Archive for ‘post-college life’

May 26, 2015

Has the underemployment rate topped out?

by Grace

Has the trend of rising underemployment rates for new college graduates finally turned a corner?


While unemployment rates improved over the last few years, underemployment rates have only started to drop more recently.

The unemployment rate for recent college graduates began to fall in 2011, and it has continued to do so—with a hiatus during 2013—ever since. However, aside from a brief dip in early 2011, the underemployment rate continued to climb well into 2014, rising to a level of more than 46 percent. This divergence between falling unemployment and rising underemployment between mid-2011 and mid-2014 suggests that more college graduates were finding jobs during this time, just not necessarily good ones. The steady growth of non-college jobs, coupled with the relatively soft demand for college graduates during this three-year period, appears to have forced many recent college graduates to take jobs not commensurate with their education. More recently, though, the tide has turned. With the demand for college graduates rising at a solid clip since last summer, underemployment has also finally started to come down. Since last June, the underemployment rate for recent college graduates has fallen by about two percentage points, to 44.6 percent.

The underemployment rate is still historically high.

While these trends are no doubt good news for recent college graduates, it is important to keep the gains in perspective. As we have shown before in this post and this article, the underemployment rate for recent college graduates remains quite high by historical standards. At 44.6 percent, we estimate that nearly half of this group is working in jobs that typically do not require a college degree—a rate that is much higher than when underemployment hit a trough of around 38 percent in 2000. And while the demand for college graduates appears to be picking up, significant labor market slack remains, so continued strong growth in the demand for college graduates may well be necessary to make a more serious dent in the underemployment rate.

The Washington Post has an optimistic view.

Why the era of college grads working at restaurants and cafes is coming to an end

For now, I’ll wait and see.


Jaison R. Abel and Richard Deitz, “The Class of 2015 Might Have a Little Better Luck Finding a Good Job”, Liberty Street Economics, May 15, 2015.

May 25, 2015

Half of college graduates expect continued financial support from parents

by Grace

Parents of college grads have lower expectations for their adult children’s ability to support themselves.

… Some 36% of parents say they expected to support their children financially for more than two years, up from just 18% last year, and only 2.8% of parents expect their kids to have a full-time job after college and only one-quarter see them having any kind of job in their chosen field when they graduate….

Their kids are even more pessimistic.

About half of students expect to be supported financially by their parents for up to two years after graduation, according to a new survey of 500 students and 500 parents released Tuesday by Upromise, the savings division of Sallie Mae, the student lender….

Agreement about the “new normal”.

Both students and their parents are more accepting of the new normal, says Erin Condon, president of Upromise by Sallie Mae. “We were pleasantly surprised that parents and students were very aligned in their expectations,” she says. “One could argue that this generation is entitled or spoiled, but you could always argue that they are financially responsible and not biting off more than they can chew by making effort to get off on the right foot to make sure that long-term success is there.”

Related:  “Baby Boomers’ kids are doing worse than their parents”


Quentin Fottrell, “Half of college graduates expect to be supported by their families”, MarketWatch, May 19, 2015.

May 12, 2015

Why college graduates should prioritize retirement planning

by Grace

Graduating college? It is time to think about retirement.

That’s not necessarily the advice millennials expect to hear, but it makes sense when you consider the power of compounding.

Saving “$5,000 per year only from ages 25 to 35 (10 years)” will generate a larger retirement nest egg than saving “$5,000 per year, but from ages 35 to 65 (30 years)”

Your income-earning ability is your “human capital”.  Planning for retirement requires that you find a way to replace income generated by human capital with that generated by your investments.

… Your overriding financial goal: Every year, put aside 12% to 15% of your earnings for retirement, so by your 60s you no longer need the income generated by your human capital.

While 15% may sound like a lot, definitely do it if you can.  In any case, start saving at least a small percentage and then try to increase it every year.

Of course, this advice is only applicable to college graduates who have well-paying jobs.  So the first step in retirement planning is to find a job.  I know, that’s easier said than done in many cases.

While I used to oppose the idea of college graduates living at home, I’ve come to believe it can be a way to enable new college graduates to save money and start putting aside money for retirement at an earlier age.  This is especially true in high COL areas where renting an apartment can cost well over half your income.

To learn more on this topic, read Jonathan Clements’ “Financial Advice for New College Grads”.

