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Young College Grads: Real Earnings Fell in 2011

The latest Census figures show real earnings for young college grads fell again in 2011. This makes the sixth straight year of declining real earnings for young college grads, defined as full-time workers aged 25-34 with a bachelor’s only. All told, real average earnings for young grads have fallen by over 15% since 2000, or by about $10,000 in constant 2011 dollars.

This statistic is fundamental to our understanding of the current economy. College graduates have jumped through the hoops that were supposed to give them a better life. They are supposed to have the skills that enable them to compete on the global economy. But something is going wrong. The fastest growing jobs now for young college grads include dental assistants, hairstylists, and bus drivers.

The middle-skill jobs that young college grads generally take (think sales agents, teachers, and financial analysts) continued to shed workers in 2011. And for the few high-skill jobs actively hiring (think engineers, web developers, and computer support specialists) most college graduates still lack the necessary training. That leaves many young grads taking jobs that don’t require a college degree for less pay. I call this “The Great Squeeze” – as college grads take the lower-skill jobs, they squeeze out those with less education and experience from the labor market. Nobody wins.

Given the prospect of falling real wages, coupled with rising college costs and debt, many young people are beginning to question the value of a college degree altogether. That means it’s essential whoever wins the election make the plight of young college grads a priority. Not making the investment in education is not the answer; ensuring there are better jobs upon graduation is.


8 responses to “Young College Grads: Real Earnings Fell in 2011”

  1. Benjamin Byron

    Any idea what accounts for the brief uptick in earnings from mid-2004 to mid-2005? That seems like a pretty significant shift considering it buoyed earnings above the 2004 low point until mid-2007.

  2. Mats Holm

    I would think it is because of a shift where bachelor is not enough, combined with a influx of people going to Collage. If more people get a bachelor, the income average will head toward the national average for people of that age. The divide between have’s and have not’s are being shortened, because there are less and less have not’s without a degree.

  3. KEVIN

    diana… i saw you chatting with peter schiff about college loans on tv. It is scarey to me to know that you are involved in policy of any sort with the little knowledge you demonstrated in that interview. Mr.Schiff is correct and you had no clue.

  4. Average earnings of young college graduates are still falling

    [...] That picture is the single biggest reason why higher education in this country is in economic trouble as a sector.  And yes, I do understand that the “education premium” is robust, but that means wages for non-college workers have been hurting as well.  At some margin, when it comes to determining how much you will pay for college, the absolute return matters too.  The full article is here. [...]

  5. Patrick

    I’d like to see how the population is changing over time.

    1. How many higher paid people are becoming excluded from this population because they are have attained higher degrees and are no longer ‘only a bachelors’. I think there has been an increase in Master’s degrees over the past 10 years.

    2. How many people are getting higher degrees and still considered ‘employed full time’? If we have more people doing master’s programs AND working full time, chances are they are making less because they have less time to devote to work.

    3. Graduating in a recession leads to lifetime pay gaps (http://www.ingentaconnect.com/content/aea/aejae/2012/00000004/00000001/art00001). More specifically, the extreme values of the the high end (mostly caused by IBanking) tend to distort average wages. With the ibanking industry shrinking in terms of new hires for a few years this could seriously distort a mean wage calculation, especially since these are the extreme high values of the ‘only a bachelor’s’ degree population.

    4. More lower paid people are becoming included because of the expansion of Bachelor’s programs.

    Some things i’d like to see to fix this:
    A) To make these types of comparisons I’d think you’d a cohort analysis would be helpful. What are the class of 2000 graduates doing compared to the class of 2008, etc. when they are 4 years out of school?

    B) Median or IQR metrics rather than mean. I think we would still see a decreasing trend looking at the IQR over time but I think it would be much less pronouced.

    C) To adjust for the fact that much of the last few years have been a recession which distorts the fact that this may just be economic noise I’d like to see this value not just adjusted to real terms but also relative to ‘full time working population with high school only’. This would be a positive trend as people have stated because of the growing degree premium.

  6. gwern

    How is this graph being generated? I spent two or three hours trying to reproduce it on the Census website, but the closest I could get was to bachelor-only median weekly incomes for 25+, and not just age 25-34. The interface doesn’t seem to allow any query for 25-34 and also bachelor-only.

  7. Sorry, neoliberals: Inequality is driven by greed, not technology | Technology News

    [...] Calling for some-more preparation and ceiling mobility, while noble, is invalid when wages are descending for college graduates and will still leave many workers behind. Social mobility is good, though it shouldn’t succeed a [...]

  8. Don’t Blame the Robots for Inequality | Sean McElwee

    [...] responsibility. Calling for more education and upward mobility, while noble, is useless when wages are falling for college graduates and will still leave many workers behind. Social mobility is good, but it shouldn’t supplant the [...]

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