The Class of 2012

College graduation is supposed to be a giant step on the way to a prosperous future. But the weak labor market means that graduates lucky enough to find good jobs will face reduced starting salaries, while many others will struggle find work or have to settle for lower-level and lower-paid positions do not require college degrees. Even after economy strengthens, many recent college graduates may never catch up. Research shows that early bouts of joblessness and low pay can damage career prospects and earnings over a lifetime. While recent college graduates are still doing far better than high school graduates, numbers are grim. In the past year, unemployment among college graduates under age 25 has averaged 8.5%, an improvement from 9.5% a year earlier, but still much higher than 5.4% in the year before the Great Recession struck at the end of 2007. From 2007 to 2011, the wages of young college graduates, adjusted for inflation, have declined by 4.6%, about $2,000 each per year. (source: Editorial – NYTimes – 05/06/2012)

It would be bad enough if one or two classes had to make up lost ground. But five, and counting since the economic meltdown, present a more profound challenge to prevailing assumptions and policies. Biggest misperception, fed by decades of growth with relatively shallow recessions, is that a college diploma virtually guarantees a good job. It does not. Without robust economic expansion to fuel growth, job shortages are inevitable, even for the educated. Another misperception is that today’s joblessness is mainly the result of mismatches, with employers unable to find skilled workers or workers unwilling or unable to move to where jobs are. Recent college graduates are both skilled and mobile, yet they experience high joblessness, demonstrating, once again, that a lack of jobs stems primarily from a lack of demand in a weak economy. Education still makes one more likely to land an available job, as evidenced by the far lower jobless rate of young college graduates, 8.5%, on average, in the past year, compared with 21% for young high school graduates. But underemployment for young college graduates, which includes jobless plus involuntary part-timers and those who have given up an active job search, has averaged 19.1%. That is nearly twice the prerecession levels. Even full-time employment for many young graduates is a letdown. Research shows that nearly 40 percent of working recent graduates are in jobs that do not require a college degree, compared with roughly 30 percent before the onset of the recession in 2007. Until the government does more to stoke demand and growth, including with job-creating aid to states and investments in energy and infrastructure, college graduates and everyone else will struggle. Republican politicians have blocked needed policies, claiming that cutting budget deficit is more important and that somehow, given enough deregulation and tax cuts for the rich, things will turn around. They haven’t, and they won’t. The damage will be deep and lasting. The lack of good jobs at good pay, combined with high student debt loads, means a slower economy for a long time to come, as underemployed and indebted workers delay starting families and buying homes. College graduates are certainly not the only collateral damage of the Great Recession, and, in many ways, their education will provide them with tools and flexibility to cope. But if young people with college diplomas cannot prosper in America, who can? 


Acerca de ignaciocovelo
Consultor Internacional

One Response to The Class of 2012

  1. Professor Uziel Nogueira says: In Brazil we say that necessity is mother of invention. Out of the box type of thinking is urgently needed to deal with a dismal US job market prospects. Soon, the US will have the largest pool of highly trained (and unemployed) young professionals in the developed world. The main political challenge is how to provide jobs in a slow growing economy. Why not to deal with jobs in the same way trade and investments are dealt with in economic agreements? why not give job creation the same status of capital and trade? The US has economic agreements with many countries in the world. They benefit big businesses and financial investors with free movement of goods, services and money. Meanwhile, US workers suffer a double whammy: they lose their jobs to overseas competition and cannot seek employment in the (growing) overseas markets. A new trade off will be part of the USTR negotiation model: highly qualified American professionals for US R&D, investment and technology. Existing economic agreements could be renegotiate and free movement of highly qualified American workers be included in them. Economic agreements under way in the Asia-Pacific area would be the first case to test the new model. Thousands of well paid jobs would be created for young American professionals in the fastest growing economies of the Asia-Pacific area, particularly China.


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