Educated and in debt, it's survival in US job market

The individual stories are familiar. The chemistry major tending bar. The classics major answering phones. The Italian studies major sweeping aisles at Wal-Mart.

“This is exactly what the corporate elite desire — educated, in debt, in no position to ask for anything. The perfect employee. Why stop here? Let’s bring back slavery while we are at it.”

Now evidence is emerging that the damage wrought by the sour economy is more widespread than just a few careers led astray or postponed. Even for college graduates, who were most protected from the slings and arrows of recession, the outlook is rather bleak.

Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all.

The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study by John J Heldrich Centre for Workforce Development at Rutgers University. That is a decline of 10 per cent, even before taking inflation into account.

Of course, these are the lucky ones, the graduates who found a job. Among the members of the class of 2010, just 56 per cent had held at least one job by this spring, when the survey was conducted. That compares with 90 per cent of graduates from the classes of 2006 and 2007.

Even these figures understate the damage done to these workers’ careers. Many have taken jobs that do not make use of their skills; about only half of recent college graduates said that their first job required a college degree.

Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors, those who majored in Latin American studies, for example, and humanities majors were least likely to do so.

Among all recent education graduates, 71.1 per cent were in jobs that required a college degree; of all area studies majors, the share was 44.7 per cent.

An analysis by The New York Times of Labour Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 per cent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services. This may be a waste of a college degree, but it also displaces the less-educated workers who would normally take these jobs.

Meanwhile, college graduates are having trouble paying off student loan debt, which is at a median of $20,000 for graduates of classes 2006 to 2010. Many graduates will probably take on more student debt. More than 60 per cent of those who graduated in the last five years say they will need more formal education to be successful.

Going back to school does offer the possibility of joining the labour force when the economy is better. Unemployment rates are also generally lower for people with advanced schooling.

Those who do not go back to school may be on a lower-paying trajectory for years. They start at a lower salary, and they may begin their careers with employers that pay less on average or have less room for growth. “Their salary history follows them wherever they go,” said Rutgers labour economist Carl van Horn. “It’s like a parrot on your shoulder, traveling with you everywhere, constantly telling you ‘No, you can’t make that much money.’

And while young people who have weathered a tough job market may shy from risks during their careers, the best way to nullify an unlucky graduation date is to change jobs when you can, says Columbia economist Till von Wachter.

“If you don’t move within five years of graduating, for some reason you get stuck where you are. That’s just an empirical finding,” von Wachter said. “By your late 20s, you’re often married, and have a family and have a house. You stop the active pattern of moving jobs.”