The Wall Street Journal. May 23, 2014.
Bailey Kinney graduated from the University of Missouri-St. Louis a week ago with a bachelor's degree and a 3.9 grade-point average. She finished in three years, did unpaid internships over the summers and held part-time jobs throughout her college career.
The day after graduation, she went to work as a receptionist making $8.50 an hour.
"I know I have to pay my dues," said Ms. Kinney, a media-studies major. "But I'm anxious to get started and find a job in my field; I'll pretty much do anything."
As the class of 2014 enters the job market, Ms. Kinney and others, particularly those with a liberal-arts degree, face a stubbornly high unemployment rate for recent graduates—8.3% last year, well above that of the past several decades. Those who have found employment aren't necessarily putting their degrees to use. In 2012, 44% college graduates aged 22 to 27 were working in jobs that didn't require a bachelor's degree, the highest level in nearly two decades, according to the latest data from a Federal Reserve Bank of New York study released this year.
The elevated underemployment—skilled workers doing jobs that don't require their education level—has been blamed on the economy's slow recovery. And for recent graduates, the headwinds are growing. Jobs in which a bachelor's isn't needed tend to pay less and offer fewer hours than a generation ago. More graduates also are taking out heftier loans; their average debt size has more than doubled to $33,000 in the past two decades.
At a spring job fair at UMSL, Conifer Health Solutions, which does reimbursements, collections and other revenue services for hospitals, was recruiting for a range of positions. Stacy Dorsey, senior director for human resources, said the company hires a steady stream of college graduates for positions that don't require a bachelor's degree. Most tend not to apply right away, becoming interested only after spending time in the job market.
"When we go to the schools and interview them, I'll be honest, they don't get real excited about a job that doesn't require a degree," Ms. Dorsey said. But she added: "We are seeing more folks willing to take roles that don't require a college degree and work their way up."
The transition from college to the workforce has long been bumpy. Underemployment has traditionally been higher among those in their 20s than college graduates as a whole. The percentage of recent graduates who aren't putting their degrees to use mirrors levels seen in the early 1990s. But five years out from the 1991 recession, the underemployment rate was starting to fall and eventually dipped to 34% by the early 2000s, according to the Federal Reserve study.
Federal data in recent months show the unemployment rate for young, bachelor's degree holders is moderating as overall joblessness falls. The question remains whether underemployment will follow: Some economists argue longer-term changes may be afoot and current rates of underemployment may be here to stay.
Last year, a team of Canadian economists argued in a paper that college graduates are facing a slowdown in the need for skilled workers after demand for them boomed in the 1990s as companies built high-tech infrastructure. Richard Vedder, director of the Center for College Affordability and Productivity, points to the sharp rise in the number of people receiving a bachelor's and the slow growth in jobs that require them.
"The notion that…once we get through this funk, things will return to a sense of normal, I don't think it's true," Mr. Vedder said.
The result for the class of 2014 is a widening gap between those that struggle out of the gate and those that succeed. A generation ago, a university degree was a VIP ticket to the middle or upper-middle class. Today, it is more like general admission—an entry into the venue but no guarantee of a good seat.
College students now must navigate a precarious path that includes picking up the right skills, landing key internships and closely watching their debt levels. Michelle Cissi just graduated from UMSL and will start a full-time job with a good salary at the Federal Reserve Bank of St. Louis. She went to college near home, where she lived with her parents rent-free. After a junior year at St. Louis University, a private college where she rang up $15,000 in debt, she re-enrolled at UMSL.
Ms. Cissi also went to work finding a career. She interned at Mercer, a human-resources consultant, which led to an internship at the Federal Deposit Insurance Corp. The work impressed upon her the importance of mastering the math side of her economics major, helping Ms. Cissi land her first job.
"College is kind of what you make of it," she said. "For me, I was really aware of trying to get the most value for my money."
On average, a college graduate still earns $2.3 million over a lifetime, nearly $1 million more than a high-school graduate—and employment is much higher for college graduates. But obscured in those widely quoted figures are the cost of college and the wide range of earnings. Mistakes can ripple through careers and personal finances for years.
Tim Ogden graduated a week ago with $70,000 in debt. He took eight years to finish, transferred, switched majors and worked too many hours as a stock boy at Target to intern anywhere, he said.
"It's going to be a struggle. I'll return to Target and probably get a second job at a pizza joint," Mr. Ogden said. "I'm not sure how I'm going to pay all my bills when my student loans come due."