Posts tagged ‘Labour economics’

April 18, 2013

Is this the ‘definitive guide’ to the college grad job market?

by Grace

Jordan Weissmann wants to set us straight about the job market for college graduates.  He thinks the press has been overly pessimistic about the value of a college degree, and he offers a “definitive guide” summarized in five points.

(1) They’re Better Off Than High School Grads … 

(2) … But They’re Still Hurting

(3) Underemployment Has Grown…

(4) … But by Less Than You Think

(5) Don’t Worry About College; Worry About the Economy

Conflicting data
The supporting details can be read in the linked article, with dueling data sometimes making the case for valid arguments on either side of the optimistic/pessimistic divide. Weissmann refers to several data sources, and all have their limitations and are subject to interpretation.  (For example, the unemployment rates for recent college graduates vary significantly depending on source and method of measuring.)

Very importantly, career prospects vary according to individual circumstances because the college premium depends on factors like college major, ability bias, and reputation of college.  And Weissmann’s last point may be the most instrumental in affecting the college graduate job market.  A booming economy makes every college degree more valuable.  Prosperity covers all sorts of sins, and helps win elections.  Remember this?

It’s the economy, stupid.

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April 1, 2013

Will underemployed college graduates be able to recover from a tough economy this time around?

by Grace

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

20130330.COCJobGrowthDegree2

… 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.

——————————

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.

February 7, 2013

Too many college graduates are chasing too few college-level jobs

by Grace

Nearly half of working Americans with college degrees are in jobs for which they’re overqualified“, according to study released last month by the Center for College Affordability and Productivity.

At the core of this issue is the problem of too many college graduates chasing too few college-level jobs.

20130206.COCIncrCollegeDegrees3

20130206.COCJobsVsDegrees3

The proportion of the adult population with degrees has dramatically increased with the passage of time. Figure 3 shows that the proportion of adults with degrees in 2010, 30 percent, was five times what it was 60 years earlier. In 1950 or 1960, college graduates constituted a single digit proportion of the adult population—almost by definition, an elite group. As we will soon demonstrate, 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.

A recent problem

The phenomenon of the college-educated person holding a job requiring little formal education training appears on the basis of this type of evidence, at least for the occupations we examine, to have arisen mostly in the past four decades or so.

20130206.COCJobsOverTime3

Underemployed but overinvested

The authors consider whether our country’s spending priorities have produced a waste of resources, leaving us with a society that is not only underemployed but overinvested in higher education.  They also consider whether this is the time for government to step back from its involvement in higher education and let the market take care of this situation.

All of this calls into question the wisdom of the “college for all” movement. Does it make sense to become the world’s leader again in the proportion of young adults with college degrees? Is the goal of individuals like President Obama or groups like the Lumina Foundation to increase college degree attainment desirable? Should we look for new and cheaper ways to assure employee competency? Should we invest less in four-year degree programs and more in cheaper training, including high-school vocational education that once was fashionable?62 Perhaps the federal government should reduce its involvement in the higher-education business, much like some states seem to be starting to do out of fiscal imperatives imposed by balanced-budget requirements that the federal government does not face. If fewer students could get Pell Grants or subsidized student loans, enrollments might very well fall, an outcome we perceive not to be a bad thing from a labor-market perspective.63

The full report:  Why are Recent College Graduates Underemployed? University Enrollments and Labor Market Realities By Richard Vedder, Christopher Denhart, and Jonathan Robe | January 2013

A lively discussion on this topic took place in the comments of The College Grad/Employment Mismatch (Inside Higher Ed), with one person making this important point about college now providing what used to be considered a high school level of education:

Many college students today are learning (or relearning) skills and knowledge that formerly were taught in high schools. Textbooks have been dumbed down for decades, while more students take remedial English and math courses. Standards are held down by grading on the curve (a mediocre majority sets the class norm) and by the importance of student evaluations of faculty for promotion and retention of instructors, more of whom are desperate adjunct faculty. Tough assignments do not elicit favorable evaluations. Many students work at least part-time, slowing the pace at which they can study. Therefore the function of college today for many students is to provide high school education appropriate to the jobs as in the past except that students formerly attained it by age 18, not 28.
Inside Higher Ed

March 6, 2012

Employers plan to hire 8.5% more college interns this year

by Grace
The Interns (film)

Good news for college kids: Companies plan to hire more interns this summer—with pay.

Employers plan to hire 8.5% more interns this year, with the vast majority of gigs slated for the summer months, according to a study by the National Association of Colleges and Employers. The nonprofit polled 280 member organizations, most of them large firms that recruit on campuses, between November and January.

Altogether, companies plan to hire more than 40,000 interns this year, up from about 36,900 last year, the study found. Nearly all respondents said they plan to pay their interns, though the projected average hourly wage for bachelor’s degree students fell slightly to $16.20, from $16.70 last year.

A sign of more hiring in the future?

The boost in internship hiring could be an early indicator that the job market is improving for college students, especially since many companies offer such programs as a stepping stone to long-term employment, says Andrea Koncz, an employment information manager at NACE.

Or is it simply employers taking advantage of cheap labor to get more work done?

Some labor experts caution against taking such an optimistic view. Companies with tight budgets sometimes cope with a heavy workload by hiring more interns or temporary workers, says Eileen Appelbaum, a senior economist with the Center for Economic and Policy Research. Since these types of workers often don’t show up on the payroll, firms can increase production without incurring permanent expenses, she adds.

“Given the way the labor market is, I wonder if this is not just a form of inexpensive recruiting,” she says.

‘Six in 10 internships lead to jobs’

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