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College Graduates: Outlook, Earnings, and More U.S. Department of Labor Bureau of Labor Statistics Fall 1998

The Outlook for College Graduates, 1996-2006. Prepare Yourself by Mark Mittelhauser Popular films and novels have depicted college-eduacted workers stuck in low-paying, low-status jobs. Although the reality for most college graduates is not as bleak as the media portray, it is true that some graduates will not find jobs that make use of the college-level skills they've developed. The reasons for the frustrating problems these graduates face are complex. Part of their frustration reflects individual circumstances and mismatches between employers and jobseekers. But another part is simple mathematics: There are more jobseekers with college degrees than there are openings for college-level jobs. This labor market dilemma for college graduates is not new. In fact, it has existed for more than a decade and is expected to continue. According to the Bureau of Labor Statistics (BLS), there were about 250,000 more college graduates entering the labor force each year between 1986 and 1996 than there were new college-level jobs. This number represents about 1 in 5 of the college-educated entrants to the work force. The difference between the number of college-educated entrants and college-level job openings from 1996 to 2006 is projected to remain around 250,000 - which means 18 percent of new college graduates may not be able to find college-level jobs. Why are so many high school students pursuing college degrees if they cannot be assured of college-level jobs upon graduation? The most likely answer is that the labor market favors college graduates - they earn more and experience lower unemployment rates than workers without a degree. In 1996, for example, workers with bachelor's degrees had median annual earnings of about $36,000, while college graduates with more advanced degrees earned around $40,000. In contrast, high school graduates who did not pursue higher education earned about $23,000. Over the course of a lifetime, these differences amount to a significant increase in earnings for those with college degrees. In addition, the college graduate labor force had an unemployment rate of 2.4 percent in 1996, which was less than half the 5.7 percent rate for those with high school diplomas. Aside from job market indicators, college graduates' labor market experiences are difficult to predict. Aggregate figures, such as those presented above, do not accurately portray the reality of many jobseekers. Millions of college graduates are happy in jobs that do not require degrees but offer other desirable characteristics, such as flexible hours or attractive working conditions. Also, some workers with high school diplomas carry out tasks usually associated with college graduates, and many college graduates perform duties that do not require a college degree. In other words, it is difficult to generalize about the employment outlook for such a diverse group of workers. Developing the Projections The college graduate outlook presented here is derived from supply and demand estimates of the college-educated labor force. Projections of the demand for college graduates are calculated using employment projections from the Office of Employment Projections of BLS. Every 2 years, this office develops projections covering a wide range of variables, including the U.S. labor force, industry output, productivity, and employment by occupation and industry. BLS bases its projections on an analysis of the changing patterns of population growth, consumption, trade, and a host of other variables affecting employment. The most recent projections are discussed in the November 1997 Monthly Labor Review; Employment Outlook: 1996-2006, BLS Bulletin 2502; and the winter 1997-98 and spring 1998 issues of the Quarterly.

Estimates of expected college graduate entrants to the labor force are based on data produced by the U.S. Department of Education's National Center for Education Statistics (NCES). NCES analyzes demographic trends and educational patterns to develop projections of enrollment and completions at various levels of educational attainment. BLS used NCES estimates of bachelor's degrees awarded between 1982 and 1995 and projections through the year 2007 to determine the number of new college-level entrants each year. These figures are published in Projections of Education Statistics to 2007, NCES Bulletin 97-382.

