By Olivera Perkins
The Plain Dealer, Cleveland
WWR Article Summary (tl;dr) A new report shows that the graduating class of 2017 is facing a better labor market than those who graduated four or five years ago but it’s still not a strong market. Also problematic, “underemployment” which remains high.
CLEVELAND, Ohio
Class of 2017 welcome to the real world.
You’ll probably have an easier time landing a job than your counterparts who graduated in the years following the Great Recession, which ended in 2009.
However, the labor markets for recent high school and college graduates in Ohio and the United States remain weaker today than in 2000 and 2007, according to a recent report on the Class 2017.
The report by the Economic Policy Institute, the left-leaning Washington, D.C.-based think tank, says the Class of 2017 faces other harsh realities. They include unemployment rates for workers under 25 that are about double the overall rate, high underemployment, a gender wage gap and employment-related racial disparities.
“Overall, the graduating class of 2017 is facing a better labor market than their older brothers and sisters, who graduated four, five or six years ago, but it’s still not a strong labor market for them,” said Elise Gould, the senior EPI economist who co-authored the report with Teresa Kroeger, a research assistant.
“When you think about their unemployment rate being around 10 percent, you’re saying that one in 10 young people in general are unemployed. That is a high rate. If that were the overall economy, we’d be back in the Great Recession.”
Five harsh job market realities the Class of 2017 faces
1. Underemployment — Underemployment rates include part-timers who desire full-time work and people who have given up looking for work. They have decreased for young people since the recession, but still remain high.
In Ohio, 18.8 percent of workers under 25 were underemployed in 2016, EPI found in its analysis, which includes government date. In 2007, the rate was 19.8 percent and 13.4 percent in 2000. For the U.S., 19.1 percent of workers under 25 were underemployed in 2016. In 2007, 17.3 percent were, but only 14.9 percent in 2000.
“When you think about whether somebody has a job, that’s one thing,” Gould said. “When you think about how good those jobs are — Are they giving somebody enough hours to get enough weekly or annual pay? — that’s another.”
When college graduates can’t find professional jobs, they often take lower-paying jobs that don’t require a degree. Gould said this creates complications for them, in an era of crushing student loan debt; but it also becomes problematic for those with only high school diplomas.
“I think that this contributes to the significant weakness for high school grads because college grads may be taking those jobs that high school grads used to be able to get,” she said.
2. Racial disparities in unemployment rates– The unemployment rates for young African-American and Hispanic graduates is higher than for their white counterparts. Education appears not to close the gap. For example, for recent white college graduates the unemployment rate is 4.9 percent. For Hispanics it is 6.8 percent and 8 percent for African Americans.
“Only in the last year did the unemployment rate for young black college graduates fall below the peak unemployment rate for young white college graduates during the recession,” Gould said.
While the report didn’t look into the reason for the disparities, previous studies on the subject might offer clues.
“Some of it is that people are being paid different amounts for the same work,” Gould said. “I would be very surprised if discrimination weren’t a factor here.”
3. Gender pay gap — Recent female high school graduates are paid 90 cents for every dollar their male counterparts earn, the report found. In 2000 it was 86 cents.
Recent college graduates are paid 86 cents for every dollar their male counterparts earn. That is down from 2000, when it was 92 cents.
Gould said the report didn’t control for such things as college major, which could possibly explain the gap. However, a gender gap also exists for those with only a high school education.
“In high school you’re talking about an equivalent degree,” she said. It can’t be because men have more experience than women because we are talking about young people across the board.
“It is not clear why men would be making more straight out of high school,” Gould said. “It could be the jobs that they’re taking or it could simply be that they are being paid more.”
4. Wage stagnation and erosion — The average hourly wage for recent high school graduates is $10.89 per hour, or 4.3 percent lower than in 2000. The average hourly wage for young college graduates is $19.18 per hour, or 1.4 percent higher than in 2000.
Wage stagnation and erosion haven’t just been the problems of recent graduates, Gould said.
“We are finally seeing the economic growth in the last couple of years translate into more broad based wage growth,” she said.
In a tight job market, Gould said employers can often hire experienced employees for less than they would be able to if more jobs were available. She said this puts young workers at a disadvantage.
“If employers can afford the worker that has more experience over one that has less experience, they are going to choose the one with more experience,” she said.
5. “Idled” by the economy — About 15 percent of recent high school graduates are neither enrolled in school, a training program, etc. nor employed. These unemployed workers are often referred to as “idled” or as NENE, an acronym for neither enrolled nor employed. In 2007, 13.7 percent of young high school graduates fell into this category and 12.1 percent in 2000.
“This is a significant number,” Gould said. “For black high school graduates it is 20 percent.”
Among young college graduates, such figures are lower, but still high. Nearly 10 percent were NENE. This compares with 8.4 percent in 2007 and 8.6 percent in 2000.
Gould said a stronger economy would solve many of the labor force problems these young graduates face as well as those faced by more experienced workers.
“It is really important that the recovery fully develops,” she said. “If the economy could pull more people in off the sidelines and reduce the slack, employers are going to have to respond.
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They will have to offer better wages and better benefits to workers across the board.”
