WASHINGTON, Jan 6 (Reuters) - Recent college graduates in the United States face a more challenging job market, causing them to remain unemployed or take lower paying jobs than their counterparts in the past two decades, an analysis by the Federal Reserve Bank of New York has found.
The report, released on Monday, analyzed more than 20 years of data and found that, while it generally takes new graduates some time to transition into the job market, today’s graduates are having an even tougher time and many are accepting jobs for which they are overqualified, low-wage jobs or part-time work.
“It is not clear whether these trends represent a structural change in the labor market, or if they are a consequence of the two recessions and jobless recoveries in the first decade of the 2000s,” the report said.
The study was conducted by Richard Deitz, an assistant vice president in the New York Fed’s Research and Statistics Group, and Jaison Abel, a senior economist in the group.
Even though overall U.S. unemployment has declined, falling to a five-year low of 7 percent in November, young graduates are entering an economy that is still fragile and far from its pre-recession levels.
The report found that graduates from fields that provided technical skills or serve growing parts of the U.S. economy fared better.
Healthcare and education graduates had lower unemployment rates of about 3 percent and 4 percent respectively, while construction and architecture majors and liberal arts and social sciences majors experienced the highest levels of unemployment of 7 percent to 8 percent.
The authors said this trend of higher unemployment for new graduates began with the 2001 recession, improved when the economy recovered, and deteriorated again during the most recent economic downturn.
Problems facing new graduates are compounded because more students graduate with massive amounts of debt due to spiraling costs for higher education. About 70 percent of U.S. students who graduated in 2012 had student loan debt, with the average borrower owing $29,400, up from $26,000 the previous year.
The underemployment rate for recent graduates is also higher than in the previous two decades. That rate was 34 percent in 2001. By 2012, it had risen to 44 percent. Because of the scarcity of jobs, recent graduates have tended to take low-paying jobs or jobs that don’t require a college degree such as positions as bartenders or retail clerks.
However, the authors of the report say the relatively high unemployment experienced by recent college graduates is no reason to dismiss the value of a college education.
The U.S. Bureau of Labor Statistics projects faster growth for jobs that require at least post-secondary education by 2022. Workers with a post-secondary education or more earned a median of $57,770 in 2012 compared with $27,670 for jobs requiring a high school diploma.