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July 1997, Vol. 120, No. 6
Frederic L. Pryor and David Schaffer
If the university educated are flooding the job market, so that many must take jobs previously held by those with just a high school diploma, then why are the wages of these university-educated workers rising? This question has been the focus of an intermittent debate on the pages of the Monthly Labor Review between Daniel E. Hecker, on the one hand, and John Tyler, Richard J. Murnane, and Frank Levy, on the other.1 Unfortunately, the participants in the discussion have not asked which university graduates have taken the high school jobs, and in their empirical investigations, they have used only a rough and subjective criterion for defining a high school job.
Utilizing much more detailed data on occupations, and taking into account the functional literacy of the workers, which is a critical variable, this article shows that it is primarily those university graduates lacking university-level literacy skills who are taking the high school jobs. Further, it is chiefly the university educated in jobs requiring university- level skills who are obtaining the major wage increases, not those in jobs in which the average level of functional literacy is lower.
Our argument is straightforward. We first summarize briefly the state of the debate about university-educated workers taking high school jobs. Next, we define "high school jobs" and "functional literacy." Then we present data on functional literacy, employment levels, and wages for workers with different levels of education in different types of occupations. These data sets provide the crucial evidence required to resolve the paradox of why an apparent surplus of university graduates is associated with rising real wages of this group. For reasons to be discussed, we focus primarily on prime-age workers, defined as those 25 through 49 years old.
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1 See Daniel E. Hecker, "Reconciling conflicting data on jobs for college graduates," Monthly Labor Review, July 1992, pp. 312; and the following two articles in the December 1995 issue of the Review: Daniel E. Hecker, "College graduates in high school jobs: a commentary," p. 28; and John Tyler, Richard J. Murnane, and Frank Levy, "Are more college graduates really taking high school jobs?" pp. 1827.
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