California's degree gap is a growing concern. According to recent reports and news articles comparing the number of degrees awarded with the jobs expected in the coming decade, California will not have enough university graduates to meet the needs of the labor market. Previous work by the California Postsecondary Education Commission (CPEC) showed significant shortages of graduates in some high-demand technical fields such as nursing and computer science. The solution is not as simple as increasing production of degrees. Many people with university degrees are in jobs where they may not be making full use of their education. Data from the 2007 American Community Survey shows that California has nearly half a million university graduates working in occupations that are not traditionally regarded as requiring a bachelor's degree. Nearly 50,000 work as secretaries and administrative assistants and 100,000 are in other clerical jobs. About 40,000 are in lower-level jobs in health care. Many thousands more are working in retail, food service, and manufacturing. Breaking down the data for different age groups shows that this problem affects mid-career workers, not just recent graduates who may be establishing themselves in careers. Data for earlier years shows that these patterns of employment have existed for at least a decade. This apparent underemployment is a concern because a university education has become increasingly expensive and graduates often need the income from a well-paid profession to repay student loans. Employment of university graduates in low-skill jobs may be contributing to a shortage of skilled professional workers, limiting economic growth. This report examines the way that earnings vary between occupations and between educational levels in order to better understand how university graduates are making use of their degrees in the labor market.