Young people with college degrees continue to earn far more than those without them. That hasn’t changed and likely won’t.
However, don’t expect rewards to come for a few years, possibly starting in your late 20s if you graduated at 21 or 22.
Last year, Americans with four-year college degrees earned on average 98 percent more per hour than people without them, according to the Economic Policy Institute. In the early 1980s, they earned 64 percent more.
However, nearly half of new college graduates will probably spend at least a few years in jobs for which they are overqualified.
A recent report from the Federal Reserve Bank of New York finds that 46 percent of recent college graduates are now working in jobs that don’t require college degrees.
“While stories about recent college graduates’ struggles to find a good job have become increasingly common over the past few years, we show that this experience is not a new phenomenon, nor one that can be ascribed simply to the Great Recession and the ensuing weakness in the labor market,” the New York Fed says.
In fact, during both good and bad economic times, the Fed reports that “relatively high rates of unemployment and underemployment are not uncommon among college graduates just beginning their careers, and those rates can be expected to drop considerably by the time the graduates reach their late twenties.”
Moreover, while it appears that the labor market has become more challenging for recent college graduates, it is much worse for young people who do not have a college degree.
Nonetheless, unemployment and underemployment is clearly an upward trend for recent college graduates over the past two decades, and particularly since the 2001 recession. It has also become more for college graduates to find themselves in low-wage jobs or to be working part-time.
“It is not clear whether these trends represent a structural change in the labor market, or if they are a consequence of the two recessions and jobless recoveries in the first decade of the 2000s,” the Fed says.
Either way, young college graduates entering the labor market since the 2001 recession face more challenges than their predecessors.
While many of these graduates will eventually find employment or transition into higher-skilled jobs, recent research suggests that “those who begin their careers during such a weak labor market recovery may see permanent negative effects on their wages.”