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Home Publications Blogs Beat the Press College Grads Have Been Hard Hit by the Recession Also

College Grads Have Been Hard Hit by the Recession Also

Saturday, 04 May 2013 09:00

A NYT piece headlined, "college grads fare well in job market even through recession," painted a misleading picture of the job market facing college grads in the downturn. First, the claim at the center of the piece, that college grads have gotten the bulk of the jobs in this recovery, is badly distorted by the pattern of retirements. The aging baby boomers who are leaving the labor force are much less likely to be college grads than the young people just entering, so even if there were no change in labor market conditions we would expect to see the share of college educated people increase among the employed. This effect is increased further as a result of the fact that less educated workers are likely to leave the work force at an earlier age because more of them work at physically demanding jobs. 

In terms of relative changes in unemployment rates, college grads have fared no better than anyone else. In fact, they have done slightly worse than the least educated workers, those without high school degrees.

Finally, the claim about the returns to a college degree are misleading, especially for men. While on average men with college degrees get far higher incomes than those with just a high school degree, there is a wide degree of dispersion as shown by my colleague John Schmitt and Heather Boushey.. As a result, a large percentage of college grads earn lower wages than many high school grads. For this reason, the marginal student who is considering attending college may have good reason to question whether it will pay off for him. It would have been useful if this piece had spent more time discussing the specifics of this issue. 

Comments (4)Add Comment
written by Frank de Libero, May 04, 2013 1:39
Ms Rampell refers to UE estimates in this article and her May 3 and March 5 Economix posts of 5.8% UE Bachelor's only and 5.5% UE advanced degree. That doesn't make sense; I'd expect the advanced degree estimate to be lower (say below 4%). Her citation doesn't match those estimates. Yesterday via NYT comments I requested an accurate citation but my comment didn't appear. I sent a similar comment again this morning.

Her reference for those numbers (which can be found at http://www.bls.gov/opub/mlr/2013/02/art1full.pdf) has recent graduates which based on Rampell's March 5 post she didn't want to use (too recently graduated). Even in that BLS-Spreen report recent graduates shows a marked difference between the two groups: 13.5% UE for Bachelor's Only v. 8.6% UE for advanced degree. And much higher UE.
dispersion is an issue...but debt is not evenly distributed either...
written by pete, May 05, 2013 10:04
I read recently (don't remember exactly where) that liberal arts majors had the highest level of debt...I would think that they also form the low end of the income distribution. This is the serioius problem. Not that there is anything wrong with pursuing pure education, just that a history degree from some multidirectional school is not the same as a history degree from a top 4 year college or an ivy league.
Other related data
written by David, May 05, 2013 11:23
... In 2008, 4 percent of U.S. bachelor’s degrees were awarded in engineering.Compared to 31 percent in China.

In 2008, 31 percent of U.S. bachelor’s degrees were awarded in science and engineering fields. Compared to 61 percent in Japan and 51 percent in China. ...

And take into account that for every US engineering student, there are 4 in China. And that these US students are in pretty much direct competition with those Chinese students.

And things will get worse before they better (if it ever gets better). As I understand it, the Current Account Deficit does not accurately reflect the amount of "effective labor import" that is being done. The conservatives have mostly abandoned Hoover's call for national self-sufficiency; Hoover was far more progressive than the current GOP. [Obama is a lot like Hoover in too many ways, except O's stimulus package was not as inadequate as Hoover's was].
NY Times articles like this further encourage education over consumption
written by John Wright, May 05, 2013 3:46
I'm concerned that the USA will wake up with an "education hangover" causing many people to wish they could go back in time and acquire a less expensive degree leaving some capital to use in starting a small business or buy a house.

But the media seems to advocate "one can't go wrong getting a college degree".

If foreign countries are producing effective graduates at a lower cost, one would reasonably expect this to be exploited by multi-national corporations, as evidenced by H1-B visas and outsourcing.

Possibly the USA 4 year college model is obsolete and should be replaced with continuous training while working?

This could keep the worker in better sync with the USA job market.

And having young college graduates working in jobs that don't require a degree is similar to the Great Depression, as my father told me "You needed a college degree to pump gas for Standard Oil".

In tighter job markets employers are reluctant to hire overqualified workers who might shortly move to better opportunities.

So with the current hiring of college graduates for jobs not requiring a college degree, this suggests employers are not too concerned about the USA job market heating up soon.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.