Comparing the number of college-educated jobseekers with that of college-level job openings from each of these data sources is complicated because of the variety of entrants and openings. New college graduates constitute the majority of new college-educated entrants to the labor force. But a number of other entrants must also be accounted for, such as immigrants, people recently discharged from military service, and workers returning to the labor force after a long absence. Similarly, economic growth accounts for the majority of openings for college graduates. College-level jobs also arise in two situations involving occupational change for workers already in the labor force. One is when educational requirements are increased, or upgraded, for occupations that previously did not require workers to have a college degree. The other is when workers with college-level jobs leave the labor force and need to be replaced by workers who have a college degree. Another difficulty in determining the outlook for college graduates is the classification of college-level jobs. Few occupations exist in which all workers have and need a college degree. Doctors and lawyers clearly fall into this category, but most other occupations include workers with varied training and experience. These occupational requirements are constantly being modified as organizations adapt to changing economic conditions. In addition, job descriptions may be tailored to an individual who fills the position, so requirements for the same job may change from year to year. Finally, it may be difficult to determine which skills were gained in college and which are the result of other types of education or work experience. The BLS approach for classifying jobs by educational attainment starts with assumptions about broad occupational groups. Remaining consistent with previous analyses, BLS considers workers to be in college-level jobs if they have college degrees and their jobs fall into professional specialty; executive, administrative, and managerial; or technician and related support occupations. For example, 76 percent of professional specialty workers, such as engineers and statisticians, who have college degrees are assumed to need these degrees in their jobs. On the other hand, a college degree is not required to work in some other occupational groups, such as retail sales; services, except police and detective; agricultural, except farm manager; and craft, operator, and laborer positions, except blue-collar worker supervisor. Regardless of their level of education, workers in these groups are assumed to be in jobs that do not require a college degree. For example, none of the nearly 120,000 truckdrivers who had a college degree in 1996 was considered to have a job that requires one. There are many occupations, however, where such classifications are less clear. The educational requirements in these occupations are especially broad or may be constantly changing. As a result, some college graduates who work in these occupations may require a degree to perform their jobs, while others could perform them adequately without one. Police and detective, farm manager, blue-collar worker supervisor, and a number of administrative support workers, such as secretary and bookkeeping and accounting clerk, are among these occupations. BLS determines which of these jobs are "college level" based on data from special supplements to the Current Population Survey (CPS) that indicate whether workers in each occupation need a college degree to perform their job duties. Workers with college degrees who need a college degree are considered to be in college-level jobs, while those who believe they could perform their jobs without a degree are classified as having noncollege-level jobs. The College Graduate Labor Force in 1996 In 1996, about 33 million college graduates were employed in the United States. They worked in a wide range of occupations, but the majority were found in two groups - professional specialty occupations and executive, administrative, and managerial occupations. These 2 groups accounted for two-thirds of college-level employment, with professional specialty occupations providing nearly 14 million jobs and executive, administrative, and managerial occupations supplying another 8.4 million. Engineer, registered nurse, lawyer, teacher, physician, and social worker were among the professional specialty occupations that supplied the most jobs for college graduates. The executive, administrative, and managerial occupations employing the largest number of college graduates were accountant and auditor; marketing, advertising, and public relations manager; medical and health manager; and administrators and officials in public administration. The balance of the remaining 33 million employed college graduates-about 10 million were scattered among other occupational groups in 1996. About 3.8 million worked in marketing and sales occupations, where they held jobs such as nonretail commodity sales representatives; first-line supervisors and managers; real estate agents, brokers, and appraisers; and insurance sales agents. Administrative support occupations accounted for an additional 2.6 million workers. Occupations in this group include secretaries; bookkeeping, accounting, and auditing clerks; clerical supervisors and managers; and insurance claims processing workers. The remaining college graduates worked primarily as blue-collar worker supervisors, farm managers, and police or detectives. Although all of those workers have college degrees, not all were employed in college-level jobs. About 5.6 million, or 17 percent, of them were employed in jobs that did not require a college degree. Many were in administrative support, retail sales, and service occupations, but over a million of these workers were also in production and craft occupations. Projected Entrants with College Degrees The most important group of college degree holders to