When the Bureau of Labor Statistics recently released its annual unemployment statistics for 2013, there was good news for every major cohort except one: Bachelor’s degree grads aged 20-24.
Since the peak unemployment years of 2009/2010. College grads over 25 experienced a 24% decrease (blue bar). But the unemployment rate for young college grads only declined by 13%–from a high of 9.2% to a 2013 average of 8% (red bar).
Despite the high expectations of employers for increased hiring of new college grads, the unemployment rate of this group between 2012 and 2013 completely stalled.
Typically, young grads have had an easier time finding work than the general population. Not so in 2013. While the overall unemployment rate for everyone in the civilian population over the age of 16 was 7.35%, 8% of college grads aged 20-24 were unable to find any employment—let alone employment that was full time and required a college degree.
This has clearly been a frustrating time for new college grads. Faced with the daunting prospect of trying to find work commensurate with their college education, many have settled for employment they could have secured without a college degree. And that has almost certainly negatively impacted their ability to repay college loans.
Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, estimates that the number of recent grads who have taken lower level positions has jumped from around 27% in 2007 to 37% in 2013–a poor return on the student’s tuition investment.
Why have young grads not benefitted from general improvements in the economy and a soaring stock market? No one knows for sure, but there may be a clue in the study released in October 2013 by Chegg, the Student Hub and Harris Interactive, that identified a big gap in the skills graduates thought they possessed, and the skills employers want.
If young graduates are not ready for the workforce, employers may reject them in favor of their older, more experienced peers.
Given the cost of education, and the increasing demand for a return on the tuition investment, it is in everyone’s best interest to address the problems associated with young graduate unemployment and underemployment.
No longer can colleges and universities sit on the sidelines and wait for the economy to improve. The economy has improved, but new grads have still been left behind.
This situation has repercussions for higher education: Unemployed and mal-employed college grads are, for example, less likely than those who are employed to recommend their college to prospective students, or to contribute to its coffers.
The smart colleges and universities will be those that recognize they can gain a strategic advantage by investing in the career preparation of their students, and giving them a greater helping hand in finding their initial positions.