The authors examine how the American economy has experienced sharp contractions in overall levels of output, income, and wealth resulting from the recent financial crisis, and how these losses have had an impact on the nation's labor market. The significance of these trends to American higher education is summarized in these terms: "Large labor surpluses in the coming years will mean intense competition for jobs among recent graduates, much higher unemployment among recent graduates, a sharp increase in underemployment, and a rise in part-time enrollment in the future" as people seek new skills and credentials to compete for fewer jobs. The authors stress that colleges and universities must adjust to a new labor market environment that is different in fundamental ways by regrouping and re-organizing their resources to effectively respond to the new labor surplus context that will characterize the nation's labor markets in the next decade. (Contains 7 tables, 6 endnotes and 5 charts.)