enter the labor market each year is recent college graduates. According to NCES, about 1.19 million people were awarded bachelor's degrees in 1996. The number of college degree earners grew about 20 percent between 1986 and 1996, in spite of a decline in the traditional college-age population of 18 to 24 year olds over most of the period. This increase in degree earners was primarily due to growing enrollments of women and of older people. In contrast, the Census Bureau projects growth in the college-age population between 1997 and 2000 while NCES projects a decline in the number of bachelor's degrees awarded over the same period. The number of bachelor's degree recipients is expected to resume growth in 2001. In fact, NCES projects the average number of degree earners each year between 1996 and 2006 will increase to about 1.19 million, up slightly from the 1.10 million recipients annually over the previous 10-year period. Nearly all of this growth is expected to be accounted for by women, who will comprise about 58 percent of all bachelor's degree earners by the year 2006. NCES estimates the number of men receiving bachelor's degrees each year will remain fairly constant between 1996 and 2006. However, not all of these college graduates will join the labor force during the 1996-2006 period. Some will enter graduate school, start a family, or take a break for various reasons. NCES projects 1.19 million bachelor's degrees will be awarded between 1996 and 2006, a number similar to its projection for the previous decade. Of those recipients, BLS estimates about 1.15 million, or 97 percent, will enter the labor market. This figure is derived from historical patterns of labor force participation among recent college graduates. In addition to recent college graduates, BLS projects that about 230,000 other degree holders will enter the labor force each year between 1996 and 2006. This number is based on comparisons between historical growth in the college educated labor force and the annual number of college graduates. These other entrants come from a variety of sources, including recently discharged military personnel, college-educated immigrants, and college degree holders returning to the labor force after a long absence. Not included in this group, however, are college graduates who are unemployed or who hold noncollege-level jobs and may be looking for college-level jobs. It is possible that some of these jobseekers might eventually compete with other college graduates in the labor market. Each year between 1996 and 2006, recent college graduates and other college-educated entrants will make up an estimated 1.38 million college graduates entering the labor force. This will represent an increase of about 6 percent over the 1.3 million who entered the labor force annually during the previous decade. Projected Job Openings, 1996-2006 The U.S. economy is projected to generate 1.13 million college-level job openings each year between 1996 and 2006, more than 8 percent above the 1.05 million job openings that arose annually over the previous decade. College-level job openings result from employment growth, educational upgrading, and replacement needs. Employment growth is a product of overall economic growth and the shifting demands for goods and services. As the need increases for workers in occupations employing many college graduates, so does the demand for college degree holders throughout the economy. Educational upgrading is an important component of growth that occurs as jobs which previously did not require a college degree for entry begin to require this level of education. Replacement job openings arise as college graduates leave the labor force, and the positions they held become available to other college graduates. Employment growth. The largest source of new collegelevel job openings between 1996 and 2006 will continue to be employment growth. Openings due to growth are expected to average 750,000 each year over this 10-year period, accounting for about two-thirds of all college-level openings. As indicated above, the overall growth of the economy is a major determinant of college-level openings resulting from employment growth. Because BLS projects overall annual employment growth to slow from 1.7 percent over the 1986-96 period to 1.3 percent between 1996 and 2006, growth is projected to provide about 75,000 fewer college-level jobs each year during the 1996-2006 period than it did between 1986 and 1996. The projected slowdown in employment growth is largely due to slower labor force growth, which BLS estimates will decline from 14 percent between 1986 and 1996 to about 11 percent between 1996 and 2006. This slowing in labor force growth reflects demographic trends. As workers in the babyboom population begin to retire and the smaller population of the "baby bust" generation enters the labor market, overall labor force growth will slow. One result of these trends is a projected decline of nearly 3 million in the number of 25 to 34 year olds between 1996 and 2006. Labor force growth is also influenced by the labor force participation rate of the working-age population. This rate is expected to continue to grow among women, although at a slower rate than in the previous 10 years, while the labor force participation rate of men is projected to continue to decline for all groups under age 45. The projected slowing of employment growth is expected to have less impact on the college-educated labor force than on other workers in the economy, as growth in college-level jobs is projected to continue outpacing the growth of jobs which typically require lower levels of education. College-level jobs are expected to increase by 27 percent between 1996 and 2006, much faster than the 14 percent expected for all workers. As a result, the proportion of college-level jobs relative to all jobs in the economy is expected to rise from around 21 percent in 1996 to slightly over 23 percent in 2006.

