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February 15, 2006
Rising Wages for New College Grads?
Is the trend of falling real wages for college grads finally about to reverse? A new survey from the National Association of Colleges and Employers says that this is looking like a strong labor market for college hiring:
The job prospects for new college graduates look encouraging as employers recently said they plan to hire 14.5 percent more new college grads in 2005-06 than they hired in 2004-05. But the increased number of jobs available isn't the only good news for these students; they can also expect to see higher starting salary offers....
In the business disciplines, accounting graduates were among those that posted a better-than-modest increase: Their average offer now stands at $45,723, a 6.2 percent increase. But this increase pales in comparison to the increase posted by economics/finance graduates, who posted a spectacular 11 percent increase in their average starting salary offer, which now averages $45,191.
The average salary to liberal arts majors as a group is up a healthy 6.1 percent over last year and stands at $30,828.
Some fields did worse than last year, including marketing, computer science, and mechanical engineering. Still, the overall impression
is that things may be finally looking up
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14.5% of not-a-lot is still not a lot. Nonetheless, it's good to see the most well-educated, competent, and well-networked individuals succeed in society. May meritocracy (and maybe a splash of oligarchy) rule.
You want to know what the problem with the poor is? They're spending too much money to live because they think they deserve to own homes and their own car. They should be living 12-to-an-apartment, sharing 1 car between them and taking public transit like the Mexicans that jump the border. It should be clear by now that the playing field is leveling on a global basis - that means it's leveling for workers as well as business, and if you're not well-educated and well-networked you need to go live in a small apartment with a dozen other people and quit expecting so much. And don't be late for work; I don't care if you had to take the bus.
Posted by: Brandon at February 15, 2006 04:16 PM
The increase in hiring and salaries is a good sign, and hopefully these will balance the job losses in all things housing that is expected over the next few years.
I must comment on Brandon's somewhat accusatory tone against our Nation's poor. The majority of low income folks in this country work very hard (often at more than 1 job - and more than often in jobs than most of us would run from) to sustain themselves and their families in an increasingly challenging and expensive financial space.
Most poor people do not own their own home, and many do not own their own car; this is a vicious cycle, since lack of access to transportation correlates with poverty - and in places like New Orleans lack of transportation is what kept so many poor stuck in the city following Katrina.
Suggesting that folks live 12 to an apartment is akin to suggesting we form shanti towns for our nation's poor. Not the most flattering politics there Brandon.
Posted by: Yariv at February 16, 2006 09:39 AM
A comment on the poor :
Some work hard, but they don't work smart. Working 70 hours a week in a min-wage hard-labor job (~$22K/yr) is much more tedious than going to college, getting a degree, getting a cushy, 40-hr/week desk job that pays $40,000/yr, and making much more than what one could make doing 12 hours/day of hard labor. Even after paying the college loans back.
There is no one who can't afford to go to college, because all the costs can be deferred until when one gets a post-college job, and it is possible to pay nothing up front.
Poverty is more about value systems than anything else. That is why Asians have the highest income, then come whites, then Hispanics, and lastly, Blacks.
Anyone who is smart enough or go to college can go, and anyone who gets a college degree can get a job in America. Period.
Posted by: Kartik at February 16, 2006 01:20 PM
Yariv and Kartik,
Can you imagine how little "upper level" jobs would pay if all these people suddenly went to college? Oversupply would mean collapsing wages among the "higher paying" sector. No, we can't have that. What's more, clearly the large majority of people are incapable of attending and completing college, or they would. They don't. It's as simple as that. Maybe it's a factor of the subculture they belong to, maybe it's motivation, maybe it's actual intelligence. Whatever the reason, they earn what they are capable of earning.
As for 12 people living in an apartment; no one has a right to their own house, or a right to their own car. They think they do, and/or insist that they have it. So they're broke and can't live on the lower incomes they are capable of earning.
With globalisation we have a leveling of the playing field. For example, GM goes down, Toyota goes up, and now they're on relatively equal footing. The same goes for the supply of labour. Foreign standard of living goes up, American standard of living goes down, and everyone's on increasingly equal footing. With exception, of course, of those that own the capital.
Posted by: Brandon at February 16, 2006 03:43 PM
I don't think more college graduates depress the wages. NEw technology always creates more jobs at the top of the skill ladder than the number destroyed at the bottom of the skill ladder.
US living standards are not dropping. People have been saying that for 5 years (actually 25 years), and it still is not happening.
Even India has a shortage of engineers, and raises of 15% a year are typical even there.
Posted by: Kartik at February 16, 2006 05:20 PM
Brandon, I hear you. The thing that saddens me is that for years this country's mantra was financial improvement for all. Being working class or middle class (or poor) in the past meant that you did not live lavish, but that you could maintain a relatively good standard of living. Having 12-person homes and multi-hour commutes is a downgrading of our aspirations, and It's sad to hear those are your desired goals.
Practical economics are fine (and you're right on the globalization front and on the leveling playing field front) - but if globalization means American shanti towns for people who work 70 hours a week, then we would have lost.
Posted by: Yariv at February 16, 2006 05:30 PM
Brandon...first, it's not totally clear that globalization is always to the benefit of those who own the capital. Large amounts of capital from around the world, seeking places to invest, will tend to drive down returns on capital, and arguably is doing so right now.
If you're the only rich guy in Possum Creek County, and no one from outside the county will lend to the local farmers, then the interest rates you can chare will be an arm and a leg. If "globalization" allows lenders from the next county to come in, then those rates are going to go down.
Posted by: David Foster at February 16, 2006 06:54 PM
Name 5 new jobs that have been "created" at the top of the skill ladder in the past 5 years. How many people are filling them?
You write, "Having 12-person homes and multi-hour commutes is a downgrading of our aspirations, and It's sad to hear those are your desired goals."
Those aren't MY desired goals, which is why I have a graduate degree, run two small businesses, and work full-time on top of it.
If you're the only person who can build cars, you can charge and arm and a leg to supply that labour. So when globalisation allows car builders from "the next county" to come in, those rates are going to go down. Globalisation has introduced a billion new car builders (and a thousand other careers) to the "county" in the past decade. The car builders in this county have no direction to go but down.
While much of what I've said has been said tongue-in-cheek, I hope it's made people think a little where the economic/market structure we've built is taking us.
Posted by: Brandon at February 17, 2006 09:01 AM
So college graduate wages are rising while overall wages have stagnated in real dollars? It's great to get a job making $45k straight out of college but then you get a 3% raise each year and you haven't made any progress at all after 5 years while your living standard has declined if you consider the rapidly rising costs of transportation and housing. Wages HAVE to increase out of college if the goal is keeping people in college. The ROI can get less each year as college costs increase, wages stagnate, and living costs increase.
Brandon - I generally agree with you. We have an entitlement society where everyone deserves everything regardless of work ethic, experience, or ability to afford.
Dr. Mandel: It would be interesting to see a study that comparies salary and career growth within the following two groups:
A)Getting a bachelors and going directly to a masters program
B)Getting a bachelors, getting 5 years of real work experience, then completing a masters degree
Posted by: Wes at February 21, 2006 11:12 AM
I can't help but largely agree with Kartik that values have lots to do with success, but also want to add that socialization and inherited variables (e.g. parent's income, education, etc.) play some role in determining the opportunities open to an individual.
Posted by: Robert Nanders at June 15, 2006 12:11 AM