College degree requirements creep into lower income

Earlier this month, the Kraft Heinz Company
KHC
was announced is looking for an “Oscar Mayer Wienermobile Representative,” whose job responsibilities include driving a “27-foot hot dog on wheels” around the country representing the Oscar Mayer brand. The position, which pays $35,600 a year, requires a bachelor’s degree. The job posting is unfortunately emblematic of a larger trend: the slow creep of college degree requirements in lower-wage jobs.

In theory, a university education equips students with valuable skills that enable them to produce more in the labor market. Everyone wins: graduates earn higher wages that reflect their expanded productivity, and the economy benefits from more skilled workers. That’s one reason the federal government has invested hundreds of billions of dollars to expand access to higher education.

But there is a danger. Broad subsidies for higher education, by increasing the number of workers with degrees, may simply lead employers to increase the education requirements they attach to job descriptions. Occupations that were once accessible to people with only a high school diploma may begin to require college degrees. But if those degrees don’t make workers more productive on the job, commensurate wage increases may not come with higher education requirements. Overall, America’s significant investment in higher education may not be yielding the returns we expect—either for students or for society.

Measuring inflation rate

The annual American Community Survey (ACS) asks a large sample of American workers about their incomes and educational attainment. If rising college attendance rates make workers more productive, college will help more Americans move into higher income brackets. College attainment rates within a fixed income range, in contrast, should stay roughly the same. But if higher attainment in college is fueling degree inflation, we should see an increase in education levels within lower income brackets.

In 2000, 16% of prime-age workers earning about $35,000 a year in today’s dollars—about the same salary as our hot dog driver—had a bachelor’s degree or higher. But by 2022, that percentage had more than halved. About a quarter of workers earning Wienermobile-level wages have at least a four-year degree.

The same phenomenon has affected other income brackets. Between 2000 and 2022, the share of prime-age workers earning about $65,000 a year with at least a bachelor’s degree rose from 35% to 51%. While workers without a four-year degree once dominated the ranks of people enjoying this middle-class standard of living, a college degree is now the norm rather than the exception among this group.

College degree requirements have steadily fallen down the income ladder over time. In 2022, $65,000 was the lowest salary at which the majority of early-career workers held at least a bachelor’s degree. Ten years ago, however, the “minimum salary” at which a college degree goes from minority to majority status was $80,000. Ten years before that, the minimum wage was $95,000. Going back to 1990, only workers earning more than $100,000 were more likely not to have a four-year degree. (All figures are adjusted for inflation.)

These patterns have troubling implications. First, a lower wage means that middle-income career paths are moving closer to people without college degrees, who represent 62% of the adult population. Second, for those who attend college, the financial returns to their education can be more moderate than expected. If college graduates increasingly fill middle-income jobs that traditionally did not require a degree, many will struggle to recoup the cost of their education.

Employers and policy makers should start taking the inflation rate more seriously. Fortunately, there are solutions: states can abandon unnecessary government degree requirements and license private sector jobs, while the federal government can limit excessive subsidies to higher education and support alternative means of skill acquisition and assessment. Aspiring hot dog drivers everywhere will be grateful.