Sam Murray
As graduation season is upon us, it only seems fitting that we examine what happens next. Though the majority of us seniors are looking into post-secondary education, not all of us are and those that aren’t will be entering the workforce. Also joining the workforce will be many college graduates as they complete their tenure in college. As seen in the graph below, since 2000 the unemployment rate of persons aged 20-24 is rising.
The unemployment rate is found by taking the number of unemployed people who are actively searching for jobs and divides that number by the total amount of people in the labor force both employed and unemployed. With increases in the unemployment rate, that will also discourage some workers from looking for jobs which will take them out of the labor force and create a statistic that is actually lower than the actual number that it should reflect. In addition, with increased difficulty finding jobs, many college graduates will lower their standards and become underemployed. When a worker is underemployed, it means that their skill set is overqualified for the job that they are doing, for example, if a person with a Master’s degree in Business Administration, were to be flipping burgers in the back of the local Buffalo Wild Wings, that would be considered underemployment. In June of 2013, “the Federal Reserve Bank of New York reported that a whopping 44% of graduates were underemployed.” The graph below shows the underemployment rate of recent college graduates versus all college graduates in the work force.
As we can see, the underemployment rate of these recent graduates is higher than the rate for all college grads, which is horrific due to the fact that the costs of college are increasing over the recent past. Therefore, being underemployed is often tied to a lower salary and the massive debt built up, which for the class of 2012, is approximated at an average of over $29,000, can spell a lifelong financial trouble. If a whole generation faces long-term financial distress, that could easily lead to extended economic downturn because the spending of those in debt will diminish. Since consumer spending is the largest part of GDP, if that falls for a whole generation for an extended period of time, our national output will fall.
Therefore, the future prospects of our youth both out of high school and college will determine the future of our national economy, and since the prospects are looking bleak with rising unemployment and underemployment rates, the future of the economy could be at risk especially if more people go to college, accumulate massive debt, and then find themselves underemployed with a salary that will not help them in the long run. Let this be a cautionary tale for all of those who are going to college that they try to avoid or limit debt through their collegiate journey, and to attempt to find jobs at their education level upon graduation so that we as a nation can avoid a long-term economic recession.
Works Cited:
Ellis, Blake. "Average Student Loan Debt: $29,400." CNNMoney. Cable News Network, 5 Dec. 2013. Web. 25 May 2015. .
"Employment Rates of College Graduates." Institute of Education Sciences. National Center for Education Statistics, 5 Jan. 2014. Web. 25 May 2015.
Weissmann, Jordan. "44% of Young College Grads Are Underemployed (and That's Good News)." The Atlantic. Atlantic Media Company, 28 June 2013. Web. 25 May 2015.
This was a very interesting piece to read about. I can't believe that huge percent number of unemployed people in the country. You would think that going to college and earning a degree will secure you with a job suited for your degree. But that is not the case, as you can tell by the article. When going to college, you have to do cost-benefit analysis to determine if this will really be the best option for you. Do the benefits outweigh the costs? If they do, you should go for it! College seems like a great idea but is it really if graduates are not getting jobs?
ReplyDeleteI like how you take into account the effect the underemployment and unemployment on GDP. It would be interesting to see how much the drop in employment effects real GDP, as they would also likely consume less, thereby dropping aggregate demand.
ReplyDeleteI enjoyed how you mentioned underemployment as many people either do not know about it or don't realize what it really is and that it is always there. Many people even if they get the career they want have to start somewhere, and even if they move up they can still not be utilizing their full potential. I wonder what that can do to the economy, if underemployment could be measured and determined how much it hurt the economy as a whole.
ReplyDeleteThis was such an interesting article: especially since all of us will be entering the workforce very soon. I wonder what the reason is for the increasing unemployment/underemployment for recent college graduates is? Maybe it has something to do with the fact that so many are entering the workforce. But it is interesting, because the Baby Boom generation is just retiring, so theoretically, shouldn't more jobs be available? Nice post!
ReplyDeleteThis applies well because of how many of us have jobs and will be entering the real work world soon. It makes sense the unemployment is higher for college students. I'm thinking that a company would rather have a stable worker who has been in the work force for a while rather than get someone else new. I feel like in this generation that with more technology being created everyday there will be more jobs available. I guess we'll find out.
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