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.