Higher income may prove elusive for many college grads

Many college graduates with a four-year degree find themselves struggling to earn enough money to achieve their version of the American dream. A significant percentage, it turns out, earn no more than a high school graduate.

A new study from Drexel University’s Center for Labor Markets and Policy shows that a significant number of four-year degree holders failed to develop necessary skills in the critical areas of literacy and numeracy. As a result, they will likely find the higher income they were seeking by attending college and earning a degree to be unattainable.

The findings of “Skills and the Earnings of college Graduates” suggest that the increasing emphasis on attaining a bachelor’s degree has risks that are partially mitigated by attaining commensurate levels of literacy and numeracy proficiencies. The authors found that employers value graduates with better literacy and numeracy skills and reward them with higher earnings — even after accounting for worker characteristics, major field of study and the type of occupation in which the worker is employed.

“Unfortunately, even as the numbers of college graduates have increased, many fail to acquire the minimum or college-graduate level of skills,” said Paul Harrington, Ph.D., Director of Drexel’s Center for Labor Markets and Policy. “One out of every five adult non-elderly workers with a bachelor’s degree lacks minimum skills in literacy; for numeracy, the number is one in three. Employers seeking workers find that a four-year college diploma is not a guarantee of strong literacy or numeracy skills. And, individuals without these skills are at risk of losing the financial rewards of high earnings.”

Irwin Kirsch, Director of the ETS Center for Research on Human Capital and Education, which commissioned the study, said the study dovetails with recent findings published in other Center policy reports. In “Too Big to Fail: Millennials on the Margins” (2018), it was found that nearly half of all Americans between ages 16 and 34 demonstrated low literacy skills, and more than half demonstrated low numeracy skills.

“These new findings should be an important signal to policymakers and leaders throughout the educational community that there is clear evidence indicating that significant numbers of high school and college graduates demonstrate insufficient levels of literacy and numeracy skills that are required for modern societies,” Kirsch said.

The study revealed that the average monthly earnings of graduates with a bachelor’s or higher college degree who were working in college-level occupations were double those of mal-employed college graduates ($7,200 per month versus $3,600). Mal-employed refers to college graduates working in jobs that do not require the skills and knowledge typically attained from a college education. Additionally, the average monthly earnings of college graduates with insufficient skills (below minimum) was $5,300, far less than the $7,300 for those with above minimum skill levels.