I’ve been doing a lot of thinking recently about the labor market for a longer forthcoming piece, and one of the mysteries I’ve been grappling with is: How do you describe how this economy is treating young people?

Let’s start by singing the necessary praises. Last year was was the best for job-creation this century. We’re in the middle of the longest uninterrupted stretch of private-sector job creation on record. After creating mostly low-paying service jobs for the first few years of the recovery, the labor market is finally churning out more high-skill jobs. All of these things should be great news for young people.

Should.

But a deeper look at the Young-American Economy today suggests that, in contrast to the overall labor market, it is still sort of terrible.

To start with the camera lens zoomed all the way out: The majority of young people aren’t graduating from a four-year university. Rather they are dropping out of high school, graduating from high school and not going to college, or dropping out of college. Millennial is often used, in the media, as a synonym for “bachelor-degree-holding young person,” but about 60 percent of this generation doesn’t have a bachelor’s degree.

And how are they doing, as a group? Young people don’t seem to have a jobs problem—their jobless rate is a bit elevated, but not alarmingly so. Rather they have a money problem. The jobs they’re getting don’t pay much and their wages aren’t growing. A recent analysis of the Current Population Survey last year found that the median income for people between 25 and 34 has fallen in every major industry but healthcare since the Great Recession began.

Zoom in on recent college graduates, and the picture gets more complicated.

In The Washington Post, Ylan Q. Mui says, "The era of the overeducated barista is coming to a close.” That would be nice, indeed. But the data suggests that the era is hardly over: Overeducated baristas, once totally ubiquitous, are now merely super-abundant. Underemployment (the share of college grads in jobs that historically don’t require a college degree) is high. The quality of these first jobs is getting worse. And, for these reasons, wages are growing slowly, if at all. Now with pictures...


Youth Underemployment Is Rising

College grads still aren’t finding  “college jobs.”

Six years into the longest private-sector jobs recovery in history, the underemployment rate for recent college grads is still about 7 percentage points higher than it was in 2000. This is as close as you can get to a “college-educated barista index” in macroeconomics, and it’s not any better today than it was in 2012, 2011, or 2010. The unemployment rate has fallen since those years, but what’s clear is that millions of recent grads are landing in entry-level positions that haven’t historically required four years of studying (not to mention all that student debt).


Unemployment and Underemployment Rates for Young College Grads: 1994-2015​

NY Fed

Job Quality for Recent Grads Has Been Deteriorating

High underemployment isn’t enough on its own to cause much worry. After all, the underemployment category includes jobs as diverse as cashiers ($25,000 a year) and dental hygienists (more than $45,000). So the more important question is: Are underemployed college grads finding better jobs?

Perhaps not. When the New York Fed studied this question last year, it found that “the share of underemployed college graduates in good non-college jobs has fallen sharply, while the share working in low-wage jobs has risen.” And, perhaps more concerning, this shift seems to predate the recession.


For College Grads, a ‘Good’ Job Is Hard to Find

NY Fed

Wages Are Growing Slowly for Some, and Not at All for Many. It’s hard to get a firm grasp on how much young people are making compared to past generations for a few reasons. They are spending more time in school, working more part-time jobs, and have graduated into a historic downturn.

That said, just about every measure finds they are struggling mightily. The Economic Policy Institute has reported that inflation-adjusted wages for recent college graduates have fallen by 7.7 percent since 2000. Last year, the San Francisco Fed produced this graph showing wages for recent college grads essentially hitting a flight ceiling around 2008 while overall wages continued to climb, however slowly.


Wages for Recent Graduates: Flat and Falling Behind

San Francisco Fed

Summing up: Today’s young-person problem does not seem to be about a lack of jobs or a lack of participation. It is, rather, a lack of good jobs, a dearth of raises, and a shortage of opportunities for this historically educated generation to put its historic number of degrees to work.

And this suggests, to me, a deeper concern: Even after the best year for job creation this century, and even after the longest private-sector expansion in modern history, the U.S. economy doesn’t quite know what to do with all these young people.

This is not proof that people shouldn’t go to college! (People who skip college are getting obliterated in this economy.) It is, rather, evidence that college is looking more and more like a disaster insurance policy for your career. A four-year degree confers economic benefits relative to your less-educated peers among a young cohort that's facing absolute declines.

For all its improvements, the labor market is just not creating enough high-quality jobs for young people to absorb all of these newly minted college grads in jobs that are historically “college jobs.” In the long run, there are plenty of reasons to expect the most educated generation in American history to do awesome things in their 30s. But in the meantime, get used to the most brilliant generation of baristas, salespeople, and waiters in American history.