Tuesday, April 22, 2025

The Decline in the College Wage Premium

Demand for College Labor in the 21st Century
Tracing the evolution of labor demand in the United States, this Economic Commentary reveals that the disproportionate rise in relative productivity of college-educated labor that shaped the latter half of the 20th century has plateaued since 2000. Our analysis suggests that technical change in the 21st century may no longer favor college graduates, in which case further growth in the employment share of college-educated workers would likely lower the premium that college-educated workers receive compared with non-college-educated workers.

Why US Men Think College Isn’t Worth It Anymore
https://www.bloomberg.com/news/features/2025-04-21/why-american-men-think-it-s-not-worth-going-to-college-anymore
Rising tuition, the spread of more traditional ideas of masculinity on social media and a desire for an immediate income are working together to set boys on a different path.

 
Falling College Wage Premiums by Race and Ethnicity
https://www.frbsf.org/wp-content/uploads/sites/4/el2023-22.pdf
Workers with a college degree typically earn substantially more than workers with less education. This so-called college wage premium increased for several decades, but it has been flat to down in recent years and declined notably since the pandemic. Analysis indicates that this reflects an acceleration of wage gains for high school graduates rather than a slowdown for college graduates. This pattern is most evident for workers in racial and ethnic groups other than White, possibly reflecting an unusually tight labor market that may have altered their college attendance decisions.

UK: White-collar graduates earning thousands less amid ‘brain waste’ crisis
https://www.telegraph.co.uk/business/2025/01/01/white-collar-graduates-earn-thousands-less-amid-overqualifi/
Graduates’ salary premium is being eroded by inflation and a soaring minimum wage. 
 
Related:
https://thehill.com/opinion/education/590971-will-the-us-higher-education-bubble-finally-burst/