Previous generations of college graduates who had the bad luck to graduate during a tough economic environment have been able to recover, albeit after spending years stuck in a “wage rut”.
College graduates entering the labor market in a recession experience reduction in earnings of 10 to 15 percent lasting about 10 years or more.
Will young workers graduating from college today be able to recover in a similar fashion? There are reasons to believe the underemployment problem is more severe this time.
• Technology
… in a paper released Monday by the National Bureau of Economic Research, a team of Canadian economists argues that the U.S. faces a longer-term problem.
They found that unlike the 1990s, when companies needed hundreds of thousands of skilled workers to develop, build and install high-tech systems—everything from corporate intranets to manufacturing robots—demand for such skills has fallen in recent years, even as young people continued to flock to programs that taught them.
Blame it on robots.
“Once the robots are in place you still need some people, but you need a lot less than when you were putting in the robots,” said Paul Beaudry, an economist at the University of British Columbia in Vancouver and the paper’s lead author. New technologies may eventually revive demand for advanced skills, he added, but an economic recovery alone won’t be sufficient.
Okay, the problem of technology destroying jobs is not without precedent But we do not seem to be generating enough “replacement” jobs for college graduates.
• Too many college graduates are chasing too few college-level jobs
… what has happened over time is that the proportion of the workforce with college degrees has grown far faster than the proportion needing those degrees in order to fulfill the needs of their jobs, forcing a growing number of college graduates to take jobs which historically have been filled by those with lower levels of educational attainment. The reality is that many jobs in the United States do not require a lot of education to perform, even though they may require on-the-job training, sometimes in considerable amount.
• The twin problems of rising debt and falling wages for college graduates
Today’s record student debt burden is a new factor that did not affect previous generations of college graduates. By limiting flexibility in the types of career opportunities workers can pursue as well as undermining the overall economic recovery, it inflicts a double whammy on recent college graduates.
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I’m usually optimistic about my children’s economic opportunities, but some days it’s hard to raise a cogent argument against a doomsday scenario. Sometimes I just revert to a simplistic faith in the positive aspects of human innovation and determination that have saved us in the past.
- All college graduates are no longer ‘special’ (costofcollege.wordpress.com)
Cost of College 