Dear Job Market, Thanks For A Lousy Grad Gift
The recession ended two years ago, but it seems the job market hasn't gotten the memo.
This will be the third year college graduates will enter the workforce facing a high unemployment rate. The poor job market is already taking a tough toll on recent grads.
Katelyn Bonar has two undergraduate degrees, in biology and psychology. She's also halfway through medical school. And she's well on her way to racking up $300,000 in student loans. Last year, she took time off from medical school and looked for work. Given her credentials, she expected to qualify for a professional job.
"It was kind of shocking, to be honest," she says.
Bonar applied to about 20 entry-level hospital jobs. Neither Bonar's schooling nor her medical certifications helped.
She says that "finding I didn't qualify for more than what I had qualified for in college was tough."
The people who got those jobs had even more advanced degrees. So instead, Bonar waited tables and also lifeguarded, neither of which required a degree. Many of her peers haven't fared much better. Bonar's boyfriend just graduated with a master's degree in psychology and applied to dozens of jobs, so far with no luck.
"It's frustrating," Bonar says. "You take the time and you put in extra years and you get an extra degree and are told, 'This degree or this time or this hard work is going to open doors for you.' And you're in the same position as someone who just finished undergrad. It's humbling, to say the least."
Leaving An Economic Scar
That's not to say that a college degree does not help. The unemployment rate for people who graduated from college is less than half what it is for non-graduates.
Also, the choice of major makes a big difference in earning power. For example, according to a study Georgetown University released last week, a degree in petroleum engineering pays the highest median income — $120,000 — more than four times the lowest paying degree, which is in psychology.
Still, for today's grads, competition is stiff. And, as Bonar's experience suggests, many are settling for lesser jobs.
Half of those who graduated in the last five years are working in jobs that don't require college degrees, a Rutgers University released a survey last month says. Seven percent of those surveyed said they were unemployed. In better times, the author of the survey says, that would probably be closer to 2 percent.
So what effect does this all have? For this generation, it will leave a big economic scar, says Scott Winship, a research manager on economic mobility at the Pew Charitable Trusts.
"Now if you graduate into a bad economy, then your starting point is going to be permanently lower in some ways than if you graduate into a good economy," Winship says.
"So if you think of career paths as an escalator where you're moving up over the course of your career and making more at the end than you were at the beginning, people who are graduating into a bad economy are starting on a lower floor than they would have," he says.
Winship says mid-career people who lose their jobs typically recover within a few years — kind of like taking an elevator back up to where they would have been. But those who have the misfortune of graduating into a bad job market face a disadvantage for decades. Not just on salary, but because there are fewer job openings to allow them to move up.