The Post-Recession Economy Has Left Recent College Grads BehindBy
Recent college graduates are floundering in the aftermath of the recession, with starting salaries for the group having barely budged for seven years, according to a new report.
Since 2007, wages haven’t grown for college-educated workers from age 21 to age 25 at the rate they have risen for the U.S. population. The median weekly pay for a college graduate rose 6 percent, to $692, from 2007 to 2014 while pay for all full-time U.S. workers rose 15 percent, to $780, during the same period, according to a report released on Monday by the Federal Reserve Bank of San Francisco.
Why haven’t college students been as upwardly mobile as the rest of the country? They are “‘marginal’ high-skilled workers” who take the brunt of an economic slowdown, wrote researchers Bart Hobijn and Leila Bengali in the report. Employers typically don’t cut wages of more seasoned workers, even in bad economic times. Instead, they pay young workers what they think is the real value of their work in a down market.
The study offers a different perspective on the post-recession fate of recent grads than that depicted in a Department of Education report issued two weeks ago, which showed that recession-era graduates had a lower unemployment rate, on average, than the general population.
The two releases measure different things. The DOE’s report was a snapshot of employment outcomes—four years later—for all college graduates who entered the workforce in 2007. The Fed, by contrast, looked at wages for college educated workers aged 21 to 25 for each year from 2007 to 2014, compared to the general population.
The DOE report carried mostly good news for business majors, who earned a median annual salary of $50,000. In the San Francisco Fed report, however, things look bleak for young graduates working in management, business, and finance, as well as those in professional and related jobs. Both groups experienced just 2.6 percent wage growth from 2007 to this year. Meanwhile, workers in such occupational categories as “office/administrative” and “sales & related” saw double-digit growth.
Such sluggishness for young worker wages isn’t unprecedented. The 2001 recession also hit the young harder than workers overall. But wages have grown slowly for a longer period of time since the latest crisis, according to the report. “The larger gap represents slow growth in starting salaries for graduates, rather than a shift in types of jobs, and reflects continued weakness in the demand for labor overall,” the Fed researchers wrote.
They stressed that the data doesn’t mean a college degree has become less valuable; it merely means a degree may “take longer to pay off for recent graduates than for those who graduate during economic booms.”