The Class of 2009 may have graduated with the burden of recessionary economics weighing down their diplomas, but this year’s college and high school grads are not much better off. So says the Economic Policy Institute, which just released a report on jobs and unemployment for young adults entering the workforce.
The findings reveal that even though the recession officially ended six years ago, long-term unemployment and slow recovery have taken a toll on job prospects. The paper, titled Class of 2015, doesn’t purport to prophesize on how well these young people do in the labor market. What it does do is analyze employment, enrollment, and wage trends to determine economic prospects as they take the first step into their careers.
One thing is important to note: Regardless of the economy, those between the ages of 17 and 24 have historically been hit with high unemployment, to the tune of more than twice the overall rate. This is in part due to a newly minted graduate’s lack of work experience or, if they are hired, their shorter tenure makes it more likely that they’ll get the pink slip if their company downsizes.
Periods of labor market weakness just push this percentage higher. The Great Recession was the most pronounced and prolonged in the past 70 years, and we are still feeling its effects.
Here’s how the unemployment rate breaks down:
- For college graduates, it’s 7.2% for 2015 vs. 5.5% in 2007
- For high school graduates, it’s 19.5% for 2015 vs. 15.9% in 2007
According to the report:
The high share of unemployed and underemployed young college graduates and the share of employed young college graduates working in jobs that do not require a college degree underscore that the current unemployment crisis among young workers did not arise because today’s young adults lack the right education or skills. Rather, it stems from weak demand for goods and services, which makes it unnecessary for employers to significantly ramp up hiring.
The Class of 2015 is also more likely to be “idled” by the economy, meaning that the option of going back to school or getting more work experience is just not available. Those numbers have grown in the past eight years:
- Among young college graduates, 10.5% are neither enrolled nor employed (compared with 8.4% in 2007).
- Among young high school graduates, 16.3% are neither enrolled nor employed (compared with 13.7% in 2007).
Salaries continue to slag, and, according to the report, they are “substantially” lower today than they were in 2000 by 5.5% for high school grads and 2.5% for those coming out of college. Female college graduates saw their wages decline by 4.4% while their male counterparts’ paychecks increased by 0.2%.
The researchers found that the overall unemployment rates, idling rates, and wages of young graduates don’t necessarily tell the whole story. Race and ethnicity also play a big role in higher education, how well you are paid, and whether or not you can even get a job.
Nearly a quarter (23.2%) of black high school graduates and 18.1% of Hispanics are currently neither employed nor enrolled in further schooling–two of the courses that lead to future career success–compared with 14.2% of whites.
Unemployment among black college graduates was 8.1% in 2007 and is now 11.4%. The unemployment rate for Hispanic college graduates was 7.3% in 2007, went back to 7.3% last year, and rose again to 11%. For white college graduates, the numbers never hit the double digits, going from 5.1% in 2007 to 9% in 2011, and down to 5.8% currently.
We’ve heard it before, and this report continues to bear out the bad news: Higher education comes with a price tag that continues to grow faster than the median family income–as much as a 129% increase between 1984 and 2014. The result: growing student loan debt (on average 74% higher) to be paid back in a job market that can’t necessarily support payments.
Limited opportunity, sluggish salary increases, and the cost of a degree is making college a tough sell. Those who do make it through may have to contend with taking a position that is beneath them.
The paper’s authors note that taking a lower-level job isn’t unique to this labor market.
“For example, in 2000–when jobs were plentiful and the unemployment rate was 4%–36% of employed college graduates age 22 to 27 worked in jobs that did not require a college degree. No matter how strong the labor market is, recent college graduates often require some time to transition smoothly into their desired career track.”
That number has gone up since 2000, climbing from 38% of graduates under age 27 working in a job that did not require a college degree, to 46% in 2014. The number of young people employed in so-called “good” jobs (think: those that pay well but don’t require a degree) has dropped, too. Back in 2000, half of grads were doing well in career track jobs such as hygienist or electrician. Now you are more likely to find grads tending bar or working the cash wrap at a retailer.
For those who do land career track positions that utilize what they learned in college, employers aren’t necessarily paying health benefits or pensions the way they used to.
All this should be taken with a grain (or a pound) of salt. Last month, the researchers at Indeed, the platform for job seekers and recruiters, released a report that indicates twice as many employers are looking to fill jobs than the number of candidates applying.