The Undereducated American

The United States has been underproducing college-going workers since 1980. Supply has failed to keep pace with growing demand, and as a result, income inequality has grown precipitously. From 1915 to 1980, supply grew in tandem with demand. But, starting in 1990, the share of college-educated young people in the workforce rose very slowly. If the nation continues to underproduce college-educated workers, the large and growing gap between the earnings of Americans of different educational attainment will grow even wider. The authors suggest that adding an additional 20 million postsecondary-educated workers over the course of the next 15 years will make America's level of educational attainment comparable with other developed nations, help meet the economy's need for efficiency, and reverse the growth of income inequality. The authors lay out their argument in five sections. The first tracks the evolution of increasing educational attainment in this country and in other countries around the world. They give an overview of the data that demonstrate that other countries have accepted that economic growth has been tied to rising educational levels. The second section documents the change in the supply and demand of college-educated workers from 1915 to 2005. They assess and confirm the consensus economic interpretation of the rise of the Bachelor's degree to high school wage premium from 1980 to 2005 that suggests that there has been an undersupply of college graduates. The third section shows how this rising Bachelor's degree premium has led to a sharp, distressing rise in inequality and discusses the positive effects of increased postsecondary attainment on wages and inequality. The fourth section addresses the arguments that we have too many college graduates today. The final section details their calculations regarding how many additional college graduates are needed between now and 2025 to meet the rising demand for college-educated workers and to meet a target Bachelor's degree to high school wage ratio that will result in a more shared prosperity. Appended are: (1) Methodology; (2) Simulation to Create Additional 18 Million Bachelor's Degrees through 2025; and (3) Considering the Costs of College-Going. (Contains 11 figures and 21 footnotes.) [For "The Undereducated American. Executive Summary," see ED524301.]