It’s Been a Good Decade for Young Workers Without Degrees, but Can It Last?

The wage gains for non-college workers came after decades of decline, and the income and wealth gap remains large.

Young adults without four-year degrees have seen significant wage gains in the past decade—a reversal of the preceding decades of decline, fueled in part by one of the tightest labor markets in history. Those gains, however, haven’t been large enough to narrow either the income or wealth gap, as young workers with bachelor’s degrees have also seen their income rise, albeit more slowly.

And there are major questions about whether gains for less-educated workers will continue if the labor market softens—especially given that the supply of sub-bachelor’s credentials is misaligned with labor market demand.

Those are the topline findings from two new reports, one from the Pew Research Center and the other from the Georgetown University Center on Education and the Workforce, and reactions from experts Work Shift spoke with. 

“We have not had such a prolonged hot labor market in a very long time, with only the experience in the 1990s coming close,” says Brad Hershbein, senior economist and deputy director of research at the W.E. Upjohn Institute for Employment Research

Where We Are: Such conditions almost always increase employment and wages for less-educated and more economically vulnerable workers—which is what the new Pew research found has happened over the past decade.

Young adults, age 25-34, without a bachelor’s are more likely to be working. 

  • Labor market participation for young men without a four-year degree has largely stabilized, after decades of steady decline beginning in 1970. Those adults also saw major gains in full-time employment over the past decade.
  • Participation for young women with the same education level has not just stabilized but increased in the past decade, after sharp drops beginning in 2000. The share of working women employed full-time has never been higher.

And they are earning more when they do work—with young men with only a high school education seeing particularly large gains. (See charts for details.)

Where We’re Going: Nobody knows what lies ahead—but there are signs that those gains may already be slowing, Hershbein says. Between 2021 and 2023, workers of all ages without a bachelor’s saw faster wage growth than those with four-year degrees. But data from the Federal Reserve Bank of Atlanta shows that in recent months, the rates have all been roughly the same.

History, he says, shows that patterns of wage growth can shift dramatically depending on the business cycle.

“There’s reason to be skeptical that the recent shifts favoring faster wage growth for less-educated workers are permanent,” Hershbein says.

National numbers also cloak big regional variations, Hershbein says. He points to Boise, Idaho, and Pittsburgh as two examples. Both have seen significant employment and earnings growth since the pandemic, but most of Boise’s gains have come from remote workers moving to the state with jobs whereas Pittsburgh has seen broad growth that has benefitted existing residents.

Labor market participation, too, is a regional phenomenon. States like Alabama, for example, have continued to struggle with low workforce participation rates despite high local demand for workers.

Some College, No Degree

Amid the tight labor market, many states have increased their investment in short-term credentials designed to quickly move residents into high-demand jobs. But while “some college” does pay a premium, the wage growth for young workers at that education level has been less significant than for those with only a high school diploma.

Young men with some college, for example, only saw their wages grow from 49K to 50K in the past decade. 

Broader data from the BLS looking at all working adults above age 25 shows stronger gains for people with some college but no bachelor’s—and millions of Americans who have some college education never actually earned a credential. Nevertheless, the new research from Pew is a useful data point as policymakers consider how to invest.

So too is data from the Georgetown study, which found that short-term credentials and associate degrees are often misaligned with projected local labor market demand. 

  • In about half of the 565 markets they studied, researchers found that at least 50% of the credentials awarded would need to be in different fields from today in order to align supply with demand.

Managerial credentials, for example, are oversupplied in many markets, while sales and office support ones are vastly undersupplied. The findings echo other recent research calling for employers to have a bigger role in shaping postsecondary education programs and “co-producing talent.”

Extending the Good Run: Hershbein agrees the conversation about short-term credentials needs to start with employers’ needs. And if he had to pick one policy to boost Americans’ prospects, he’d adapt the high school curricula to—universally—allow students to earn college credit and industry credentials while still in school. He points to the P-Tech program as a model.

But the biggest policy win, Hershbein says, would be if policymakers would focus more on fundamentals—like carefully weighing the benefits and costs of regulations and ensuring all people have access to multiple channels of education and training that are aligned with jobs. Doing so isn’t easy or catchy, he says, but is essential to economic growth and individual advancement. 

“These are technocratic answers because they are based on decades of research of what works in the long term, not what is appealing over election cycles,” he says.

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