Finally, there is some good news for college grads. New data from the National Association of Colleges and Employers (NACE) shows the median starting salary for the class of 2012 is 4.5% higher than their peers grading just a year earlier. That translates into a starting annual salary of $42,569, compared to $40,735 for the class of 2011. And since inflation (minus food and energy) increased 2.4% over the last year, the benefit to college grads in the class of 2012 is real.
A lot has been said about the growing pile of student debt college grads are facing, and how policymakers can find ways to alleviate the burden. But that’s just part of the struggle college grads are facing – as PPI noted in a study released earlier this year, the fact grads are becoming less able to repay this debt is just as important as the debt itself. What’s missing from the discussion on college grads is a solution that addresses this double whammy: right as the cost of going to college and debt per student is rising, real earnings have been falling. In fact, PPI found real earnings of young college grads aged 25-34 working full-time declined 15% over 2000-2010.
That makes this newly released NACE data especially sweet. Not only is the increase in starting salary good for this year’s crop of college grads and for their ability to repay student loans, but it could be a very encouraging sign for the whole economy. Young grads can be seen as a bellwether for economic growth, because they are generally considered cheaper than more experienced grads and therefore are more likely to be the first segment of educated workers hired on an economic upswing (much like trends in temporary workers foreshadow company hiring). And although methodology changes make it impossible to compare this increase in salary to previous years, the warming economic climate gives more credence to this being the beginning of a very promising trend.
Photo Credit: Ralph and Jenny
