What should a high school graduate do? People have been told the surest and best path to middle-class comfort is the college degree. We have spent our careers in higher education, but are also economists who look at the data. A story that has been circulating for the past few years is that college is not what it used to be. The percentage of Indiana high school graduates who go on to college has declined from 63% in 2017 to 53% in in 2022.
Interestingly, a new study released in February by the Federal Reserve Bank of New York offers insights into labor-market outcomes for 22-27-year-olds with and without college degrees. Using annual national data from 1990 to 2025, the study confirms the persistence of a college wage premium ranging from 37% to 68%. On average, young adult college graduates earn 49.4% more than their non-credentialed counterparts. To our surprise, this premium varies quite a bit from year to year, especially in recent years. Notably, the premium fell from 67.7% in 2020 to 48.6% in 2021, rose to 66.7% in 2022, fell to 50% in 2023, and remained at 50% in 2024. We are not sure what, if anything, this portends.
Another interesting statistic is the unemployment rate for college and non-college graduates within the age cohort. The college grad unemployment rate averaged 2.9% over the period, while their non-credentialed counterparts averaged 9.2%. This 6.3% differential tends to rise in downturns and decline in good times, but the pattern seems persistent.
How many college grads are underemployed- colloquially serving as baristas after graduation? Over the past 35 years, some 42.8% of all college grads in the age cohort held jobs that did not require a college degree. In 2025, the yearly average was 41.4%. This pattern is also persistent.
What is striking is the range of outcomes for different college majors. Recent wages for higher-earning majors, including various engineering degrees and computer science, were in the mid $80k’s, twice those of the lower-earning majors in pharmacy, theology, social services, performing arts, and anthropology, who earn in the low $40k’s. Performing arts majors suffer a high unemployment rate (7.0%), high underemployment (58.9%), and low wages ($44,000). Computer engineering majors have a high unemployment rate (7.8%) but earn high wages of $90,000. Of course, the decision to go to college and the major chosen are not just about dollars and cents. Nevertheless, college prospects are well-advised to consider historical and recent employment data.