College Grads: Downsized and Falling Behind

Well, I guess I should be opining this morning about the nation’s top story: The victory by Steelers star Hines Ward on Dancing With the Stars. And with the possibility of no NFL season this fall, this gives the Steeler Nation the opportunity to celebrate ahead of the Steeler Bowl that is generally held in February.

But I’m still mad at DWTS for giving Bristol Palin the boot last season. And at my age, grudges become more intense and long lasting because I have so little else on my mind most days. Oops. I digress.

So I’ll return to a story much less interesting than that of Hines Ward: The plight facing many college graduates these days as they search for a decent job that pays north of minimum wage and that offers some prospect for a middle-class lifestyle or better. Also, the earnings losses for those graduating during a recession — or at best now a jobless economic recovery — will follow them for a lifetime.

The NYT examines these and a host of other issues facing college grads, our economy and our nation in one of its regular Room for Debate features, “The Downsized College Graduate“:

The employment rate for new college graduates has fallen steeply in the last two years, a Times article reported last week, and many of those who have gotten jobs find that the pay is low and the work does not require a college degree.

The reporter, Catherine Rampell, wrote in a later blog post that some older readers cited factors other than the economy for the drop in the number of new graduates in the work force: that young people have a sense of entitlement, were sheltered by their parents, and partied through college. Or, if they worked automatons, they took no risks, expecting to be rewarded no matter what.

Previous generations of graduates had trouble finding jobs during bad times, and complained about having to work in clerical jobs or at places like the Gap. Are there reasons besides the economy to explain why today’s group is different? Are some students affected more than others? How can we do a better job of steeling young people for the cruel world?

Here’s an excerpt, from Till Von Wachter, associate professor of economics at Columbia University:

How come earnings losses from graduating in a recession can be so large? Research based on past large recessions has shown that college graduates entering the labor market in a recession experience reduction in earnings of 10-15 percent lasting about 10 years or more. (This puts college graduates apart from those entering the labor market with a high-school degree, who experience larger swings in unemployment, but whose employment and earnings recovers with the labor market.)

The initial earnings losses of college graduates have two main sources, among other factors. First, the quality of jobs declines in recessions, and college graduates start to work at lower paying firms and sectors – a phenomenon known to economists as ‘cyclical downgrading.” (That is, they get a service-type job at Gap or Starbucks instead of a career-type job at Cisco or Goldman Sachs). Second, even once young workers find a good job, starting wages of new jobs typically decline in recessions.

And from Richard Arum, professor of sociology and education at New York University:

First, the amount of indebtedness many graduates have is pronounced and unprecedented.

Second, young adults today as a group are highly motivated, but often directionless. The sociologists Barbara Schneider and David Stevenson have astutely described recent cohorts as “drifting dreamers” with “high ambitions, but no clear life plan for reaching them.” Indeed, more than a third of college graduates in our study reported that they aspired to own their own businesses, even though there was little evidence that entrepreneurial skills were being developed.

Many colleges and universities are implicated in the difficulties that graduates are facing, since not only did they fail to ensure that college students experienced rigorous academic coursework associated with the development of higher order cognitive skills, but, more troubling, they typically have abandoned responsibility for shaping and developing the attitudes and dispositions necessary for adult success.

In my research with Josipa Roksa, more than a third of students reported studying alone less than five hours per week, but these students were able to graduate on-time and with high grades. If students have learned in higher education that success was possible with such little effort, colleges have done them a great disservice. Career, family and community achievements are not so easily attained.

And from Carl E. Van Horn, professor of public policy at Rutgers University:

While college graduates entering the labor market during and immediately after an economic recession always encounter difficulties landing their first job, this recession has presented even greater challenges. The Great Recession — and the lingering high unemployment — was the deepest and longest downturn in 60 years. The economy shed more than eight million jobs and many millions more were temporarily unemployed. The recovery, which has been under way for over a year, has thus far generated less than 20 percent of the jobs needed to get back to the pre-recession levels of 2007, let alone created enough jobs to accommodate normal labor market growth due to population increases.

Young workers — those who graduated before the recession — are also clinging on to their entry-level jobs and may be blocking new graduates from getting on the first step of the career ladder. Older workers are also holding fast to their jobs or cannot retire because the value of their homes or retirement savings has eroded.

Compared with the college graduates of 10 or 20 years ago, the recent college graduates are carrying higher debt levels due to the rising cost of a four-year degree. With an average college debt of $20,000 and median starting salaries of $30,000, graduates from 2006 to 2010 seeking their first jobs will be hard-pressed to pay their bills.

Given the harsh economic realities, it is not surprising that students are pessimistic about their ability to achieve the American dream and do better financially than those who came before them. Since the time these college graduates were very young, their parents, educators and political leaders have told them that getting a college degree is a ticket to success in the knowledge economy. The vast majority of these graduates worked hard to earn their degrees — over 80 percent of students reported that they were working in at least part-time jobs during college and nearly 25 percent said they worked full time. Over 90 percent reported working during the summer months. More than 8 in 10 still must pay back the money they borrowed to pay for their tuition and books.

Now as they enter the world of work during the worst recession in memory, more than half have not be able to get a full-time, salaried job with benefits, nearly half find themselves in jobs that do not even require a college diploma, and nearly one in 10 are unemployed.

OK. I’m a strong supporter of education. And in the long run, college graduates have higher lifetime earnings and more stable employment over the course of a career.

But the current situation facing new grads is troubling — and it represents a serious challenge not just to the individuals involved and their families but to our nation’s future economic prosperity.

Just sayin’.

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One response to “College Grads: Downsized and Falling Behind

  1. Chenayle Bradford

    I really don’t like the fact that the older generation is blaming us and colleges for not being able to get a job out of college because they spent more time studying and the new generation doesn’t spend as much time. Times have changed and our generation takes in information a lot faster and easier than the older generation because we’re constantly surrounded by information these days. It sucks that we are in a recession and we’ve spent years in school to get ahead and still can’t but incompetency isn’t to blame the economy is.

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