44% underemployment for new grads is OK

44% of Young College Grads Are Underemployed (and That’s Good News), writes Jordan Weissmann in The Atlantic.  In a weak economy, many new graduates have to take jobs that don’t require a college degree, argues Weissmann. It’s worse now “because the economy got fed through a wood chipper during the recession and we still haven’t picked up all the pieces,” not because a bachelor’s degree has lost value.

The unemployment rate among recent college graduates tends to move “in step with unemployment among all working age adults,” he writes. New graduates are having problems because everybody is.
NYFed_College_Grad_Unemployment.jpg

College graduates during the 80s and early 90s were as likely to be overqualified for their jobs as young graduates today, according to New York Fed President William Dudley. Most graduates then eventually found professional jobs.

The obvious difference between higher education today and in 1990 is the cost of a degree, and the amount of debt students take on to finance it. So while failing to land a college-level job straight out of school might have been tolerable in the past, today it might mean severe financial hardship, especially if students aren’t savvy about how to handle their student debt (three words: Income. Based. Repayment).

There’s evidence that young people who graduate into a recession and start lower on the job ladder never recover completely.

I’d like to see a good survey asking whether collegebound students understand their likely future earnings and loan payments. Do they know the risks? If they did, second- and third-tier private colleges would have to slash tuition or go out of business.

Be deeply suspicious of promises that a bachelor’s degree will raise earnings significantly, warns Tim Donovan on Salon. If the “higher interest rate convinces even a few 18-year-olds not to take on huge debt for that Musical Theater degree, maybe it’s not so bad,” he writes.

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Comments

  1. Just on logic, I’d guess that it’s worse now. More marginal/unprepared kids are going to college and there are more of the softer college-major options, into which such kids gravitate. My older kids graduated in the early 90s and had no problem finding good jobs, but they were in majors with defined paths; accounting/finance and engineering. The debt situation makes things much worse, of course.

  2. Mike in Texas says:

    Let’s see, lots of desperate people looking for jobs, and employees beholden to the banks.

    Sounds like a Republican wet-dream come true.

    • Roger Sweeny says:

      Must be a Democratic wet dream, too. Look who’s been in the White House for four and a half years.

      • Mike in Texas says:

        I agree with you in some respects. Obama is more like a Republican when it comes to education.

      • Nah, the democrat version is ‘lots of desperate people with their hands out, and employers beholden to the state’.

        • Mike in Texas says:

          No., the Obama version is Bush’s. I suppose lots of desperate people is supposed to include teachers like myself. I guess you think we have a lot of nerve wanting to be paid for the work we do.

          • Since I’m talking about a ‘democrat wet-dream’, you should take ‘desperate people’ to mean the American people, in general, since the ultimate goal is to have as many people dependant on government as possible in order to buy votes and retain control.

  3. Florida resident says:

    J. Derbyshire:
    “Do We Need More Smart Foreigners?”
    http://www.vdare.com/articles/john-derbyshire-asks-do-we-need-more-smart-foreigners
    From there the conclusion:
    “We surely don’t need any more dumb people in the U.S.A. than we already have. That we need more smart people is, however, open to reasonable doubt.”
    Read the rest.
    -
    With deep respect of the noble work of Ms. Jacobs,
    your F.r.

    • Mike in Texas says:

      The whole idea of needing foreign workers is bullcrap. The corporations just want to pay less for their workers. We have plenty of STEM graduates in the US, but they expect to be a reasonable wage.

      • No argument here, though I think this applies far more at the low end of the economic spectrum, rather than STEM fields.