Recession's toll: Most recent college grads working low-skill jobs

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Posted on Thursday, June 25, 2009
By Tony Pugh | McClatchy Newspapers

WASHINGTON — The tough economy and tight labor market have tarnished the luster of a bachelor's degree for young college graduates seeking employment.

New monthly survey data from the Center for Labor Market Studies at Northeastern University in Boston finds that during the first four months of 2009, less than half of the nation's 4 million college graduates age 25 and under were working in jobs that required a college degree. That's down from 54 percent for same period last year.

''I've never seen it this low and we've been analyzing this stuff for over 20 years," said center director Andrew Sum.

The problem is most acute in the 25-and-under age group among Asian female graduates and black and Hispanic male graduates.

The survey, of 60,000 households, found less than 30 percent of Asian female grads, 32 percent of Hispanic male grads and just over 35 percent of young black male grads working in jobs that require a bachelor's degree.

Research has shown that college graduates who take jobs below their education level not only earn less, but also can take years to match the earnings of graduates who land career-track employment upon graduation.

These so called "mal-employed" workers also compound the unemployment problem by taking jobs that non-college graduates and even high school students are often qualified to hold.

The problem of "mal-employment" — working outside one's field of education, training and choice — has increased sharply for young college grads since the recession began and all signs suggest the trend will continue for the foreseeable future.

Employers expect to hire 22 percent fewer graduating seniors for entry-level positions this year than in 2008, according to a recent survey by the National Association of Colleges and Employers. And 17 percent of surveyed firms said they'd trim college hiring even more this fall.

That's bad news for people like James Dillon, a political science major who will graduate from Western Michigan University later this year. With the economy in tatters, Dillon is putting his career search on hold and will return home to Adrian, Mich., to seek a job at a local bank where he once worked.

It doesn't have to be a career-track job, Dillon said. General office work, some teller and light finance duties would be just fine. He just wants a steady paycheck to help his family following the recent deaths of his father and grandfather. Michigan has the nation's highest unemployment rate, at more than 14 percent.

"I realize jobs are kind of tough to come by, especially in Michigan, but I really can't relocate for a job so I'm taking what I can get," Dillon said. "I'm not too particular. Just having a job is more important to me than having one that's tailored specifically for me."

Dillon's not alone in his job angst.

Sixty-four percent of college seniors surveyed by the association of colleges and employers worry about finding a job. Yet 52 percent think they'll find work within three months of graduation, said Edwin Koc, director of strategic and foundation research at NACE.

In fact, survey data found that only 45 percent of responding seniors who were offered jobs this year actually accepted them, Koc said.

"That tells me they haven't quite realized the extent of the market and that they're still waiting for the offer that matches their expectations," Koc said. "They know it's a bad economy, but they think, 'I've gone through college. I've gotten a degree.' They feel they've done well and that they should have a job."

The survey found that Asian males, at 58 percent, and white females, at 55 percent, had the highest employment rates for 25-and-under graduates working in jobs that require a bachelor's degree.

Sum of Northeastern University said college grads who begin their careers in lower-paying jobs below their education level often take seven to nine years to catch the earnings of fellow grads who start out at jobs that require a college degree.

"It's a long lag before you recover. It does not go away," Sum said. "The older you get, the bigger the losses become. It haunts you dramatically."

Lisa Kahn, a labor economist at the Yale School of Management, confirmed those disparate outcomes in an updated 2008 study of white male college graduates that suggests, "the labor market consequences of graduating from college in a bad economy are large, negative and persistent."

When coupled with heavy student loan obligations, it's no wonder that 40 percent of seniors surveyed by NACE said they expect to need financial help from their parents after college.