For those who make the investment, college graduation is supposed to signify the transition from training for life to living it. But for many young adults in the class of 2012, this year’s ceremony will be more like an anticlimax. According to a new analysis of government data by the Associated Press, more than half of young college grads are either not working or working in jobs that don’t offer them enough hours, enough pay, or the promise of a future career.
The AP reports:
Young adults with bachelor's degrees are increasingly scraping by in lower-wage jobs -- waiter or waitress, bartender, retail clerk or receptionist, for example -- and that's confounding their hopes a degree would pay off despite higher tuition and mounting student loans.
The report reveals a harsh reality for students, their parents, and an economy that needs trained workers in high-skill jobs. Today, young people facing job and income insecurity put off decisions that were once the hallmarks of maturity, such as buying a home, starting a family, or moving out of mom and dad’s place. A higher portion of young adults are living with their parents than at any time in the last three decades, which has changed social expectations about the meaning of adulthood and led to this generation of college grads being labeled as “boomerangs” who return to the nest. In a poll conducted during the fall of 2011, think tank Dēmos found that 43 percent of all 18- to 24-year-olds delayed moving out of their parents’ home, and 47 percent of 25 to 34-year olds delayed purchasing a home because of the economy (editor’s note: Dēmos is the Prospect’s publishing partner). Since young people traditionally make up a significant portion of the real-estate market, these trends are not just an impediment to perceived adulthood, but a drag on markets as well.
Education has long been acknowledged as a key to upward mobility. Last fall, I co-authored a study of the economic prospects for this generation of young adults called the State of Young America. We showed that over the past 30 years, the only young workers to see any earnings gains were those with a college education. Still, while the overall unemployment rate for those with a bachelor’s degree—4.2 percent—is far lower than the national average, these workers are taking jobs that do not provide the same security, benefits, and opportunities for growth that their parents’ generation enjoyed.
This group is also saddled with student-loan debt at levels unknown to college graduates in decades before. The most recent numbers from The College Board show that more than half of public university graduates take on debt, with an average debt burden of $22,000. Among the 54 percent of graduates who cannot find adequate work after graduation, student-loan payments eat a big chunk of their monthly budgets, further restricting their financial freedom and sending increasing numbers of graduates into default.
With a pace of recovery that puts the U.S. at full employment sometime around the year 2020, we’re looking at an entire generation left behind. And it’s not just a temporary blip. Studies of previous downturns show that college students with the unhappy fate of graduating during a recession experience lower earnings and delayed career development throughout the duration of their working lives. Beginning a career in an economy with lower starting salaries is part of the problem. Another part may be changes in the structure of the labor market as the economic contraction puts the squeeze on underperforming sectors. According the Associated Press article:
Any job gains are going mostly to workers at the top and bottom of the wage scale, at the expense of middle-income jobs commonly held by bachelor's degree holders. By some studies, up to 95 percent of positions lost during the economic recovery occurred in middle-income occupations such as bank tellers, the type of job not expected to return in a more high-tech age.
In other words, as the range of middle-income jobs narrows, workers who didn’t make it into the ranks of top earners sink to the bottom.
Today’s college graduates invested in education as a means to attain economic stability, and it is still the best bet we have for achieving a middle-class life. But the report from the Associated Press demonstrates that now and in the coming years, the opportunity to get a college degree is not enough to put young people on the path to prosperity. Part of the solution, as even our presidential candidates agree, is to alleviate the debt burden on young people as they start their careers. But a broader approach for planning for the future middle class is needed, one that addresses the problems of polarizing labor markets, the increasing cost of higher education, and the insecurity and wage stagnation among workers at the bottom. Until then, the generation that embodies our material future will be busy waiting tables.