In July, 2011, newly minted young college grads faced an unwelcome pinnacle: at 13.1%, the unemployment rate for bachelor’s degree graduates under the age of 25 was the highest on record.
Since the past summer, Bureau of Labor Statistics (BLS) data show several months of relative improvement in the job outlook for young grads. But, statistics from 2007-2011 provide plenty of reasons why optimism should be tempered with caution.
Average unemployment rates
The average unemployment figures for the past four years paint a gloomy picture. Rates started inching up between 2007 and 2008, but then jumped 54% between 2008 and 2009, when the economy took a dramatic turn for the worse. For the past three years, the average unemployment rate for bachelor’s degree grads under 25 has remained stubbornly rooted around 9%.
Why job creation doesn’t lower the unemployment rate
New jobs are being created that are suitable for college graduates, but at nowhere near the rate necessary to bring the unemployment rate down. Between 2007 and 2011, the number of employed college grads increased by 1.8%, but the number of unemployed grads increased by 75%. Part of the problem is the ever-increasing number of college graduates, whose numbers have risen 8.6% in four years.
The difficulty of predicting the future for the Class of 2012
Unemployment rates for the population as a whole vary from month to month, but over a period of months it is usually possible to spot trends. The data for college graduates under age 25 is much more difficult to interpret because of wild month-to-month variations. There was a 177% difference between the highest and lowest monthly unemployment rates in 2008 and, even in 2011, the monthly unemployment rates fluctuated 111% between a high of 13.1% and a low of 6.2%.
The degree of employment difficulty facing the Class of 2012 will vary considerably depending on when they look for jobs. Most students graduate in May. The chart below shows the impact of new entrants into the job market: Finding a position in June, July and August is the most challenging. Young college grads who want work will find much less competition in April. This is, of course, better news for the still-unemployed members of the Class of 2011 than it is for the Class of 2012; most employers want to see applications only from those ready to start work within a month.
Why employment statistics do not tell the whole story
The BLS definition of employment is simple: graduates count as working if they hold any kind of employment. Thus, they are considered employed if they work while in graduate school, have part-time work out of necessity, or hold positions that do not require a college degree. Anecdotally, it seems likely that–despite the latest improvements in the job market– the Class of 2012 will face significant challenges finding interesting work that is commensurate with their educational background.
Note: All statistics relate to college graduates under 25 with bachelor’s degrees, and are based on the Bureau of Labor Statistics Table 10 (unpublished).