By Gail MarksJarvis
WWR Article Summary (tl;dr) A new study analyzed data from 167 occupations, responsibilities within those occupations and earnings. The study compared the experience of recent college graduates against recent grads of years past and found that people who entered jobs shortly after the 2008 recession did worse than previous generations, but NOT as badly as commonly thought.
The college graduate underemployment epidemic is easing.
And the stereotypical image of young people stuck in parents’ basements, working as baristas at Starbucks and wondering why they burdened themselves with $30,000 in student loan debt is becoming outdated.
There are still too many recent graduates in jobs that didn’t require them to go to college, but the situation is improving.
A highly cited report several years ago found 53.6 percent of recent college graduates were out of work or underemployed in 2011. But recently released data from a separate source shows that in 2014 only about 33 percent of people fresh out of college didn’t have jobs that required college educations and after age 22 their career paths were much improved.
The latest figures were released by Stephen Rose of the Urban Institute, who analyzed the American Consumer Survey of 2014.
That 33 percent number is clearly not reassuring for those who went to college and expected more, but the general trend into more opportunity for college graduates is encouraging.
Generally, people straight out of college are most likely to have problems finding good jobs during a recession, but as they move through their 20s and 30s they get into jobs that are a better match for their educational background, Rose said.
By their prime earning years, between 35 and 55, they may not even recall that they struggled to get ahead when young, he said.
Rose analyzed data from 167 occupations, responsibilities within those occupations and earnings. He compared the experience of recent college graduates against recent grads of years past and found that people who entered jobs shortly after the 2008 recession did worse than previous generations, but not as badly as commonly thought.
According to the data, about 33 percent of recent college graduates in 2014 started their working years with jobs that didn’t require their degrees.
By comparison, in 1980, 29 percent of recent graduates settled for less than what their degrees called for. Although 1980 was followed by strong years of opportunity, the initial experience of college graduates wasn’t easy. They were coming into a job market flooded with waves of new baby boomers with fresh bachelor’s degrees.
In contrast, 2000 was among the best of times, until the economy went into a recession after the technology stock bubble burst. Amid that peak in employment, there was still a substantial group of young graduates who didn’t find jobs that met their qualifications. About 24 percent of young graduates took jobs that didn’t require their degrees.
Now there are signs that recent graduates are finding a more comfortable path than appeared likely right after the 2008 recession. A poll by the Pew Research Center in 2014 found significant optimism. About 86 percent of college grads between 25 and 32 said they were either in a “career job” or in “a stepping stone to a career job.”
Rose’s data provide encouragement for today’s high school students considering college, or those in jobs who are thinking about going to college. In a nutshell, it shows that college typically is worth it. But it’s not a guarantee. Coming out of college in tough economic times does not provide the initial opportunity people expected to have upon graduation. And certain fields, such as teaching, social work, art and writing, don’t pay well despite being geared toward people with college degrees, Rose notes.
In addition, certain minority groups can’t count on college to provide as much opportunity as students might imagine. After graduating from college, Hispanics and African-Americans were significantly more likely to end up overqualified for jobs in 2014 and 1980, said Rose.
“These findings underscore the importance of a strong macroeconomy for these underrepresented minorities,” Rose said.
His findings also carry another warning: Although with time the outlook for college-level jobs has improved for the recession generation of college graduates, Rose found trouble for those who haven’t been able to make it into jobs suited for their educations.
Pay is much higher for people who are in jobs geared toward people with college educations than those that don’t require college. But people who finished college with degrees and then ended up settling into positions that weren’t geared toward college educations paid a steep price.
In 2014, college graduates who did not find a good-fitting occupations earned just half of what their peers did in jobs fit for college grads, noted Rose. And the price is much steeper now than for people a few decades ago. In 1980, if a person with a degree settled for a job that didn’t require college, the individual sacrificed just a third of the pay he would have had in a job with higher qualifications.
ABOUT THE WRITER
Gail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of “Saving for Retirement Without Living Like a Pauper or Winning the Lottery.”