Table: Employment in college-level jobs, 1996, projected 2006, and projected change, 1996-2006 (numbers in thousands) Occupation 1996 2006, projected Projected change, 1996-2006   Number Percent Number Percent Number Percent Total 132,330 100.0 150,940 100.0 18,610 14.1 College-level jobs 27,450 20.8 34,940 23.1 7,490 27.3 Executive, administrative, and managerial 8,370 6.3 10,210 6.8 1,840 22.0 Professional specialty 13,900 10.5 17,930 11.9 4,030 29.0 Technicians and related 1,170 .9 1,600 1.1 430 36.8 Marketing and sales 2,490 1.9 3,250 2.2 760 30.5 Administrative support 1,060 .8 1,420 .9 360 34.0 All other college-level jobs 460 .3 530 .4 70 15.2 Noncollege-level jobs 104,880 79.3 116,000 76.9 11,120 10.6

One reason college graduates will fare better than workers in other educational groups is the occupational distribution of growth. The major occupational groups that provide collegelevel jobs are expected to grow more rapidly than the 14-percent increase in employment for the economy as a whole. Professional specialty occupations, the largest source of college-level jobs, will be the fastest growing occupational group including both college- and noncollege-level jobs. In contrast, the occupational groups expected to grow more slowly than average -agricultural, craft and other production, and administrative support occupations employ a relatively small share of college graduates. As a result of these trends, professional specialty occupations will continue to add more college-level jobs over the projection period than any other occupational group. In fact, between 1996 and 2006, professional specialty occupations will account for more than half of all collegelevel openings due to growthabout 400,000 jobs each year. The occupations that will add he most jobs in this group are computer engineers, computer scientists, and systems analysts. These occupations are expected to be among the fastest growing in the economy. In fact, their combined occupational employment is. expected to double over the 1996-2006 period. Other professional specialty occupations projected to provide many job openings are engineers, teachers, registered nurses, therapists, physicians, and social workers. The growth of many of these occupations is the result of the expanding use of computers and increasing need for health care projected as the baby-boom population ages. The next largest number of college-level job openings is expected to occur in executive, administrative, and managerial occupations. Employment in college-level jobs within this group is projected to grow annually by 185,000 between 1996 and 2006. Most of the new jobs will arise among managers, including food service and lodging managers, financial managers, and marketing, advertising, and public relations managers. Some management support occupations, such as accountants and auditors, management analysts, and personnel, training, and labor relations specialists and managers, will also add new college-level jobs. The remaining 164,000 college-level job openings arising due to growth each year will be distributed among other major occupational groups. In marketing and sales occupations, the largest source of college-level openings will be sales representatives who sell financial securities, real estate, machines, and a variety of other commodities. The technicians and related support occupations that will add the most college-level jobs are health, engineering, and science technicians, computer programmers, and legal assistants. A number of administrative support occupations, such as clerical supervisors, teacher aides, insurance claims processing workers, and bookkeeping, accounting, and auditing clerks will also add new college-level jobs. Finally, about 8,000 new college-level jobs will arise each year among blue-collar worker supervisors between 1996 and 2006. Agricultural and service occupations are expected to provide limited growth in college-level jobs. Educational upgrading. Many of the new openings created by growth reflect a related phenomenon-educational upgrading. When organizations restructure or change, they rely on workers in certain occupations to assume new responsibilities. As a result of a reduction of the number of middle managers, for example, firms have shifted some managerial responsibilities to other workers. One result of this trend is that some workers classified as secretaries may now be training new employees, performing research, or working with spreadsheets-tasks often associated with skills developed in college. Along with the new duties may come new titles, such as administrative assistant or administrative aide, but these workers might still be counted as secretaries in government surveys. As educational requirements are upgraded, subsequent job openings are considered to be new openings in collegelevel jobs.

BLS estimates educational upgrading by tracking changes in educational attainment for occupations which require college degrees. For most of these occupations, including professional specialty, technician, nonretail sales, and executive, administrative, and managerial occupations, projections of educational upgrading are developed by analyzing the trend of collegeeducated workers in each occupation. For the remaining occupations with college-level jobs, such as farm managers, secretaries, and police and detectives - those in which it is not assumed college-educated workers need a degree to perform their jobs-estimates are based on analyses of trends in CPS surveys which track degree requirements for each occupation.

