As the weather warms and the days grow longer, millions of students across the nation look forward to the summer and a break from schoolwork. For college seniors their last summer vacation has come and gone. This year an estimated 1.25 million college students will graduate with a bachelor's degree, a monumental achievement. According to the U.S Census Bureau only 28% of the nation’s population has achieved the same goal. With their new degree, doors have been opened and a high paying job waits. Sandy Baum, a Skidmore economist, has shown, a college graduate will make $20,000 a year more than if they just had a high school diploma. Factor in inflation and cost of schooling that amount adds up to an extra $300,000 over a 40-year career. Of course, with that education and job come certain drawbacks. That summer vacation is reduced to just two weeks a year and the risk of infidelity increases 8.8% with each year of higher education. If this was January 2007, the Bureau of Labor Statistics (BLS) reports, your unemployment rate would have been 3% and the prospect of finding a job was high. 51% of college graduates who applied for a job got it. Unfortunately, the year is 2010, the economy has drastically declined and the unemployment rate has dramatically increased.
Unemployment as of March 2010 according to the BLS stands at 9.7%, which translates into 15 million Americans without jobs. The BLS has broken the statistics down even further. For adult men, unemployment is 10%. For adult women, it is 8%. For teenagers, unemployment is an astounding 26.1% (the highest ever recorded for the demographic), but what about recent college graduates. 80.3% will graduate college this year without a job or roughly, 1 million will be jobless. ABCnews.com has reported unemployment for 16-24 year olds is 18.9% a slight decrease from its historic high of 19.2% in September 2009. Giving that only 20.7% of recent college graduates will graduate with a job this year, the number does not accurately portray unemployment trends. Since the federal government does not gather data on recent college graduates, it is hard to find and accurate number on recent college graduate unemployment. In reality since 80.3% will not find a job this year, an increase of 29.3% from 2007, unemployment for recent college graduates is almost 30%. But even that number fails to account for recent college graduates working in a field below their education level and earnings potential.
Nearly 18% of 18-24 year olds are living below the national poverty line. As a result many recent college graduates have or will be forced to move back home. Working in low paying jobs as cashiers, waiters etc. many are no better off than they were four years ago. Except now, they have accumulated an average debt of $22,000. Studies show their suffering will not be short term.
Lisa Kahn, a Yale School of Management economist has studied the residual effects of the 1980s recession and has concluded graduates who entered the workforce during the recession earned 7%-8% less than someone who graduated college and obtained a job even just one year before the recession hit. After twelve years, that same person earned 4% to 5% less than a college graduate who earned their degree the year before they did. After eighteen years the margin had reduced to just 2%, but over the eighteen year span the college graduate, unfortunate enough to enter the workforce during a recession, lost $100,000 in pay. The study does not take into account the loss in retirement savings, tax revenue, or the emotional toll recent college graduates must contend with after sending resume after resume and receiving no responses.
With the dismal employment numbers and lost earnings, does a college degree still pay? The answer is yes and no. Even as national employment has hovered around 10%, unemployment for college-educated workers has remained relatively low at 4.3% as of April 2009 and has remained firm since. Therefore, a college degree provides job security. What the class of 2009 and soon the class of 2010 will learn, a college degree no longer means higher pay. Until this recession ends, each subsequent graduating college class will find their earning potential reduced.
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