Since 1980 the United States has produced too few college graduates to meet demand in the workplace, according to a new study from the University of Georgetown, and has lost its place as the world's most educated nation. America needs an additional 20 million college educated workers by 2025.
The report, The Undereducated American, found that the demand for college graduates has outpaced supply, which it says could have a detrimental effect on the economy and precipitate income inequality.
"The demand for college educated workers is growing much faster than the supply," Anthony Carnevale, Director of the university's Center on Education and co-author of the report, said in a statement. "We are hurtling into a future dominated by college-level jobs, unprepared."
For years, the US was the global leader in higher education expansion. From the 1960s, the country worked to make college more attainable for the masses, and by 1980 between 50% and 60% of Americans had attended post-secondary institutions, according to the study.
Demand for college educated workers rose in tandem. The post-war boom and the computer and internet revolutions led to 3.6% annual growth in demand for college graduates between 1950 and 2005.
But as other countries caught up, the US advantage narrowed.
In 2008, 42% of 25-to-34-year-old Americans had college degrees, significantly less than the 55% college degree completion rate attained by students in Canada, Japan and South Korea, according to the study.
"As a result of our failure to keep up with the demand for college educated workers, we have lost our number-one global position in college graduates and have become the number-one industrialised nation in income inequality," said Stephen Rose, co-author of the report and a senior economist at the centre.
To prevent further slippage, the US needs to produce an additional 20 million college educated workers by 2025, according to the study.
This would ensure that 75% of the workforce would have at least one year of post-secondary education. That would break down as 15 million people with a bachelor degree, four million with non-degree post-secondary qualifications, and one million associate degree holders.
The additional workers would meet the swelling demand in the workplace for tertiary educated employees, as well as boost gross domestic product by $500 billion, the study suggests.
More college graduates would also go some way to bridging the income gap.
In 1979, those with a bachelor degree earned 40% more than those with a high school diploma and no post-secondary education, according to the study. By 2005, the income gap had widened to 74%, with earnings of those with bachelor degrees rising to $54,502, versus $31,242 for high school graduates. If nothing is done, that figure will rise to 96% by 2025.
The extra 20 million college educated workers would bring that income disparity down to 46%, a figure that "strikes the proper balance between an appropriate return on investment in post-secondary education and the importance of shared prosperity to stability and fairness in our society," wrote the authors.
Additional workers would also ensure that wages for all groups would increase - 24% for those with a high school diploma, 15% for those with an associate degree, and 6% for bachelor degree holders, the study found.
The country is currently on track to produce eight million additional degree holders, Rose told University World News, so the challenge would be in pushing through another 12 million.
Rose said one possible pool to tap is the large group of high school students who are college-ready but for unknown reasons do not end up pursuing tertiary studies.
"A sizable number are prepared academically and don't go," said Rose. "These people are the low hanging fruit of increasing college [attendance] and we are not sure all of the factors that explain why they don't go."
But some might argue that with unemployment high, the last thing America needs is more college graduates out of work.
Rose said critics are failing to look at the whole picture. "They're wrong," said Rose. "They are looking at the exceptions and making that an indictment of the system."
Around 15% of college graduates do not use their degree for various reasons, such as mental health problems, lack of motivation or drug and alcohol addictions, said Rose.
Political will is one of the main drivers for increased enrollment, he said, but the recession and political polarisation are barriers.
A surge in college graduates will also depend on commitment and determination on the part of all educational institutions, said Rose.
By increasing the number of college-educated workers, "we will not only have a more competitive economy, we will also have more equitable prosperity - and the American dream will come within reach of millions more of our citizens," wrote the authors.
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