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Rising Above Underemployment

Charlie Anastasi
March 29, 2024
5 mins

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Strada and The Burning Glass Institute recently published a report titled Talent Disrupted that led with an ominous headline: over half of 4-year college graduates are underemployed 1 year out of college. Nearly half are still underemployed 4 years later.

Major news outlets like the Wall Street Journal and Bloomberg quickly ran stories that added to the growing corpus of articles that question the value of a college degree.

The report’s methodology received pushback from some critics. But even if we cut the report’s findings in half, we are left with a pretty sobering conclusion: a very large share of college graduates are not securing first-destination jobs that match their college education and provide a persistent wage premium over high school graduates.

Unsurprisingly, the report finds that one of the most reliable predictors of underemployment is the Academic Program a student pursues. In fact, what you study is even more important than where you go. Computer Science majors at inclusive colleges have lower rates of underemployment than Psychology majors at selective colleges.

Unless you made it to the underlying report, you may have missed some more surprising observations that stood out to us at Rize. Even “career-oriented” majors like business and computer science have more challenges than you might expect.

Below are several surprising observations paired with recommendations that we can use to better support students.

Observation #1: Beware of Popular Majors

As highlighted above, majors are the most reliable predictor of underemployment. Studying a high-performing major at an inclusive institution is a more reliable path to economic security than studying a low-performing major at a selective institution.

So those Business majors should be taking care of business….right?

It depends.

Some business majors outperform the average considerably. But the generic Business Management degree has a 57% underemployment rate 5 years after graduation - much worse than the average.

What’s going on here? I don’t have data to support this hypothesis, but I was talking to a Provost last year who referred to Business majors as “the new Undecided.”

We know that the #1 reason students go to college is to improve job prospects, but many students have a very foggy sense of what that actually looks like. Amidst this uncertainty, this Provost thinks that many students choose “Business” because business is associated with money. Four years later, many of these students haven’t left the original fog that brought them to business.

If this hypothesis is right, a generic Business degree is a deceiving security blanket for students. It also might be attracting some of the most adrift students on your campus.

And it isn’t just business. Other popular majors on college campuses, including psychology and biology, perform very poorly in this study.

Two recommendations if this hypothesis resonates with you:

  1. Popular degrees attract the herd, so these students are susceptible to being lost in the crowd. They need the most help in escaping underemployment. Departments that offer popular, general majors might consider requiring students to map out several concrete career paths by the start of their junior year.
  2. Popular majors are, by definition, less differentiated. 165k students graduated with a general business degree last year. Encouraging or requiring students to concentrate or minor in areas that deliver higher rates of college-level employment can improve the performance of a general degree. For example, pairing Business with sales or project management.

By definition, popular majors attract the most students, so improving these areas will have large impacts on your overall results. There is a lot of leverage in making small changes to big majors!

Observation #2: All Majors Have Room to Improve

Okay, so business majors might not be as safe from underemployment as we might have thought, but those Computer Science majors are wearing bulletproof vests….right?

Relatively speaking, Computer Science is pretty high-grade Teflon. However, I was still pretty taken aback that the report highlighted 36% underemployment. Nearly 2 out of every 5 CS grads are underemployed in a field that is growing 4x the national average according to the BLS!

A few recommendations from this report, as well as the career research we have conducted at Rize:

  1. Internships and experiential learning are critical. Computer Science students who participate in an internship are ~33% more likely to secure college-level employment.
  2. Embedding job preparation throughout a student’s four year journey and making it mandatory is worthwhile. Many students that are pursuing CS degrees feel underprepared for finding, applying to and interviewing for jobs. Rize recently announced career navigation courses based on our learnings from student interviews. We are also working with teaching institutions to incorporate more assignments that promote career navigation and preparation (you can read more about this research here).

So yes, majors matter, but we can’t just celebrate the fact that a program is available in a catalog. We need to be vigilant about the outcomes that the program delivers, even in high demand areas like Computer Science.

Bucking the Trend

Reading reports like Talent Disrupted, I think our first instinct is often to push back with our own personal experiences. I have plenty of friends who graduated with a Psychology or general Business degree that are leading fulfilling lives with awesome careers. Working at Rize, I’ve met plenty of amazing Psychology and Business professors who care deeply about preparing students for fulfilling post-graduate outcomes. Concluding that Psychology and Business are bad majors would be a very poor reading of this report.

However, I think concluding that Psychology and Business students are in greater need of career support is reality. These findings may not define all students and programs, but they do define most. Majors influence outcomes and some majors prepare students better than others for careers.

By embracing that reality and making career exploration and preparation a more central and embedded component of student experience, small colleges in particular can ensure the sweeping generalizations these reports make do not apply to their students.

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