Completing a degree is supposed to be a ticket to higher income and greater job stability. And in fact, a bachelor’s degree results in a lifetime income advantage of 12.5% on average versus a high school diploma, depending on the field of study. But recently, something has gone somewhat awry: Recent college graduates are finding it harder to land a job in the first place.
While unemployment across the broader economy remains low at 4.2%, the rate of unemployment for college graduates old less than one year out of school stood at a near record 5.8% as of March. That is up sharply from the 4.6% rate for last year’s graduating class, according to the Federal Reserve Bank of New York.
Furthermore, many graduates who have found work are not employed in fields requiring their specific degree. According to a recent report by the Burning Glass Institute and the Strada Education Foundation, 52% of recent grads are working at jobs that don’t require a bachelor’s degree, a condition known as underemployment. Of those grads who start out underemployed, 45% remain underemployed after 10 years.
What’s going on? There’s no one simple answer, but some kind of structural change appears to be happening in the market for entry level white collar jobseekers.
For most of the time since such records have been kept, a four-year degree was a winning ticket. From 1990 through 2018, the unemployment rate for first year college grads was consistently 1 to 3 percentage points lower than the overall unemployment rate. A sheepskin not only meant greater lifetime earnings but a spot at the front of the line at the employment office.