Fortune interviewed PPI’s Diana Carew on the fall in real earnings for young college grads, and the effect of the “Great Squeeze” on the younger population
Fall has arrived. Across U.S. college campuses, thousands of students are deciding on majors that will hopefully prep them for the job they’ve dreamed of. But they’re probably also pretty discouraged, having heard that so many graduates from a few years ago are spending their days as baristas earning a measly wage.
Indeed, it’s tougher out there for America’s young people. For the sixth year in a row, real earnings declined for 25 to 34-year-olds with a bachelor’s degree working full-time, according toProgressive Policy Institute’s look at the latest U.S. Census data. In 2011, they earned $10,000 less than they did in 2005, falling from an inflation-adjusted $64,500 to $54,500.
What’s most perplexing isn’t what happened last year or even the year before. Fortune asked the Washington, DC-based think tank how the slide in earnings of young college grads compares to most other full-timers. Economist Diana Carew crunched the numbers and found that in 2009, earnings for young graduates fell below all other workers 18 years old or older, regardless of education, for the first time. Young college-educated workers saw their earnings rise in 2004 amid the height of the U.S. housing market boom, while wages and salaries for all other full-timers continued to stagnate. As the market started showing signs of cooling in 2005, young graduates saw earnings immediately plunge from their $64,500 peak to $56,500 by 2009.