Wages for College Grads Are Lower Than They Were 15 Years Ago
Posted By Eliana Osborn on June 12, 2015 at 3:04 pm
Students leaving college with bachelor’s degrees in 2015 are in for some bad news: their wages aren’t looking so good. A report by the Economic Policy Institute (EIC) finds that earnings for these new grads are 2.5% less than in 2000 when adjusted for inflation. Things are worse for those with only a high school diploma, as their wages have decreased more than 5% over the past fifteen years. Wage decreases are the most severe for women and non-white males.
Though the recession is over and many sectors of the economy are showing positive numbers, employment statistics are discouraging for the newly graduated as well. 10.5% of this group are neither working nor continuing their education, up from 8.4% in 2007. Unemployment numbers for black and Hispanic students are significantly higher as well.
“In 2007, 38 percent of employed college graduates under age 27 were working in a job that did not require a college degree, and this share increased to 46 percent by 2014,” according to the EIC report. New employees are more and more frequently taking any job they can find, even those at an entry or low level. Early data isn’t promising for this practice, as lifetime earnings potential decreases when you start out in lower-level jobs.
The yearly EIC report highlights trends for new graduates, providing a good measure of how economic changes apply to real life. The Class of 2014 report noted an unemployment rate for recent grads that was double the national average of 6.7% at 14.5%. So while 2015 numbers may not be what parents and grads are hoping to see, they do show an improving trend.
With low wages, 2015 graduates and beyond will need to make thoughtful decisions about what they study and how much they spend on their education. Research has found that only 20% of new graduates feel prepared for the job market, and some degrees have a better return on investment than others. The recently proposed Student Right to Know Before You Go Act may help students have a clearer idea of potential earnings after they graduate, so they will have fewer economic surprises.
College enrollment rates increased during the Great Recession, when many people headed back to school after they were unable to find jobs. However, the EIC report found that this trend has stopped. The report also found that loan debt is a factor in 37% of households headed by someone under 40, a reminder that low wages after graduation can put young people’s entire credit history in jeopardy.