In the past six years, during which the Great Recession came
and went and our perception that the economy is doing well has vanished, people
in some categories have been more likely to suffer than others.
People in their 50s have often found themselves out of their
careers, with poor or no working options.
A variety of Americans have seen their incomes plunge, as their good jobs
were lost and replaced by lower-paying ones most commonly now created, or none
at all. Parents of younger college
graduates have seen their offspring, instead of being monetary assets able to
contribute some income to them, turning into liabilities. Yet it is the graduates themselves who have
taken it the worst.
Even those who don’t know the statistics can at least sense that. Official unemployment for college graduates
aged 21 to 24 has improved, but only to 8.5%.
Another 8.3% want to be working but don’t qualify as technically
jobless, or are working part-time but wanting full-time. Another 44% are in positions not requiring their
degrees, which, as a New York Times
editorial on Sunday put it, are less and less likely to be “well-paid
professions” such as electricians or dental hygienists, but are instead “waiters,
bartenders, or cashiers.” After
subtracting out people unemployed in spirit but not among the 60% above, such
as those off the grid, many getting more schooling, and others following their
essentially second-choice paths, we get only about one-quarter of recent, young
bachelor’s degree recipients working in paid jobs where that education is
needed.
At the same time, college tuition costs average a staggering
13 times what they were in 1984. The
total amount of education-related debt reached $1 trillion last year (over
$3,000 per American), amazingly passing the amount owed on credit cards. As would logically be the case when combined
with the poor jobs situation, loan default rates, now 15% in the first three
years alone, are ever higher. High
school seniors, who have heard for decades that college graduates average
double the income of others, often do whatever it takes to attend, which, in
times of lower income across the board and university financial aid leaving
large gaps, usually means borrowing the money.
In the meantime, 46% of people starting college in 2006 failed to get a
degree by 2012, meaning that, while they benefited in other ways, they did not even
qualify to try to join that 25%.
As time passes, many graduates do get good jobs. I have written for years about how typical
working years start closer to age 30 than to 22, so that’s nothing new. However, the effect of the delay is
devastating. Financial advisors say that,
when careers start at 22, savings plan contributions made at a given percentage
of income made in a worker’s 20s rate to be worth more at retirement than those
from ages 30 through 65. Careers
dependent on time of service, still most of them, do less well, meaning lower
income, with later starts. As an
indication of younger peoples’ lower prosperity, fewer are buying houses; according to one pre-recession 2008 study,
the average age of first-time buyers was 33, with a mean family income just
over $64,000. As the second number has
become more challenging, the first is almost certainly higher now. Since home equity is a major form of
household wealth, that means younger graduates are falling behind in that way
as well.
How have those finishing bachelor’s degrees coped with the
employment situation? As above, many are
doing what they can, with part-time positions or more humble full-time
ones. Many others live with their
parents, extending their times of “premature affluence” or having richer
lifestyles than their own incomes can support.
Fewer than ever are relocating for work, often a wise decision as more
and more good jobs turn out to be temporary.
They have used often-free electronic media frequently and comprehensively,
helping them spend less and leave home less, as shown by the share of
18-year-olds with driver’s licenses dropping from 80% to 61% from 1983 to 2010.
Progress on the jobs crisis, never strong, has stalled
almost completely. The Obama
administration has moved from even talking about needing more positions to
concentrating on raising the minimum wage, sure to achieve the opposite. Republicans in Washington have offered
nothing, other than weak and vague references to taxing the real or imagined
job providers less and cutting unspecified federal employment-reducing
regulations. College tuition continues going
up.
The problems of new graduates cannot be allowed to stand as
they are. So what can they, and the rest
of us, do? That will be the subject of
next week’s post.
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