College Grads and Underemployment: Life and Data

A wave of anxiety is sweeping the nation as newly minted college and university graduates frame their diplomas and make plans to repay loans. Was it all worth it? Majors in the humanities and social sciences may be especially worried, but even engineers and health care workers will not have an easy go in this economy.

For a lively discussion of this issue see Brittany Bronson’s latest piece in the New York Times “Long Odds in the Game of Life.”  Then, for a sober look at underemployment trends, read Abel, Deitz, and Su, “Are Recent College Graduates Finding Good Jobs?” The first article hits all the right nerves, evidenced by numerous comments. The second article, from the New York Fed, picks through the data to show that the struggle to find jobs that utilize one’s education is not a new phenomenon, but it has gotten worse of late.

How do we define underemployment? Let me count the ways. Among the employed, those working part time when they prefer full-time (at least 35 hours per week), are the traditionally underemployed. By that definition, the underemployed soared (up 112 percent) to nearly nine million during the Great Recession, an absolute and relative increase greater than any time since the end of World War II.

 But what if we say you’re “underemployed” because you work in a job that doesn’t require a college education? Or, more dynamically as Ms. Bronson notes, your prospects for decent lifetime earnings are diminished because to pay your bills now you do things that don’t really enhance your resume. What does the data show?

Recent college grads (aged 22 to 27 and out of school) suffered unemployment more than “all college graduates” but less than “all workers.” That’s much lower than “all young workers” but with a curious hockey stick uptick in 2013.


Over time, as college graduates age, unemployment typically goes down. But the latest “unemployment by age” snapshot (2009-2011) is higher by a factor of two versus 1990 and 2000.


What about the baristas, bartenders, and restaurant servers with bachelor’s degrees? One-in-three college graduates overall work in jobs that don’t require a college degree. (Whether they “use” their “education” is another question.) More than 40 percent of recent college graduates work in such jobs but that number is about where it was in 1990. The lucky cohort graduated around 2000 and were more likely to be sucked into the tech sector around the turn of the century. Abel, et al. speculate that as the technology revolution matured, the demand for cognitive skills has declined. So the dip around 2000 in the next chart may be the outlier.


Everyone wants a “good job.” But what is a “good job?” In fact, there are two kinds of good jobs: good jobs that require a college education and good jobs that do not require a college education. Some “under-degreed” entrepreneurs and skilled tradespeople earn a decent living and have good prospects for advancement. But the trend for college graduates shows fewer working in good, non-college jobs and more working in low-wage jobs. Those trends may be the most telling of underlying, structural changes like a maturing tech sector and a growing, globalized service economy


Conclusion: Overtime, as college graduates age, they are likely to gain their footing in the new labor market as they use the information and thinking skills gained in college to adapt to new opportunities. No doubt they were slammed by their timing, graduating in the wake of the Great Recession. But, if they did their homework in “Technology and Society” (not your father’s Mickey Mouse course), and continue to read the New York Times, the future can be off the charts.

Tom ExterComment