[PeterisP]

In 1920 or 1950 if we'd had as many people with college degrees as we do today, we'd also have a LOT of people who can't find any jobs related to their majors.

What you describe is not the quality of jobs decreasing, it's the increase in (unfulfilled, unreasonable) expectation of job quality just because you have a college degree. IMHO we have much more "good jobs" than in 1920 or 1950, it's just that the number of college graduates has grown faster than the number of good jobs. In 1920 or 1950 there weren't enough good jobs for everybody, and the good jobs mostly went to people with college degrees. But the problem was not actually in the lack of college degrees - if most people have college degrees, then all that means that college degree ceases to be the pathway to good jobs, and other filtering mechanisms inevitably need to appear (and have appeared) to select which people will get good jobs and which will be left behind despite having a college degree.

[dpenguin]

Potentially somewhat controversial take on this: why do college grads deserve a better job than, say, high school grads if the subject they studied in college is not particularly relevant to the society at this point(which the lack of jobs for that qualification is indicative of)?

There was probably a point in time when learning hunting was like going to college and along comes farming to make all those hunters jobless. That’s how the wheel of “progress” rolls.

The idea that going to college will make you more bucks or guarantees you a job in your field of study is very arcane at this point.

[PeterisP]

The traditional answer to this comes from the age when college graduates were a distinct minority. In the 1950s environment, if a job applicant has a college degree even with irrelevant subject, then this means that the applicant has passed two filters (getting into college, and actually graduating with decent grades) for qualities that are relevant to most jobs but are hard to measure directly, so that degree is a very useful signal for evaluating people in a way that you can't do during an interview or two.

These qualities are not guaranteed but are correlated with being able to get into college and graduate - everything from conscientiousness, ability to follow arbitrary complex rules, general intelligence and also socioeconomic status (in e.g. sales and management, the social contacts of a high-SES employee and their family are very valuable in achieving business goals, and the social contacts of a low-SES employee are not). A graduate might not have these qualities, and a non-graduate might have them, but it's hard to tell so the degree is a useful proxy because it does (or did?) correlate with these qualities.

So it made all sense for businesses to prefer college graduates for certain types of jobs ("the good jobs") even if the college major was something like history or literature in a field of business where that's not relevant, and they did just that. And because of that employer preference, a college degree was a ticket to one of these good jobs.

However, if almost everyone gets a degree that means that there's no real filtering happening, and that benefit gradually becomes useless.