This second report in "The Impact of Human Capital in the American Labor Market Series" finds that college graduates with higher literacy and numeracy skills have a better chance of accessing higher-paying jobs, but many college graduates lack a minimum level of those skills and wind up mal-employed.
Factors Affecting Future Earnings
Earning a bachelor's degree has become a basic goal for high school students, but many college graduates with a four-year degree find themselves struggling to earn enough money to achieve their version of the American dream. In fact, a significant percentage earn no more than a high school graduate. How is that possible?
A study by Neeta Fogg, Paul Harrington, and Ishwar Khatiwada of Drexel University's Center for Labor Markets and Policy points to three important factors that affect a newly minted graduate's ability to get on a path that leads to high future earnings:
- College graduates who don't work in college-level jobs, also known as the mal-employed, earn no more than high school graduates. One-third of those with just a bachelor's degree were mal-employed at the time of the PIAAC study.
- Having a college degree does not automatically mean that one has the skills to succeed in the workforce. One in five college graduates lacked minimum literacy skills, according to PIAAC results, while the ratio was one in three for numeracy.
- Employers seem able to discern literacy and numeracy skill differences among college graduates and pay substantially more to those with better skills.
- Although a college degree is a strong indicator of future earnings, it's important to consider addressing the literacy and numeracy skills of college students to reduce the risk of college graduates failing to reap the benefits from their education.
Skills and the Earnings of College Graduates
Neeta Fogg, Paul Harrington, and Ishwar Khatiwada — Drexel University
ETS Center for Research on Human Capital and Education
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