The report projects that two of every five jobs will require a college degree by 2025 -- up from one in three today. Therefore, the study warns, the state should boost the number of homegrown California college graduates.

"If education levels in the state don't catch up, the economy will adjust in one way or another," by downgrading, said economist and study co-author Deborah Reed.

Study authors looked at the number of foreign workers admitted under the current U.S. immigration system, as well as trends in education and migration patterns in and out of California.

The findings suggest that the U.S. immigration system's quotas on visas makes it harder to attract workers. Congress is now debating an immigration overhaul that could admit more skilled foreigners in the future.

In a telephone interview, Reed said that without more homegrown college graduates to fill more skilled jobs, "we're likely to have a lower-income economy overall, with implications for tax revenue and social programs."

The state's huge economy also requires lower-skilled workers, she said, but even service industries need technical, legal, engineering and other types of professionals.

Reed said many points exist along "the educational pipeline" in California where policy changes could help make college more attainable and affordable, especially in a state where 76 percent of graduates obtain degrees at public institutions.

Thirty-one percent of working-age Californians have college degrees today. With no changes in policy, the study predicts, that number will rise to only 32 percent by 2025.

The proportion of white Californians with degrees is expected to change little between 2005 and 2025.

Rates of college degrees for Asians, already high, are expected to increase from 59 percent to 64 percent for those between the ages of 30 and 34.

Rates of degrees for Latinos, currently the least likely to graduate from college, are projected to rise from 11 percent to 18 percent in that same age group.

In the last four decades, California has seen a steady rise in the number of foreign-born residents ages 25 to 64 who have college degrees. Some grew up here and attended U.S. colleges, others were adult immigrants who arrived with degrees.

In an astonishing surge, the percentage of California's college graduates who are foreign-born has tripled, from 8 percent in 1960 to 31 percent in 2005.

That's neck and neck with college graduates who were born in another state -- 32 percent -- and not far behind the 35 percent who were born in California.

Between 2000 and 2005, the study also notes, one-third of all new legal immigrants who settled in California had college degrees, marking the first time that the number of immigrants coming into the state with degrees was greater than those who had not finished high school.

The Senate is debating, as part of its immigration bill, creating a point system that would pave the way to admit more educated workers, if there are proven shortages in high-demand jobs.

But to avert skilled labor shortages in California, immigration levels into the state would have to double, said demographer and study co-author Hans Johnson.

But countries around the world, as well as other U.S. states, are also competing to lure educated workers, Johnson said.

In California, the study predicts, some top jobs that will be in high demand are in the health-care industry and educational services -- not just in high tech, a sector often considered the primary employer of skilled foreigners.

In addition to warning that California cannot continue to rely heavily on immigration, the study also contends that migration of U.S. workers from other states is an "unlikely" solution to filling shortages.

The high cost of housing in California is one obvious barrier to attracting and keeping workers from other states, Johnson said.

Furthermore, California has seen the departure of many of its own college graduates in recent years, along with hundreds of thousands of its less-educated workers who've found jobs in other, less expensive states.

Between 2000 and 2005, 612,000 college-educated people from other states moved into California, according to the study, but 659,000 college-educated Californians moved out.

Increasing wages in California, already higher than in many other states, could help attract skilled workers from other states.

But competition, Johnson stressed, is going to be fierce. America's baby boom generation, which once fueled migration into California, will be too old by 2025 to pack up and head west to fill jobs.

By Susan Ferriss, Sacramento Bee, May 24, 2007