February 3, 2015

Baby Boomers’ kids are doing worse than their parents

by Grace

The Typical Millennial Is $2,000 Poorer Than His Parents at This Age

More young people are living in poverty and fewer have jobs compared their parents’ generation, the Baby Boomers, in 1980.

Even though a higher percentage of today’s young people have college degrees, more live in poverty.




Wages are lower for those who are working full-time.



Unemployment rates were lower and labor participation rates for young people were higher in 1980
, measures that are consistent with the higher poverty rates of today.  Another related cause may be that more Millenials are still in college at later ages than Baby Boomers were at the same ages.  But today’s high college dropout rates mean the younger generation will fail to reap the financial benefits of a college degree, and will even be penalized since a few years of college may be worse than never enrolling.

The immigrant effect

It’s also worth pointing out that the United States has absorbed millions of immigrants over the past 30 years, often from poorer Latin and South American countries. (The Census notes that the share of ethnic minorities has doubled over the last 33 years.) It’s possible that, even as these young families have raised their own living standards by moving to the U.S. and contributed to a growth economy, their below-average wages, when lumped into the aggregate, make it look like native-born families’ wage growth is worse than it really is.

Lower marriage rates may be a factor.

Unlike prior generations of young adults, the majority of Millennials have never been married

Finally, the “jobless recovery” we have been experiencing ties into the financial misery that Millenials are feeling today, especially considering that 1980-1982 was a time of back-to-back recessions.


Derek Thompson, “The Typical Millennial Is $2,000 Poorer Than His Parents at This Age”, Atlantic, January 31, 2015.

January 21, 2015

Another reason to avoid student loans

by Grace

Level of student debt burden, not choice of school, is the biggest predictor of a college graduate’s well-being.

Last year Gallup surveyed over 30,000 college graduates to learn how well they were doing.

For the most part, the type of school has little correlation with well-being.

… It asked graduates how they were doing across five different metrics, including financially, physically and socially. Eleven percent of graduates of public universities and private universities said they were “thriving” across all five. Twelve percent of graduates of U.S. News & World Report’s top 100 schools were thriving, essentially the same as the rest.


But student loans can cripple well-being.


The biggest predictor of whether a graduate wasn’t thriving was whether he or she had student loans. Fourteen percent of those without any debt said they were thriving, compared to 2 percent of those with more than $40,000 of debt. You can’t draw iron-clad conclusions from that, but those figures should be worrisome all the same for anyone thinking about taking on student loans.

Takeaway lessons:  Going into debt to attend your “dream” school may be detrimental to your well-being.  Private school may not be worth the extra money.


These are the five elements of well-being that were measured in the Gallup survey:

Purpose Well-Being: Liking what you do each day and being motivated to achieve your goals

Social Well-Being: Having strong and supportive relationships and love in your life

Financial Well-Being: Effectively managing your economic life to reduce stress and increase security

Community Well-Being: The sense of engagement you have with the areas where you live,

liking where you live, and feeling safe and having pride in your community

Physical Well-Being: Having good health and enough energy to get things done on a daily basis


Max Ehrenfreund, “Private colleges are a waste of money for white, middle class kids”, Washington Post, December 18, 2014.

November 27, 2014

Poor economy and technology are causing millennials to drive less

by Grace

Although Thanksgiving auto travel this year is expected to be the heaviest since 2007, overall, driving is on a downward trend.

This chart shows that per-capita vehicle miles peaked in 2007, and the correlation of vehicle travel with economic growth is weakening.

Trends in Per-Capita Vehicle-Miles Traveled and Real Gross Domestic Product


For decades, economic growth and vehicle travel were closely correlated. Since the beginning of the 21st century, however, economic growth and vehicle travel have diverged, suggesting a weakening link between the state of the economy and the number of miles Americans drive.

Millenials are driving less.

No age group has experienced a greater change in its driving habits than young Americans.

According to the National Household Travel Survey, from 2001 and 2009, the annual number of vehicle-miles traveled by 16 to 34 year-olds (a group that included a mix of Millennials and younger members of Generation X) decreased from 10,300 miles to 7,900 miles per capita—a drop of 23 percent…

The percentage of young people with a driver’s license has been dropping for years. In 2011, the percentage of 16 to 24 year-olds with driver’s licenses dipped to 67 percent—the lowest percentage since at least 1963.

