By Alexia Elejalde-Ruiz
WWR Article Summary (tl;dr) Nearly 43 percent of recent college graduates are underemployed, that is, working in jobs that don’t require a college degree, according to March numbers from the Federal Reserve Bank of New York.
Since graduating from college last month, Gabriel Villagomez has been polishing his resume, updating his LinkedIn profile, and worrying.
Sure, the job market looks promising for new grads. And Villagomez, who plans to apply to medical school, just needs a job to hold him over for a year or so.
But with student loan bills looming, Villagomez can sense how the need for a paycheck, any paycheck, could suck him into a job that doesn’t take advantage of his education.
He has seen cousins and friends abandon ambitions and fall into the rut of low-wage work when life gets in the way.
“I’m worried about not following through on my plans,” said Villagomez, 27, who spent five years in the Marine Corps before enrolling at University of Illinois at Chicago, where he majored in economics and minored in biology.
“Sometimes it’s easier to get stuck in these other fields.”
While the nation’s sunny jobs reports show low unemployment and growing payrolls, the jobs available aren’t necessarily good ones, and many new college graduates find themselves settling for less than what they bargained for.
Nearly 43 percent of recent college graduates are underemployed, that is, working in jobs that don’t require a college degree, according to March numbers from the Federal Reserve Bank of New York.
While making lattes or staffing a cash register is often considered a youthful rite of passage during that bumpy transition from campus to the workforce, new research suggests that settling for a subpar job out of the gate can harm career prospects for years to come.
Two-thirds of new grads who were underemployed in their first job out of college were still underemployed five years later, while only 13 percent of new grads who landed college-level jobs right away were underemployed five years in, according a study released last month by Burning Glass Technologies, a labor market analytics company, and the nonprofit Strada Institute for the Future of Work.
The cycle gets harder to escape as time goes on. Three-quarters of those who were underemployed five years after college continued to be so at the 10-year mark, according to the report.
The skills and professional connections gained in the first job help lead to the next and then the next, and those who missed the early boat have a hard time catching up.
Their earnings fall behind. Recent college graduates who are underemployed earn, on average, $10,000 less per year than their counterparts doing college-level work, the report found.
Women are disproportionately affected. Forty-seven percent of women were underemployed in their first post-college job, versus 37 percent of men, the report found.
The researchers didn’t examine the reasons for the gender divide, but it could be linked to the growing specificity of job descriptions, as research has shown that women are less likely than men to apply for a job if they don’t believe they meet all of the listed requirements, said Burning Glass CEO Matt Sigelman.
“That first job is so critical because so many who do start out behind stay behind, and the financial implications are substantial as well,” said Michelle Weise, chief innovation officer for the Strada Institute.
The research was based on 4 million resumes of people who graduated after 2000, and, to account for rising employer standards, it defined college-level jobs as those for which more than half of current job postings require a college degree.
In decades past, wandering aimlessly for a while after college was an accepted part of the transition to adulthood.
Today’s new grads face a very different labor landscape that favors the focused, the researchers said.
For one, ballooning student debt – approaching $1.5 trillion nationally, with Illinois graduates on average facing nearly $30,000 each, makes it unwise to cut short earning potential.
In addition, employers no longer expect new hires to stay with the same company for the long haul, so many don’t invest in entry-level training, yet they also have high expectations that people come in with a specific skill set, Sigelman said.
Meanwhile, the population of college graduates has risen markedly, more than a third of people over 25 now have at least a bachelor’s degree, compared to about a fifth 20 years ago, which has made it harder to stand out and has allowed employers to make college a prerequisite for jobs that traditionally didn’t require it.
And new graduates face competition from older peers still recovering from the misfortune of graduating during the Great Recession.
As a result, Sigelman said, college students can’t wait until the second semester of their senior year to visit the career services office, and should start thinking strategically about career paths closer to freshman year.
“It’s incumbent on students to have a plan,” he said.
Not all underemployment is created equal. In a study published last year, sociologist Kody Steffy, director of student research at Indiana University, conducted in-depth interviews with three dozen underemployed college graduates from a large Midwestern university, and found a stark class divide between those who were in that position intentionally versus not.
The voluntarily underemployed tended to come from families with money, and many did not consider the decision to be a temporary exploratory detour but, rather, a permanent path. They spoke of rejecting capitalism or prioritizing other facets of life besides career ambition, or they had found meaningful work that simply didn’t require a college degree, Steffy said.
More worrisome were the new grads in his study who were involuntarily underemployed. They tended to come from working-class backgrounds and often were the first in their families to go to college, which can make it harder to secure that first post-college job because they lack family friends who can put a good word in at a desired employer.
Those grads felt highly stressed about not finding work commensurate with their education, which their families had believed would be the ticket to upward mobility, and several cried during their interviews, Steffy said.
The distinction is important, he said, to properly frame the problem and direct resources to the people who need it most.
“I think there’s both a positive story here and a disturbing story,” Steffy said. “It’s great that there is a set of college graduates thinking very seriously about what the good life is and not just following the path of least resistance, but that same sort of exploration isn’t available for our first-generation college graduates.”
Villagomez, who lives with two roommates in Humboldt Park, is the first in his family to go to college, and he feels anxious as he contemplates his next step.
He was born in Chicago but raised in Mexico, where he spent long days juggling school and helping run the family’s produce store. When he realized his family wouldn’t be able to afford to send him to college, he saved enough money for a bus ticket and, at 16, returned to Chicago to live with relatives and aspire for more.
As he studies for the MCAT, Villagomez is working in a paid internship with a real estate broker and consultant, to see if that’s another path to pursue. But the $13-an-hour wage won’t be enough to make ends meet when student loans start to come due in a few months, he said.
He applied for a few jobs through his fraternity’s alumni network, but is concerned employers won’t want to hire a short-timer intending to return to school. As financial pressures mount, he worries more immediate options could lead him to abandon his expensive medical school goal altogether.