Of the 750,000 college-level job openings projected to arise annually between 1996 and 2006 due to economic growth, about 160,000-1 in 5-will result from educational upgrading. This is significantly lower than during the previous 10year period, in which 250,000 openings were estimated to have arisen annually due to upgrading. Occupational distribution of upgrading is the major reason for this downturn. Upgrading is occurring slowly in the occupational groups that include most college-level jobs, while groups with relatively few college-level jobs are increasingly producing more job openings for college graduates. For example, marketing and sales and administrative support occupations are projected to provide 40 percent of openings due to upgrading between 1996 and 2006, yet these 2 groups supplied only 13 percent of college-level jobs in 1996. Replacement openings. Replacement openings are job openings that arise as workers leave the labor force to retire, take a break, return to school, or raise a family. By leaving the labor force, these workers create openings for other collegeeducated workers. BLS uses data on age distribution and labor market behavior to develop net replacement rates; these rates are used to estimate the number of openings resulting from separations each year and to project the number of labor force entrants needed to replace workers who leave the labor force. Replacement openings will be an important source of college-level job openings as the baby-boom generation enters age groups with higher rates of retirement. The number of expected openings arising annually from replacement needs is projected to increase from 219,000 over the 1986-96 period to about 380,000 annually between 1996 and 2006. (See chart 4.) Openings due to replacement needs are expected to mirror the distribution of college-level jobs across major occupational groups. Professional specialty and executive, administrative, and managerial occupations will account for about four of every five replacement openings, while other openings will be distributed across the remaining occupational groups. Jobseekers Exceed Job Openings Similar to the results of previous BLS studies, the projections outlined above indicate that, between 1996 and 2006, there will be more college degree holders entering the labor force each year than the number of college-level job openings. An average of 1.38 million entrants will be met with approximately 1.13 million college-level job openings each year, a projected annual difference of about 250,000. The size of this difference remains almost unchanged from the previous 10-year period, as the number of both projected entrants and openings is expected to grow at approximately the same rate over the 1996-2006 period. The proportion of college graduates who do not find employment in college-level jobs-projected to be about 18 percent between 1996 and 2006-will most likely work as sales representatives, first line supervisors, clerks, secretaries, service workers, farm managers, and as various production and blue-collar workers. As mentioned previously, many workers choose these positions because they offer desirable job characteristics. However, some college-educated workers in these positions would rather have the earnings, status, and other qualities typically associated with college-level jobs. Degrees, Skills, and Jobs As the number of new college-educated entrants continues to exceed the available college-level jobs, the job market will continue to frustrate many college graduates. The level of frustration will vary widely based on major field of study, individual aptitude, personal circumstances, and geographic location. Applicants whose majors are in high demand, such as computer engineering, are likely to find jobs more easily and receive higher salaries than jobseekers with degrees in other fields, such as philosophy. Similarly, graduates looking for work in areas where the local economy is booming are likely to be more successful than those seeking work in economically depressed areas. More than ever, jobseekers need to become familiar with the job market in their chosen fields and tailor their skills to the requirements of employers. Because of the potential value of a college degree over a worker's lifetime, investment in a college education is still worthwhile. College graduates need to realize, however, that not all college degrees are created equal. An article by Frederic Pryor and David Schaffer in the July 1997 Monthly Labor Review, Wages and the University Educated: A Paradox Resolved, underscores this point. The authors found that the labor market success of college graduates is highly correlated with the skills college graduates bring to the workplace. Graduates with a high level of functional literacy-the ability to read, interpret documents, and perform quantitative calculations in real-life situations-were more likely to be employed in college-level jobs. In contrast, college-educated workers with low functional literacy were more likely to be employed in what were called high school jobs. The researchers stressed the fact that functional literacy is learned and that success in the labor market is influenced by the efforts of each college graduate. In a labor market with more college-educated entrants than college-level openings, recent college graduates are welladvised to carefully study the changing employment and earnings of the Nation's occupations and industries. Although a detailed discussion of specific occupational growth is beyond the scope of this article, the above analysis points to major occupational groups that are expected to provide the most college-level openings between 1996 and 2006. More detailed information on working conditions, employment, training requirements, earnings, and job outlook for about 250 occupations, covering 6 of every 7 jobs in the economy, is in the 1998-99 Occupational Outlook Handbook. In addition, the 1998-99 Career Guide to Industries provides similar information from an industry perspective. These publications are found in most public libraries, career centers, and guidance counselors' offices. The Handbook is also accessible online at http://stats.bls.gov/ocohome.htm As the quest for collegelevel jobs continues, these publications can help you get a step up on your competition-and there will be plenty of it. Mark Mittelhauser is an economist in the Office of Employment Projections, BLS, (202) 606-5707.

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