Percentage of 16 to 24-Year-Olds with Driver’s Licenses


Technology has affected driving habits.

The recent recession no doubt reduced the number of miles young Americans drove, but the economy is clearly not the only factor at play. Members of the Millennial generation have expressed a greater willingness to pursue less auto-oriented lifestyles than previous generations, and have been the first to grow up with access to the mobile Internet-connected technologies that are reshaping society and how people connect with one another. These changes could be playing a role in the dramatic reduction in driving among young Americans.

Drive safely this Thanksgiving weekend.


Tony Dutzik, Frontier Group, Phineas Baxandall, U.S. PIRG Education Fund, A New Direction Our Changing Relationship with Driving and the Implications for America’s Future, Spring 2013.

October 28, 2014

Millenials expect to rely on work income during retirement

by Grace

Personal savings and income from work will become increasingly important to future retirees.

Working in retirement is likely to become even more commonplace as Generation Xers and Millennials eventually head toward their retirement years. While many of today’s retirees say they can count on Social Security and employer pensions to fund most of their retirement, future generations are far more likely to say they will need to rely primarily on personal savings and income from working during retirement (FIG 8).





Although I was initially surprised that 12% of Gen Xers and Millenials still expect pensions to fund their retirement, I realized these might represent the views of government employees, one of the few groups still covered by traditional pension plans.

And those who expect personal savings to cover retirement expenses need to start saving more.  The latest alarming news on this topic is that “middle-class people in the USA have a median of $20,000 saved for retirement, far short of the $250,000 they think they’ll need during that time of their lives”.


Work in Retirement: Myths and Motivations, Merrill Lynch with Age Wave, June 2014.

October 27, 2014

Houston, Nashville, and Denver are hot cities for young college graduates

by Grace

Where are young college graduates choosing to live?  And as they age, will they flee to the suburbs as earlier generations have done?

When young college graduates decide where to move, they are not just looking at the usual suspects, like New York, Washington and San Francisco. Other cities are increasing their share of these valuable residents at an even higher rate and have reached a high overall percentage, led by Denver, San Diego, Nashville, Salt Lake City and Portland, Ore., according to a report published Monday by City Observatory, a new think tank.

And as young people continue to spurn the suburbs for urban living, more of them are moving to the very heart of cities — even in economically troubled places like Buffalo and Cleveland. The number of college-educated people age 25 to 34 living within three miles of city centers has surged, up 37 percent since 2000, even as the total population of these neighborhoods has slightly shrunk.



These trends bode well for the top cities.

“There is a very strong track record of places that attract talent becoming places of long-term success,” said Edward Glaeser, an economist at Harvard and author of “Triumph of the City.” “The most successful economic development policy is to attract and retain smart people and then get out of their way.”

The economic effects reach beyond the work the young people do, according to Enrico Moretti, an economist at the University of California, Berkeley, and author of “The New Geography of Jobs.” For every college graduate who takes a job in an innovation industry, he found, five additional jobs are eventually created in that city, such as for waiters, carpenters, doctors, architects and teachers.

“It’s a type of growth that feeds on itself — the more young workers you have, the more companies are interested in locating their operations in that area and the more young people are going to move there,” he said.

Will millenials flee to suburbia as they start to have families?

How many eventually desert the city centers as they age remains to be seen, but demographers predict that many will stay. They say that could not only bolster city economies, but also lead to decreases in crime and improvements in public schools. If the trends continue, places like Pittsburgh and Buffalo could develop a new reputation — as role models for resurgence.

Not so fast.  According to New Geography, “the first group of millennials who are now entering their 30s … are beginning, like preceding generations, to move to the suburbs”.

Here’s how the geography of aging works. People are most likely to move to the core cities in their early 20s, but this migration peters out as people enter the end of that often tumultuous decade. By their 30s, they move increasingly to the suburbs, as well as outside the major metropolitan areas (the 52 metropolitan areas with a population over 1,000,000 in 2010).

This pattern breaks with the conventional wisdom but dovetails with research conducted by Frank Magid and Associates that finds that millennials prefer suburbs long-term as “their ideal place to live” by a margin of 2 to 1 over cities.

