Thursday, April 10, 2014

Underemployment among Recent College Graduates

For recent college graduates, underemployment is a bigger problem than unemployment, according to a study by the Federal Reserve Bank of New York. Underemployment is defined as working at a job that does not require a college degree. A recent Fed study measured the underemployment rate of all college graduates and recent college graduates.

Among all college graduates, the underemployment rate (calculated by dividing the number of college graduates who are underemployed by the total employed) has remained steady at about 33 percent over the past two decades. Among recent college graduates (those aged 22 to 27), a larger 44 percent were underemployed in 2012.

Although today's high rate of underemployment among recent college graduates is not unprecedented (the rate was 46 percent in 1990-91), there are some troubling differences between then and now. First, the share of recent college graduates who are underemployed in "good jobs" (with an average wage of about $45,000 per year) has declined from about half to about one-third. Second, the share of recent college graduates who work part-time has climbed from 14 to 23 percent.

"Taken as a whole, these trends provide evidence that the job prospects for recent college graduates have indeed worsened," conclude the researchers.

Source: Federal Reserve Bank of New York, Are Recent College Graduates Finding Good Jobs?

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