News Column

Chicago Tribune Gail MarksJarvis column

September 3, 2014

By Gail MarksJarvis, Chicago Tribune



Sept. 03--As college freshmen begin to lay the groundwork for their futures, the job experiences of many recent college graduates may take some of the thrill and promise out of early days on campus.

More than five years after the recession, a large proportion of recent college graduates is still in jobs that don't require college degrees, and starting salaries for a broad range of occupations are stuck in the doldrums.

A study by the San Francisco Federal Reserve shows that recent college graduates 21 to 25 years old have had worse luck with pay than full-time workers in general.

Since 2007, those with newly minted college degrees have seen pay levels hardly budge. Median weekly pay for the grads is only about 6 percent higher than just before the recession, or $693. But pay for an array of full-time U.S. workers climbed about 15 percent, on average, during the same time period, to $780.

The dismal pay level must be discouraging in light of typical household expenses and suggests why so many recent graduates are slow to move out on their own. According to a Federal Reserve report on the "Economic Well-Being of U.S. Households" released in July, the average renter pays $830 a month for rent and the average monthly payment on college student loans is $245.

Still, while recent college graduates continue to be punished harshly by a weak economic recovery, San Francisco Fed researchers Bart Hobijn and Leila Bengali note that relief should come with time. In past recessions, wage growth for new job entrants also fell more than for workers with more experience and more seniority. Pay does "not pick up again until long into recoveries," they said.

But while the general trend seems similar to the past, the extremes in this cycle are unique and discouraging to workers.

Pay for a wide range of working Americans has failed to bounce back as expected. Personal income for July increased just 0.2 percent -- a disappointingly low number that, along with other jobs data, has prompted Federal Reserve Chair Janet Yellen to conclude that the jobs economy remains troubled and in need of stimulus.

Hobijn and Bengali noted that wage growth has been poor across occupational groups for recent graduates. Even popular career areas such as management, business and finance, which paid college graduates well in the past, "have seen particularly low wage growth."

In addition, research by the Federal Reserve Bank of New York shows a substantial number of recent graduates "underemployed."

"Recent graduates are increasingly working in low-wage jobs or working part-time," said New York Fed researchers Jaison Abel, Richard Deitz and Yaqin Su. "Finding a good job has indeed become more difficult."

Since the recession, people with college degrees have fared significantly better with jobs than those who had high school diplomas. But a college degree alone doesn't convey the full picture.

There was a difference between college graduates who had been working for a while and those seeking their first jobs after graduation. In 2010, the unemployment rate for college graduates was 5 percent -- far less than the 16 percent unemployment rate for young workers without degrees. But unemployment for recent college graduates was more severe than for college graduates generally, peaking at 7 percent.

Underemployment has also been a problem. During the 2009-2011 period, New York Fed researchers found that about 56 percent of people who had just graduated ended up in jobs that didn't require a degree.

That trend should ease over time, New York researchers said, because it's common for new graduates to take low-wage jobs and, with time, transition into jobs that fit their educations.

But having to take inferior jobs has been an increasingly troubling trend for college graduates. In the 2000s, about 16 percent of recent graduates were working in part-time jobs. In 2011, with the jobs recovery still anemic, about 23 percent of recent college graduates were in part-time jobs.

Among recent college graduates, unemployment has been low, at 3 percent for health majors and 4 percent for education majors. Architecture and construction majors are at 8 percent, and liberal arts and social science majors are at 7 and 8 percent, respectively.

Seventy-five percent of recent graduates with engineering degrees are working in jobs that required a degree. Yet, in the low-pay leisure and hospitality area, only 33 percent were working in jobs that required degrees. And among those who majored in communications, liberal arts, business and social sciences, only 40 to 45 percent were in jobs requiring degrees.

gmarksjarvis@tribune.com

Twitter @gailmarksjarvis

___

(c)2014 the Chicago Tribune

Visit the Chicago Tribune at www.chicagotribune.com

Distributed by MCT Information Services


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Chicago Tribune (IL)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters