Recent College Grads & Unemployment: How Many Graduates Can Actually Find Jobs
With the sky-rocketing costs of college tuition and the subsequently rapidly rising student debt, the pressure is on for recent college graduates to find jobs. However, in today’s economy, in spite of job growth, economic conditions make the post-college job search especially brutal.
According to Heidi Shierholz, a labor market economist at the Economic Policy Institute (EPI), the Class of 2014 was “the sixth consecutive graduating class to enter the labor market during a period of profound weakness.” Furthermore a variety of factors - lower wages, less jobs, and the exorbitant cost of higher education - are converging to create the perfect (un) employment storm. Let’s take a look at how post-grads are really doing out in the job market.
8.5 percent of college graduates between the ages of 21 and 24 were unemployed
According to the chartbook on youth joblessness published by the Economic Policy Institute, roughly 8.5% of college graduates between the ages of 21 and 24 were unemployed. The figure, which is based on a 12-month average between April 2013 and March 2014, suggests that the post-collegiate job market is still suffering, and it doesn’t necessarily look like it will be improving anytime soon.
In spite of the fact that unemployment has dropped to a six-year low of 6.3% and that job creation reached a two-year high in April, with American employers adding roughly 288,000 jobs, the portion of Americans between the ages of 25 and 34 who were working in April fell to a five-month low of 75.5%. For a bit of perspective keep in mind that the unemployment rate for all college grads over the age of 25 is 3.3%.
True, there is typically a disparity in unemployment rates between recent graduates and more established professionals. Bureau of Labor Statistics data compiled by the EPI show that the unemployment rate for those under 25 is typically at least twice the national average. This is in part because recent grads are less experienced and are often the first to be let go when a company has to downsize in hard economic times. Still the current situation is unsettling.
16.8 percent of recent college graduates are underemployed
Understanding the post-grad job market means looking beyond the binary divide between “unemployed” and “employed;” the reality of the situation is much more nuanced and much more complex. A number of employed graduates are actually “underemployed,” meaning they are either jobless and hunting for work; working part-time because they can’t find a full-time job; or want a job and have looked within the past year, but have now given up on searching after being unable to find something.
44 percent of recent graduates are working in jobs that technically do not require a bachelor’s degree
We’ve all heard reports of twenty-somethings with bachelor’s degrees stuck waiting tables or making espressos in order to pay the bills. A January report put out by the Federal Reserve Bank of New York found this troubling trend is all too common. The report found that roughly 44 percent of recent graduates - meaning those ages 22 to 27 with a B.A. or higher - were in a job that did not technically demand a bachelor’s degree.
It should be noted that this alone isn’t a troubling trend. Even in the best of economic times it takes many college grads a few years to find career paths that matches their educational levels. Research shows that recent college grads are on par with their 1990s counterparts when it comes to the time it takes to close the gap between career and education.
Only 40% of these overeducated workers are able to find “good” jobs
The problem isn’t so much that it takes workers longer to find a job that matches their educational levels, it’s that prior to landing a professional gig recent grads are forced to take much lower paying jobs than their counterparts in previous generations.
Only 40 percent of recent-grads working in jobs that don’t require a degree have “good” jobs, defined as jobs that pay over $30,000 annually. All in all, recent-college grads are in occupations that pay far less than in the past.
Even more disturbing? Roughly one-fifth of this overeducated workforce is stuck in jobs that pay less than $25,000 per a year. The bottom line is that for many graduates this will have life-long implications. Studies show that entering the labor market during a recession can affect an individual’s earnings for the following ten to fifteen years, depending on the industry the individual works in and how long they are unemployed or underemployed.
High School Diploma or Degree?
In spite of this troubling picture, there are a few glimmers of hope. Research indicates that for those with majors that are in high-demand, employment prospects tend to be good, regardless of bleak economic times.
For example, while post-grads with majors in the liberal arts and social sciences had unemployment rates of close to 8%, those with majors in education and healthcare fields fared much better, with unemployment rates close to 3%. Research shows that it pays to have a college education (literally). Workers with a post-secondary education or more earned a median of $57,770 in 2012 compared with $27,670 for jobs requiring a high school diploma. The U.S. Bureau of Labor Statistics projects faster growth for jobs that require at least post-secondary education by 2022.
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