Based on past patterns, by the time people enter their 50s, the entire gain to the core cities that builds up in the 20s all but dissipates, as more people move to suburbs and to outside the largest metropolitan areas.


Claire Cain Miller, “Where Young College Graduates Are Choosing to Live”, New York Times, October 20, 2014.

Joel Kotkin, “The Geography of Aging: Why Millenials are Headed to the Suburbs”,, December 9, 2013.

September 26, 2014

Women place greater importance on steady employment when seeking a spouse

by Grace

Almost twice as many women as men consider it “very important” that their future spouse have a “steady job”.

… Never-married women place a great deal of importance on finding someone who has a steady job—fully 78% say this would be very important to them in choosing a spouse or partner. For never-married men, someone who shares their ideas about raising children is more important in choosing a spouse than someone who has a steady job.


Could it be that women still think they’d like to stop working when they have children?  Yes.  One recent survey found that 84% of working women want to stay home to raise their children.


Wendy Wang and Kim Parker, “Record Share of Americans Have Never Married”, Pew Social Trends, September 24, 2014.

September 2, 2014

Millennials — narcissistic or nice?  cynical yet empathetic?

by Grace

The millennial generation, those born after 1980 and before 2000, have been criticized as narcissistic and entitled.  But some recent press suggests this is a bum rap, and that these young people are nice, compassionate, and hard working.

Psychology professor and author Jeffrey Jensen Arnett defends millennials, and recently shared his “warm and benevolent views” of these “emerging adults”.

One of the most common insults to today’s emerging adults is that they’re lazy. According to this view, young people are ‘slackers’ who avoid work whenever possible, preferring to sponge off their parents for as long as they can get away with it. One of the reasons they avoid real work is that have an inflated sense of entitlement. They expect work to be fun, and if it’s not fun, they refuse to do it.

But millennials are hard workers.

“So, yes, emerging adults today have high and often unrealistic expectations for work, but lazy? That’s laughably false. While they look for their elusive dream job, they don’t simply sit around and play video games and update their Facebook page all day. The great majority of them spend most of their twenties in a series of unglamorous, low-paying jobs as they search for something better. The average American holds ten different jobs between the ages of 18 and 29, and most of them are the kinds of jobs that promise little respect and less money. Have you noticed who is waiting on your table at the restaurant, working the counter at the retail store, stocking the shelves at the supermarket? Most of them are emerging adults. Many of them are working and attending school at the same time, trying to make ends meet while they strive to move up the ladder. It’s unfair to tar the many hard-working emerging adults with a stereotype that is true for only a small percentage of them.”

Society’s elders, meaning anyone older than 35, are encouraged to accept the new normal that is defined by the emerging adulthood stage of life.

The origins of the many prejudices against today’s emerging adults are complex, but maybe one key reason is that many of their elders still use old yardsticks to measure their progress. The pace of social, economic and technological change over the past half-century has been mind-boggling, and what is ‘normal’ among young people has changed so fast that the rest of society has not yet caught up. Many observers are still finding them wanting if they are not married and settled into a stable job by age 23 or 25, even though that would be unusually early by today’s standards. Understanding that a new life stage of emerging adulthood is now typical between adolescence and young adulthood, and that it is a time when change and instability is the norm, will help make it possible to ease up on the negative stereotypes and learn to appreciate their energy, their creativity, and their zest for life.

The New York Times tells us “The Millennials Are Generation Nice”, at least according to Pew research that found they are not entitle but rather “complex and introspective”.

What Pew found was not an entitled generation but a complex and introspective one — with a far higher proportion of nonwhites than its predecessors as well as a greater number of people raised by a single parent. Its members also have weathered many large public traumas: the terrorist attacks of Sept. 11, costly (and unresolved) wars, the Great Recession. Add to those the flood of images of Iraq and Katrina (and, for older millennials, Oklahoma City and Columbine) — episodes lived and relived, played and replayed, on TV and computer screens.

Both cynical and empathetic

There’s something to be said for experiencing  “large public traumas” through digital media that makes us relive them in a more personal way than previous generations did.  It could have the effect of making a person more cynical, yet more empathetic in some ways, an apt description of millennials I know personally.


Jeffrey Jensen Arnett, “Growing-ups”, Aeon, April 17, 2014.

Sam Tanenhausaug, “Generation Nice”, New York Times, August 15, 2014.


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