17,000 college graduates prove the recession isn't over for young people yet
A recent report by the National Center on Education Statistics found that the majority of people who graduated from college at the onset of the Great Recession were doing relatively well four years after earning their diplomas. Compared to graduates in the past, however, they still have a lot of ground to cover.
In "Baccalaureate and Beyond: A First Look at the Employment Experiences and Lives
of College Graduates, 4 Years On," researchers followed more than 17,000 members of the college class of 2007-2008 for four years to see how they fared in the workforce. In 2012, only 6.7% reported being unemployed. Overall, they were doing better than the rest of the country, which had an average 7.9% unemployment rate the same year.
They are also managing to find full-time work. Of the 83% of graduates who had found jobs four years after graduation, about 85% were working full-time (35+ hours per week). Eight percent said they were working part-time. All in all, 2007-2008 college graduates earned an average $52,000 a year four years after graduating.
But these recession-era graduates still have much ground to cover. A decade ago, college graduates from the class of 1997-1998 were earning nearly $50,000 (in 2012 dollars) four years after graduation, according to the NCES. Today's graduates may be doing slightly better earnings-wise, but their unemployment rate has more than doubled since then, when it was just over 2%.
STEM and health care majors lead the pack
Realistically, recession-era college graduates were always expected to have a rougher go of making it in "the real world." But some have fared much better than others. Based on employment rates and salaries, health care and STEM majors (that is, science, technology, engineering and mathematics) were -- unsurprisingly -- the clear winners of the class. Graduates who majored in health-care fields were most likely to land a job after college, with a measly 2.2% unemployment rate four years out of school. STEM majors weren’t too far behind with a 5% unemployment rate.
STEM degrees also proved to be most lucrative, with a median $60,000 salary four years after graduation. Health care majors did well for themselves with a median $54,800 salary. Social science majors lagged behind the class of 2008 in almost every category. They were the least likely group to be employed, with an unemployment rate at nearly 10% and a $40,000 median salary.
“[Our findings] do seem to be positive overall compared to the general employment situation,” says Ted Socha, a statistician and project officer for the NCES report. “But you have to remember that these are the succeeders in life. They made it to college, through college, and graduated with what was required to get a fairly good job in this economy.”
Before you get too pleased with yourself, millennials, it’s worth noting that there are some troubling trends that emerged in this year’s report.
The gender wage gap is going strong.
Despite the fact that women far outnumbered men in the graduating class of 2008 (57% vs. 43%, respectively), they still earned much less four years out of college. Men earned an average $58,000 in 2012, compared with $47,000 for women.
Unfortunately, it’s a trend that has persisted since NCES began conducting these post-graduate surveys in the early 1990s. Male 1992 graduates earned $55,000 in 1997 (in 2012 dollars), while women earned $44,000 — the same $11,000 pay gap that separates genders today. (The NCES also followed the class of 2000, but was not able to conduct a four-year post-graduation study due to budget cuts, we were told.)
There are some clues as to why this wage gap hasn’t budged in over a decade. In 2012, women on average reported working about three fewer hours per week than men (40 vs. 43), and were more likely to be juggling several part-time jobs (9.1% of women vs. 5.9% of men) at once. The disparity mirrors a pay gap that has persisted in the U.S. for decades. A recent Pew report found that today’s younger women are at least in a better place earnings-wise than their mothers and grandmothers had been. In 2012, women earned 84% as much as men, a vast improvement over the 1980s, when they earned 64% as much.
Women were also more likely to be unemployed for longer (11.3 months vs. 9 months for men) and to leave the workforce by choice (9% of women vs. 6.5% of men).
Minorities are still falling behind.
Minorities are still disproportionately more likely to be unemployed and earn less than white college graduates. College-educated Asian Americans and Blacks nearly tied for the highest unemployment rate (11.9% and 11.8%, respectively) in 2012, while Hispanics boasted a relatively strong 8.5% rate, while whites lead the pack with 5.5% without jobs.
Almost all racial groups, however, are doing worse in the workforce than their counterparts in 1997 — especially Asian Americans, whose unemployment nearly tripled from 4.5% to 12%. When Asian Americans do find work, though, they manage to land some of the highest-paying gigs of most college graduates, with a median salary of $55,000, the highest of any ethnicity.
What about the real recession graduates?
As thrilling as a sub-7% national unemployment rate should be, we can’t help but point out that this report, as Socha says, only includes successful college graduates.
The unemployment rate for 20- to 24-year-olds peaked at 12.2% in March of this year and has yet to fall below 10%, according to the Department of Labor, while the national jobless rate was 6.1% as of June.
And the class of 2008 is still far worse off than the class of 1992 was four years after graduation. Their unemployment rate was just over 2%, according to Socha.
It’s also worth noting that the report follows only the class of 2007-2008. They graduated at the precise onset of the recession. But the classes of 2009-2011 were really thrust into the worst of the economic downturn and would have had a much harder time finding a life raft after graduation. In October 2011, the unemployment rate for 20- to 29-year-olds who graduated in 2011 was 12.6% — even higher than the rates for graduates prior to the 2007–2009 recession.
“Perhaps if we did look at these graduates, the numbers would be strikingly different,” Socha says.
For those recent graduates who have been able to find a full-time job in the wake of the economic downturn, there is, of course, no guarantee they’re working in a field related to their area of study or worthy of their educational pedigree. Nearly half of millennials today are estimated to be underemployed, according to a recent report by the Federal Reserve Bank of New York.
At least recent grads can take comfort in the fact that graduates always face higher increased unemployment rates in weak labor markets.
If there is one bright side to the uphill battle college graduates are facing today, it’s that they almost always have a tougher time making it early in their careers. As researchers at the Economic Policy Institute noted in a May 2014 report on young graduates, struggling to find a solid job is one of the consequences of being young and inexperienced in an increasingly competitive job market.
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