Combining the Lenses Without Pretending to Have a Perfect Measure

For workers with bachelor’s degrees, the combined model asks whether the BLS entry label should remain decisive when a graduate also receives a meaningful earnings premium. This chapter examines the model’s rule, the reasons behind its thresholds, and the size of the resulting change in the estimate. The practical judgment is conditional: adding earnings can make the classification more informative, but it does not turn an occupation-level proxy into a direct measure of an individual’s skills.

The rule: start with entry requirements, then test the return

The combined approach does not discard the BLS-based classification. It starts with the same comparison: a bachelor’s-degree worker in an occupation that BLS assigns an entry requirement below a bachelor’s degree is initially counted as underemployed. It then asks whether the worker’s earnings meet a specified premium over workers with the education level assigned to that occupation.

For a high-school-level occupation, the report uses a threshold of at least 40 percent above the earnings of workers with a high school diploma alone. A bachelor’s-degree worker who clears that threshold is reclassified from underemployed to adequately employed under the combined model. For an occupation assigned to some college or an associate’s degree, the threshold is at least 20 percent above the earnings of workers with that level of education. The report treats bachelor’s-degree workers in occupations assigned “no formal educational credential” as underemployed regardless of this adjustment because the cited literature does not establish an expected bachelor’s premium relative to no formal credential.

The rule can be written as a sequence rather than a slogan:

  1. Identify the worker’s bachelor’s degree and the occupation in which they work.
  2. Read the occupation’s BLS entry-level education assignment.
  3. If the assignment is below a bachelor’s degree, compare the worker’s earnings with the relevant lower-education comparison group.
  4. Apply the threshold appropriate to that comparison group.
  5. Reclassify the worker only when the premium reaches the stated threshold; preserve the no-formal-credential exception.

This sequence matters because the model is not saying that any higher wage cancels a mismatch. It sets a boundary for what the report considers sufficient evidence of degree-level productivity in the occupation. A hypothetical graduate earning 50 percent more than the high-school comparison group in a high-school-level occupation would pass the 40 percent test. A graduate earning 30 percent more would not. The occupation and degree are the same in both cases; the earnings rule creates a further distinction among workers inside the broad category.

flowchart TD A["BLS-based classification"] --> B{"Below bachelor's entry level?"} B -->|"No"| C["Not underemployed under baseline"] B -->|"Yes"| D{"Which entry category?"} D -->|"High school level"| E{"At least 40 percent above high-school earnings?"} D -->|"Some college or associate's"| F{"At least 20 percent above comparison earnings?"} D -->|"No formal credential"| G["Remain underemployed"] E -->|"Yes"| H["Reclassify as adequately employed"] E -->|"No"| G F -->|"Yes"| H F -->|"No"| G

Why 40 percent and 20 percent?

The thresholds come from an approximate return to education rather than from a natural dividing line in the labor market. The report draws on research suggesting that each additional year of postsecondary education typically produces about a 10 percent earnings premium over a high school diploma.