Educated Illiterates

__"Wages and the University Educated: a Paradox Resolved" by Frederic L. Pryor and David Schaffer, in Monthly Labor Review (July 1997), Bureau of Labor Statistics, U.S. Dept. of Labor, Washington, D.C. 20212.__

Every spring, graduating college seniors all around the country giddily march up to the podium to accept their degrees and then stride off hopefully into an employable future. In recent decades, however, the flood of graduates has been so great that an increasing proportion—9.6 percent in 1995, compared with 5.7 percent in 1971—have found themselves, within a few years, working as sales clerks, cab drivers, and in other jobs that don’t require a college degree. Despite this apparent surplus of people with sheepskins, the real wages of collegeeducated workers have been going up. Economists Pryor, of Swarthmore College, and Schaffer, of Haverford College, explain the paradox.

Analyzing census data on prime-age (25 to 49) workers and the results, by education and occupation, of the 1992 National Adult Literacy Survey, they find that it is mainly those college graduates who do not have the "functional literacy" (i.e. the practical ability to read, interpret documents, and do arithmetic) traditionally associated with college degrees who are taking jobs that might previously have gone to people with high school diplomas only. The wages of these folks, after adjustment for inflation, have remained roughly constant over the years (about $15 an hour in 1994). And they still get a payoff from having a college degree: workers with only a high school diploma earned about $11 an hour.

Pryor and Schaffer also find that the major wage increases are going chiefly to the college graduates who are in jobs, such as management analysis or financial administration, requiring the level of func-tional literacy that college degrees tradi-tionally have represented. These workers