Graduates Have Things To Worry About

“The era of the over educated Barista is here to stay.”

Seniors in college have been told they are entering the best job market in at least 10 yrs. But these educated workers may have more to worry about than they thought, a new report suggests.

An analysis of College Board and government data published this week by the Economic Policy Institute finds the Class of 2015 will likely see lower wages than those that graduated into better job markets for as long as 15 years.

Other research shows that a rising number of recent college graduates take low-skill and service jobs that do not make use of their degrees.

Since Y 2000, the share of recent college graduates taking low-wage jobs like tending bar, cashier work, and food service has steadily increased. Last year, 46% of young American college graduates worked jobs that did not require a bachelor’s degree, up from 38% in Y 2007.

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According to the New York Fed, “the era of the over educated barista is here to stay.”

Those choices put these graduated at a lower rung of the career ladder at a Key time in their lives, said the EPI’s Elise Gould, Alyssa Davis, and Will Kimball in the report. While young workers may move up the company hierarchy or transition to more lucrative careers over time, erasing that initial wage disparity could take well over 10 yrs, they say.

“Young workers who have the bad luck to enter the labor market during a downturn not only have worse outcomes in the short run than if they had entered in a healthy labor market; these negative effects can last a very long time,” said the report. “Research shows that entering the labor market in a severe downturn can lead to reduced earnings, greater earnings instability, and more spells of unemployment over the coming 10 to 15 years.”

The Institute pointed to a rise in what it calls “idling,” or the share of young college graduates who are neither employed nor enrolled in school. Last year, 10.5% of recent college graduates are idled.

That is a slight decrease from the height of the recession, when 11.9% were in career limbo, and it “represents an enormous loss of opportunities for this individual, as the loss of work experience or further education will have a lasting negative impact on their lifetime earnings,” the economists said.

While the Class of 2015 is entering a better job market than the previous 6 classes of college graduates, they are worse off than most classes since the early 1990’s. The new report predicts it may take another generation for them to catch up to their predecessors.

Have a terrific weekend.

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