New college graduates with a bachelor’s degree or better may initially face tough times landing work, but there are reasons for hope. A new study looks at how recent college graduates are faring in the post-recession job market.
Youth unemployment has become a troubling trend in recent years, having spiked to historic levels during the Great Recession and remaining at record-high rates even as the United States economy continues to recover. As job opportunities remain difficult to come by for professionals of all ages, recent college graduates find themselves competing with older, more experienced workers vying for positions often held by mostly younger employees prior.
“Young people were the hardest hit group during the Great Recession,” according to the Young Invincibles, a nonprofit youth advocacy organization. “The unemployment rate for those aged 16 to 24 soared to levels previously unseen, peaking at a record high of 19.6 percent in April 2010. As youth employment continues to lag far behind the rest of the nation in the recovery, some fear a generation of Americans is falling behind.”
How are recent college graduates actually faring in today’s post-recession job market?
Employers taking part in the National Association of Colleges and Employers’ (NACE) recent Job Outlook Spring Update survey forecast their college hiring levels to remain relatively flat. In the NACE findings, released in April, employers said they would be hiring 2.1 percent more new college grads from the graduating class of 2013 than they hired from the 2012 class. That’s down from the 13 percent increase they projected last fall.
“Recent college graduates with a bachelor’s degree or better are still bearing the greatest unemployment risk, with unemployment rates ranging from a low of 4.8 percent to a high of 14.7 percent depending on their major,” Georgetown University’s Center on Education and the Workforce (CEW) says in its new report, titled Hard Times 2013. “Despite the slow recovery, the overall unemployment rate for recent college graduates is 7.9 percent and the overall unemployment rate for graduate degree holders is 3.3 percent.”
The CEW’s latest annual study on the topic, published in late May, found differences between degrees and employment status. The results showed that while a bachelor’s degree will secure better levels of employment and salary, higher-than-average unemployment rates tend to be concentrated in specific majors.
Overall, unemployment rates are relatively low for recent graduates in education (5 percent), engineering (7 percent), health and the sciences (4.8 percent) because they are “tied to stable or growing industry sectors and occupations.” At 12.6 percent, the unemployment rate is highest in anthropology and archaeology.
Of particular interest are the technology sector’s numbers. Generally speaking, unemployment is higher for non-technical majors, such as law and public policy (9.2 percent), and people who make technology are better off than those who use technology, according to the study.
Unemployment for recent graduates in information systems, concentrated in clerical functions, is 14.7 percent compared with mathematics (5.9 percent) and computer science (8.7 percent), the study shows.
“[H]iring tends to be slower for users of information compared to those who write programs and create software applications, the CEW states. “Moreover, the relatively low unemployment rates for experienced bachelor’s degree holders and those with a master’s degree or better seem to indicate these majors have a stable employment outlook.”
While entering the workforce is a particularly difficult task for new college grads lacking any professional experience, employment prospects tend to improve as graduates acquire more experience and education.
According to the CEW, unemployment rates for college graduates with actual work experience hover around 4.6-4.7 percent.
For recent graduates with a civil engineering degree, for example, unemployment is 7.6 percent. However, for experienced graduates with the same degree, the unemployment rate drops to 4 percent. The gap is even larger for mechanical engineering grads, with an unemployment rate of 8.1 percent for recent graduates and 3.4 percent for graduates with experience. For electrical engineers, the unemployment rates for recent grads versus experienced grads are 7.6 percent and 4.6 percent, respectively.
Meanwhile, some fields showed that a graduate degree makes a noticeable difference in terms of employment prospects.
“As disappointing as high unemployment rates for recent college graduates can be, a graduate degree or work experience sometimes shelters them from higher unemployment rates,” the CEW study says.
In architecture, for instance, recent grads face an unemployment rate of 12.8 percent, while the unemployment rate for graduates with experience in the field was 9.3 percent – the same rate for the economy overall, even as the housing bubble seems to be dissipating. For those with a graduate degree, however, the unemployment rate decreased even further to 6.9 percent, still high but a significant drop.
The overall unemployment rate for people with graduate degrees is 3.3 percent.
“Hard times could still be ahead for the current college students about to select a major,” the CEW says. “Specific fields and the higher technical skills associated with these fields can and often do offer lower unemployment and higher earnings; however, as can be seen for architecture majors, certain fields of study can result in higher unemployment risk after graduation.”
Ultimately, the CEW study indicates that a college education still pays off in an economy recovering from recession, though earnings also depend on what field employed college graduates studied.
Median earnings among recent college graduates range from $54,000 for engineering majors to $45,000 for computers and mathematics to $30,000 for life and physical sciences. The highest-paying majors continue to be in engineering. Those figures rise with more experience and a graduate degree. With the exception of arts and education, where pay is traditionally low, workers with graduate degrees average between $60,000 and $100,000 per year.
“In the past, a college degree all but assured job seekers employment and high earnings, but today, what you make depends on what you take,” the CEW report’s authors make clear. “We show that STEM — Science, Technology, Engineering, and Mathematics — majors typically offer the best opportunities for employment and earnings, while unemployment is higher for graduates with non-technical degrees.”
Early jobs are crucial for establishing future earnings and employment trajectories, meaning that the failure of youth to find employment today significantly slows their future professional growth.
“A clutch of academic papers, based mainly on American statistics, shows that people who begin their careers without work are likely to have lower wages and greater odds of future joblessness than those who don’t,” The Economist recently reported. “A wage penalty of up to 20 percent, lasting for around 20 years, is common. The scarring seems to worsen fast with the length of joblessness and is handed down to the next generation, too.”
The CEW study is the latest in a series of similar findings that suggest U.S. employers are under-utilizing the capabilities of young, college-educated workers. At the end of April, Accenture reported that 41 percent of workers who graduated from college in the past two years are underemployed and working in jobs that do not require their college degrees. As of late March, Accenture found that only 16 percent of students graduating this year had already secured employment.