The Biggest Myth About College Graduates and the Recession: Busted
The downturn didn't wreck the value of a college degree. In fact, it barely dented it.
There have been a lot of scare stories about the fate of young college graduates in these post-recession years--grim tales of the over-indebted and underemployed desperately trying to scratch out a living making lattes at Starbucks or racking clothes at Urban Outfitters. Perhaps most frightening of all was the widely circulated statistic that more than half of college graduates under 25 supposedly are either jobless or working in a position that doesn't require their degree.
But here's the thing: It's all largely a myth. Young people with bachelor's degrees haven't suffered that severely, especially compared to their less educated peers. As I've written before, there were always reasons to doubt the "more than half" figure based on the methodology that produced it. But now, the Pew Charitable Trust's Economic Mobility Project has released its own study of the jobs data that should give everyone reason for calm.
Here's what it tells us: Job prospects for young four-year college grads did dim a bit after 2007, but not terribly. Their overall employment rate dropped just a few percentage points and in response, slightly more young adults returned to school than might otherwise have decided to. There's no sign that many more bachelor's holders ended up working dead end jobs just to pay the bills.
Pew's researchers reviewed data on roughly 100,000 Americans between the ages of 21 through 24 from the Census Bureau's Current Population survey. From 2003 through the end of 2011, forty-two percent of bachelor's holders on average were employed in jobs that should have required a college education, as defined by the Occupational Information Network. Only 10 percent were jobless and not in school. By contrast, 18 percent of high school grads weren't working or studying, as were 11 percent of associate's degree holders.
Pew found that those figures stayed fairly consistent for college grads before, during, and after the recession. As charted out below, the employment rate for young bachelor's holders fell four percentage points, from 69 percent to 65 percent. For high school grads, the employment rate dipped eight percentage points. Associate's degree holders saw a 7 percentage point drop.
In response to the deteriorating job market, many young college grads simply went back for more education. Among those who weren't working, the fraction enrolled in school actually dipped slightly over the course of the recession (shown below). But looking at the entire population of bachelor's holders, a higher percentage may have found themselves heading back to class than before the economy crashed.
I say "may," because although Pew doesn't break that number out itself. However, it is possible to use their figures to calculate a rough estimate of what the jobs picture looked like pre- and post-recession (these figures are rounded, as are theirs). Here's the before and after.
You might still be discouraged by these statistics. The fact that more than a quarter of students leave college and can only find work for which they're overqualified sounds pretty terrible. So does a three percentage point increase in joblessness. But for most college graduates, underemployment and joblessness are really only a temporary problems--much more-so than for other young adults. By looking at data on individuals over time, Pew calculated that 27 percent of bachelor's holders who are stuck in high-school level jobs move up to more appropriate work each year. That's only a 2 percentage point decline since the recession. Among the unemployed (or "excluded," on the chart below), 67% found work over the year.
The upshot of Pew's findings is that the recession didn't do a lot to dent the value of a college degree. The job market payoff to higher education isn't quite what it was a decade ago, but it's not far off. The people we should be worrying about are those who weren't lucky enough to spend four years in school in the first place.