Research Reveals Wages and Job Quality Declined, as Gender Wage Inequality Increased for College Graduates
Posted By Terri Williams on August 10, 2016 at 11:20 am
Sometimes, research on college students and graduates enlightens and encourages. For example, college graduates out earn peers who only complete high school. Also, unemployment rates are also lower among college graduates. Many grads are fortunate enough to work in some of the fastest-growing jobs in the U.S.
However, the Economic Policy Institute’s report on the Class of 2016 reveals that these students are not entering an idyllic labor market. Although the country continues to bounce back from the recession of 2008, the EPI’s report states, “The slow pace of the recovery has meant that eight classes of students have graduated into an acutely weak labor market and have had to compete with more-experienced workers for a limited number of job opportunities.”
This weak labor market, combined with stiff competition, has produced several other results as well. Below are excerpts from the report:
- Among young college graduates, the unemployment rate is 5.6%, and the underemployment rate is 12.6%.
- “Non-college jobs” for college grads used to include positions that paid well and led to a career (dental hygienist, electrician, mechanic, etc.). However, there has been a decline in the availability of those types of jobs, and an increase in low-wage, non-college jobs for college grads (bartender, cashier, food-server, etc.).
- Gender wage inequality has increased: Male college grads earned 8.1% more in 2016 than in 2000, while young female college grads earned 6.8% less in 2016 than in 2000. This despite a ton of attention and effort brought to reduce gender wage inequality.
- Pension coverage for young college grads has declined from 41.5% in 2001 to 29.4% in 2015.
Is a college degree still a good investment?
As the cost of higher education continues to rise, a student loan is the only viable option for many students. However, is it a good idea to incur so much student loan debt when the labor market is still rather dismal—especially for young workers?
Michael Rosner, a Merrill Lynch adviser in Farmington Hills, MI, tells GoodCall that the topic of student debt is often discussed with his clients, but he’s noticing a shift in their responses. In the past, many parents were willing to accumulate debt to send their kids to school because they assumed that the kids would land good jobs and could help to pay back the loans.
However, Rosner says, “That view has been altered a bit; now, we have conversations with clients about not wanting to set back their own retirement, due to the debt they would assume with home equity loans, etc., because the job market has become so competitive.”
Rosner says he recently spoke with a client whose daughter was about to enter college. ”He is worried that she won’t find a great job after college and wondering why should he spend all of this money and get into debt to send her to college.” This client represents a growing number of parents who are cutting the financial cord with their college students and recent graduates.
Online education could present an alternative
Rosner sees online education as one option that will allow students to pursue a degree without the tremendous financial burden that accompanies a brick and mortar school. However, prospective students would fare better financially by choosing a non-profit online school.
Even though the labor market may look dismal, Christine Roberts, head of student lending at Citizens Bank, notes that those with a college degree earn more than those who don’t have one. However, Roberts tells GoodCall that students and their parents have to be diligent in determining how they’re going to pay for that degree.
“This ‘buyers’ remorse’ that recent grads are facing can be diminished if students considering loans take advantage of the resources out there and do their homework on the topic before taking out loans.” In addition to researching grants and scholarships, Roberts recommends that students understand the terms of their student loan, including the repayment options, before they sign on the dotted line.