a better life as many of our country’s college students are now realizing. Underemployment can have truly devastating effects on the lives of millions as well as our country’s economic health.