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Underemployed and overeducated — and maybe the nation’s best hope

By Megan Woolhouse
Globe Staff / January 23, 2011

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From the US Chamber of Commerce to the halls of academia, the warnings have been abundant: A shortage of skilled workers with college degrees will create a workforce crisis by the year 2018.

The projected shortage is rooted in demographics — retiring baby boomers and slowing population growth — and will leave employers short-staffed and the United States at a competitive disadvantage.

But a recent paper by Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, and Paul Harrington, who recently left Northeastern for Drexel University in Philadelphia, calls those predictions overblown.

The researchers said studies forecasting labor shortages ignore a large and growing number of college graduates who work in low-skill, low-paying occupations. These are the legions of overeducated waiters and waitresses, retail clerks, and receptionists who hold college degrees, a problem known as “malemployment.’’

If this hidden college-educated workforce is considered, then looming shortages in occupations requiring college degrees appear less dire, Sum and Harrington argue.

Sum said about 25 percent of all employed, college-educated adults in the nation work in jobs that don’t require a college degree. That number increases to nearly 40 percent for recent college graduates, many of whom are struggling to repay loans.

“We have to be honest about this problem, otherwise we’re setting people up for failure,’’ Sum said. “We would like colleges and universities and employers to work together to find a way to reduce the problem.’’

Harrington and Sum’s analysis of Labor Department data found nearly 16 percent of young college graduates (age 25 and under) were working in retail jobs from January to October of last year. Nearly 10 percent worked as waiters, waitresses, and bartenders, and 6 percent took jobs as secretaries or office assistants.

Harrington and Sum’s paper, published by the New England Board of Higher Education, criticized a widely publicized study last year by the Center on Education and the Workforce at Georgetown University. That study predicted the nation will need 22 million college graduates to meet employer demand by 2018, but at current graduation rates, colleges and universities will produce only 19 million.

The study’s author, professor Anthony P. Carnevale, said evidence of the demand for college graduates is apparent from the steady rise in wages for degree holders. The $3 million study, paid for by Georgetown and charitable foundations, found overall wages for college graduates were 74 percent higher than those of high school graduates in 2008. The wage advantage was just 30 percent in 1979.

This wage analysis, Carnevale said, captures college grads working in occupations that don’t require degrees and supports his forecast of a looming shortage.

During economic downturns, Carnevale said, he frequently hears that college graduates are forced to “tend bar or mop floors.’’ His study, he said, considered a “college job’’ any position that gives substantial earnings returns to a college degree, regardless of occupation.

For example, the work done by a nuclear technician does not typically require a degree, but about half of the people in those positions have either an associate’s or bachelor’s degree and typically earn about twice as much as the person who does not.

“I don’t know how he’s getting these numbers,’’ Carnevale said of Sum’s calculation. “He shows that lots and lots of people have college degrees and low wages, and he refuses to send his data so we can check it.’’

Other research bolsters the notion of a shortage. The National Association of Manufacturers surveyed 779 industrial companies last year and found 32 percent already reported “moderate to serious’’ skills shortages, including in occupations that required college degrees. Sixty-three percent of life science companies and 45 percent of energy firms cited similar shortages.

Other Northeastern researchers, Barry Bluestone and Mark Melnik, also predicted labor shortages in their 2010 study, “After the Recovery: Help Needed.’’

Bluestone said both problems — a shortage of skilled workers and overeducated workers in low-paying jobs — coexist as the economy moves from a manufacturing-based to a skills-based economy. That transition creates a mismatch between employers’ needs and workers’ educations. Bluestone added there is always a population of workers who hold a college degree but for a variety of reasons — from the wrong skills to an inability to relocate for a job — work in lower-skill jobs.

Part of the problem is that colleges are not graduating students with degrees in demand by employers, Sum and Carnevale said. Both researchers said colleges need to do a better job guiding students into better-paying fields that need educated workers, or shortages will continue.

Sum described malemployment as an “enormous’’ problem that needs more attention from education leaders, who could offer students better direction, and the federal government, which could offer stimulus programs to help employ young graduates.

For now, he said, many college students are staying in school longer because it is so hard to find a job. And the problem is especially destructive in minority communities where college graduation rates are low. When people in these communities see college students go through the effort and expense of earning a degree, but then end up with a lackluster job, it undermines aspirations, Sum said.

“You get a degree and do a job someone could have gotten with a 10th-grade education?’’ Sum said. “I can’t think of a worse situation. The kids feel deceived, and what message does it send?’’

Megan Woolhouse can be reached at mwoolhouse@globe.com.