44% of grads are underemployed — and that’s OK

44% of Young College Grads Are Underemployed (and That’s Good News), writes Jordan Weissmann in The Atlantic.  In a weak economy, many new graduates have to take jobs that don’t require a college degree, argues Weissmann. It’s worse now “because the economy got fed through a wood chipper during the recession and we still haven’t picked up all the pieces,” not because a bachelor’s degree has lost value.

The unemployment rate among recent college graduates tends to move “in step with unemployment among all working age adults,” he writes. New graduates are having problems because everybody is.
NYFed_College_Grad_Unemployment.jpg

College graduates during the 80s and early 90s were as likely to be overqualified for their jobs as young graduates today, according to New York Fed President William Dudley. Most graduates then eventually found professional jobs.

The obvious difference between higher education today and in 1990 is the cost of a degree, and the amount of debt students take on to finance it. So while failing to land a college-level job straight out of school might have been tolerable in the past, today it might mean severe financial hardship, especially if students aren’t savvy about how to handle their student debt (three words: Income. Based. Repayment).

There’s evidence that young people who graduate into a recession and start lower on the job ladder never recover completely.

I’d like to see a good survey asking whether collegebound students understand their likely future earnings and loan payments. Do they know the risks? If they did, second- and third-tier private colleges would have to slash tuition or go out of business.

Be deeply suspicious of promises that a bachelor’s degree will raise earnings significantly, warns Tim Donovan on Salon. If the “higher interest rate convinces even a few 18-year-olds not to take on huge debt for that Musical Theater degree, maybe it’s not so bad,” he writes.

Too many college graduates?

A growing number of college graduates are underemployed, concludes a new study from the Center for College Affordability and Productivity.

About 48 percent of employed U.S. college graduates are in jobs that the Bureau of Labor Statistics (BLS) suggests requires less than a four-year college education. Eleven percent of employed college graduates are in occupations requiring more than a high-school diploma but less than a bachelor’s, and 37 percent are in occupations requiring no more than a high-school diploma;

In 1970, fewer than one percent of taxi drivers and two percent of firefighters had college degrees; now more than 15 percent do in both jobs. Increasingly, new college graduates are working as clerks, cashiers, retail sales reps and waiters and waitresses, the report found. About five million are in jobs the BLS says require less than a high-school education.

Comparing average earnings for high school and college graduates is misleading, the report warns. “Overproduction of college graduates lowers recent graduate earnings relative to those graduating earlier.”

Not all colleges are equal: Typical graduates of elite private schools make more than graduates of flagship state universities, but those graduates do much better than those attending relatively non-selective institutions;

Not all majors are equal: Engineering and economics graduates, for example, typically earn almost double what social work and education graduates receive by mid-career;

The number of college graduates is projected to increase by 19 million in 20 years;  the number of jobs requiring a bachelor’s degree is projected to increase by 7 million, according to the BLS.

If President Obama’s college completion goal is met, even more young people will be competing for a limited number of professional jobs, warns Richard Vedder, co-author of the study and director of CCAP. Soon, would-be janitors will need “a master’s degree in Janitorial Studies.”

The “college for all” movement is misguided, CCAP argues, calling for “new and cheaper ways to assure employee competency”  and investing “less in four year degree programs and more in cheaper training, including high school vocational education.”

College graduates continue to earn significantly more than non-graduates, Anthony Carnevale, director of the Georgetown Center on Education and the Workforce, tells Inside Higher Ed.

“You can’t have a 48 percent surplus of college graduates and an 84 percent college wage premium over high school,” Carnevale wrote via e-mail. “This advantage wouldn’t have been growing along with the number of college graduates since 1983. The market is very responsive to labor supply…. If there was an over production the employers would’ve figured it out some time over the past 30 years.”

Nearly half of sales reps in the wholesale and manufacturing industries have four-year degrees in what the BLS considers a high school-level job. “What Vedder doesn’t point out is that sales representatives with B.A.s make $73,000 a year compared with sales representatives with high school degrees who only make $38,000 a year,” says Carnevale.

 

The shampooer with a BA

Too many college graduates are underemployed, writes Christopher Matgouranis of the Center for College Affordability and Productivity. He offers a Bureau of Labor Statistics chart showing the percentage of workers with at least a bachelor’s degree in careers that typically don’t require higher education.

Profession
Flight attendants…………………………………….. 29.8%
Retail salespersons………………………………….. 24.5%
Customer service representatives…………… 21.6%
Baggage porters and bellhops………………….. 17.4%
Secretaries (not legal/medical/executive). 16.6%
Hotel, motel, and resort desk clerks………… 16.1%
Telemarketers…………………………………………. 15.8%
Taxi drivers and chauffeurs……………………. .15.2%
Manicurists and pedicurists……………………… 11.5%
Shampooers…………………………………………… .11.5%
Locksmiths and safe repairers………………… 10.2%
Telecomm. installers & repairers…………… 13.1%

A large increase in the number of college degrees will leave more graduates in debt and underemployed, he writes. Degree inflation will soar.

. . . a quick search of monster.com will show that for many jobs, such as an office clerk or administrative assistant, a college degree is preferred or even required, when the work entails tasks that high school/ vocational grads could easily handle.

Society should focus more resources on vocational education leading to a certificate, “a less costly and more effective alternative,” he concludes.

Of course, those college-educated shampooers and bellhops may enjoy the intellectual benefits of higher education, even if they’re working in a field that doesn’t require a bachelor’s degree. Some are young people who will get a chance to use their degree eventually.

But a bachelor’s degree doesn’t guarantee a middle-class job any more. Nothing does. For the career-minded, a two-year degree or less-than-two-year certificate could be a better investment of time and money.