Party On Class Of 2013: Real World Offers Dim Job Prospects, Low Wages

Bummer job prospects and deflating wages await most of the graduating class of 2013, a new report finds.

The Great Recession and its aftermath have decimated job prospects and earnings for young workers, a new Economic Policy Institute  (EPI) report shows.

Class of 2013 face tough job market.
Class of 2013 face tough job market.

In The Class of 2013: Young Graduates Still Face Dim Job Prospects, EPI researchers Heidi Shierholz, Natalie Sabadish and Nicholas Finio find that for the fifth consecutive year, new graduates will enter a “profoundly weak labor market.”

New grads in 2013 are looking at high unemployment and underemployment rates and declining wages as they enter the workforce.

It is not as though things were going well for young workers during the past several years.

Great Recession Extra Big Bummer For Younger Workers

Young workers usually experience disproportionate increases in unemployment during economic downturns. But young workers have confronted particularly high unemployment rates since the end of the Great Recession.

For young high school graduates, the unemployment rate is 29.9%, compared with 17.5% in 2007. Among high school grads the underemployment rate is 51.5%, compared with 29.4% in 2007.

For college graduates, the unemployment rate is 8.8%, compared with 5.7% in 2007. Owners of college degrees are experiencing an underemployment rate of 18.3%, compared with 9.9% in 2007.

The definition of underemployment includes the officially unemployed, people who want a job and are available to work but have given up actively seeking work, and people who are working part-time but want full-time jobs.

Wage Deflation Enters The Graduation Equation

Younger workers wages have also declined.

Bad Jobs: Young workers exploited.
Bad Jobs: Young workers exploited.

Between 2007 and 2012, the wages of young high school graduates dropped 11.7%. Wages for young college graduates dropped 7.6%.

However, the wages of young graduates were faring poorly prior to the Great Recession. Most groups of young workers also saw wages decline between 2000 and 2007.

In all, between 2000 and 2012, the wages of young high school graduates declined 12.7%. Wages of young college graduates decreased 8.5% during the same period.

For full-time, full-year workers, this represents a roughly $2,900 decline in annual earnings for young high school graduates. It equates to a roughly $3,200 drop for young college graduates.

While additional education is often identified as a possible option for young people during periods of high unemployment, there is no evidence of young workers “sheltering in school.”

Since the start of the Great Recession, college and university enrollment rates have not changed from their long-term trend for either men or women.

Other recent research and reporting shows that many of the same business and industries that say they suffer from a lack of skilled workers are resisting paying wages that justify the expense of training and education.

Though some students have had the financial resources to take shelter in school, the lack of substantial increase in enrollment suggests students who have been forced to drop out of school, or never enter, because a lack of work meant they could not afford to attend, have offset this group.

“Through no fault of their own, these young graduates are likely to fare poorly for at least the next decade through reduced earnings, greater earnings instability and more spells of unemployment,” Shierholz said.

“Instead of focusing on deficit reduction, policymakers should be passing policies that will generate demand for U.S. goods and services, and therefore demand for workers who provide them,” Shierholz said. “This is the key to giving young graduates entering today’s labor market a fighting chance.”

Party on Class of 2013! You only have 40 or so more years until retirement.

Related stories:

College Grad Starting Salary Survey: Engineering Dominates Top-Paying Majors

What Employers Want – Top 10 Skills For Job Candidates

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