Demand for college-educated workers is no longer growing faster than supply
Relative demand for college-educated workers has plateaued since 2000, which could mean lower wage premiums for college graduates if their numbers keep growing.
A new Cleveland Fed report suggests that the college wage premium—the difference in average earnings between those with and without a bachelor’s degree—has declined by about 10 percent since 2000 after more than doubling during the prior two decades.
Why? The report suggests that technological change in the 21st century no longer favors college graduates. Thus, demand for their skills is no longer growing faster than the supply of college-educated workers, which has grown rapidly since the early 1980s, according to the report’s authors, Alexander Cline and Barış Kaymak.
“Assuming sustained growth in the employment share of college-educated labor and a continued lack of skill bias in technological progress, we project a decline in the college wage premium over the coming decades,” they write.
Read the Economic Commentary: Demand for College Labor in the 21st Century
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.
Media contact
Chuck Soder, chuck.soder@clev.frb.org, 216.672.2798
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