It’s no secret that recent college grads have struggled over the years to find suitable employment in the wake of economic downturns.
U.S. Census data reaching back two decades reveals that – even with a college degree in hand – young Americans fresh out of school have had a tough time finding work that matched their educational levels during recessionary times. Frequently, they had to settle for lesser jobs until something better came along.
A new study by the Federal Reserve Bank of New York confirms what other analysts and advocates for “Young Invincibles” have been saying for months: That the aftermath of the Great Recession of 2007 to 2009 has had a far more profound and negative impact on the employment prospects of recent college graduates than previous recessions.
After the Great Recession ended, for example, the unemployment rate for college graduates as a whole peaked at around 5 percent in 2010, while the unemployment rate for recent college graduates peaked at around 7 percent. For the period 1990 through the first quarter of 2013, the unemployment rate averaged 4.3 percent for recent college graduates compared with 2.9 percent for all college graduates.
“These results suggest that finding a job tends to be more difficult for those just out of school than for those who have been out of school longer,” the report states. “Moreover, this disparity exists at all points in the business cycle.”
The percentage of unemployed or underemployed young adults with sheepskins has risen markedly over the past two dozen years, while the quality of jobs relative to the individual’s educational level has plummeted, according to the report. Today’s recent graduates increasingly are accepting low-wage jobs that don’t require a degree or working part-time in ways that previous generations of recent grads were not required to do.
The New York Fed Bank report notes that in the past, it was not unusual for new college graduates to struggle to find an appropriate full time job as they transitioned into the labor market. “However, when we delve further to examine the quality of jobs held by the underemployed, we find that recent graduates are increasingly working in low-wage jobs or working part-time,” the report says. “We conclude that while elevated rates of unemployment and underemployment may be typical for recent college graduates, finding a good job has indeed become more difficult.”
The travails of recent college graduates in a still relatively brutal economy is hardly news, and other researchers have documented the phenomenon of young people locked out of the job market or having to settle for part-time work or jobs with entry requirements well below their educational experience.
For sure, young adults with degrees still have a decided edge over others with only a high school education in landing a job. Last year, the unemployment rate for young adults with only a high school diploma was almost 10 percentage points higher than for those with a bachelor’s degree. Yet
Yet even there, the success of recent college grads over lesser educated rivals came from lowering their sights and elbowing aside less educated people to take lower-skilled positions.
In what is being called the “Great Squeeze,” college graduates are squeezing out other young adults with more modest educational records. Since 2009, many of the occupations with the fastest employment gains for young people have been lower-skill jobs that typically pay less, according to a recent study by economist Diana G. Carew of the Progressive Policy Institute.
What’s more, the employment picture is improving. The seasonally adjusted unemployment rate for 16-to-24 year olds fell from 14.1 percent in November to 13.5 percent in December, which is the lowest it’s been since September 2008, according to Bureau of Labor Statistics data. For 25-to 34-year olds, the unemployment rate fell from 7.4 percent to 6.9 percent, the lowest since October 2008.
The Federal Reserve Bank report was written by analysts Jaison R. Abel, Richard Deitz and Yaqin Su. For the purposes of the study, the researchers defined recent college graduates as those with at least a bachelor’s degree who are 22 to 27 years old.
To get some perspective on the labor market difficulties of recent college graduates, the analysts tracked the unemployment rate for this group relative to three other groups: all workers (those who are 16 to 65), all college graduates, and a comparable group of young workers, aged 22 to 27. The sample period, extending from 1990 through the first part of 2013, encompasses the 1990-91 and 2001 recessions as well as the Great Recession of 2007-2009.
College graduates as a whole fared the best throughout the sample period, experiencing unemployment rates that were about half the rate all workers experienced,” according to the study. “But for recent college graduates—the group of immediate interest for our study—unemployment was consistently higher than for college graduates as a whole.”
The report insisted that the relatively high unemployment experienced by recent college graduates should not lead anyone to dismiss the value of a college education in helping young workers find jobs.
However, the report confirmed that choosing the right major in college can have a lot to do with one’s success or failure in finding work. The results show that unemployment and underemployment rates differ markedly across majors: students majoring in fields that provide technical training, such as engineering or math and computers, or majoring in fields geared toward growing parts of the economy, such as education and health, have tended to do relatively well, even in today’s challenging labor market.
At the other end of the spectrum, the unemployment rate for architecture and construction majors was 8 percent—a finding consistent with the lack of jobs in housing-related sectors of the economy following the housing bust. Liberal arts and social sciences majors also tended to have relatively high unemployment rates, at 7 to 8 percent.
Top Reads from The Fiscal Times: