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Congratulations to the Class of 2014. You have worked hard and you have a diploma to show for it.
Be prepared to work even harder to find a job.
It’s been five years since the Great Recession ended, but it’s still taking its toll on recent graduates. A new report by the Economic Policy Institute, a left-leaning think tank, indicates that graduates looking to enter the workforce have dim prospects. The study says:
Unemployment of young graduates is extremely high today not because of something unique about the Great Recession and its aftermath that has affected young people in particular. Rather, it is high because young workers always experience disproportionate increases in unemployment during periods of labor market weakness — and the Great Recession and its aftermath is the longest, most severe period of economic weakness in more than seven decades.
Although the numbers of unemployed and underemployed young people have gone down since the recession ended, they have yet to reach pre-recession levels. The EPI study noted:
- Recent college graduates. Unemployment is 8.5 percent now (5.5 percent in 2007). Underemployment is 16.8 percent (compared with 9.6 percent in 2007).
- Recent high school grads. The unemployment rate is 22.9 percent (15.9 percent in 2007). Underemployment is 41.5 percent (26.8 percent in 2007).
There’s also a large group of young high school and college graduates – nearly 1 million – who are idled. Dubbed the “disconnected youth” or “missing,” these young graduates are not employed, not looking for work and not enrolled in school.
The EPI said, “The increase in the share of disconnected young people represents an enormous loss of opportunities for this cohort, as the loss of work experience or further education will have a lasting negative impact on their lifetime earnings.”
It’s estimated that if these young people entered the labor force looking for work, the unemployment rate for young workers would skyrocket from 14.5 percent to 18.1 percent.
Other key findings of the report include more depressing news for recent graduates.
- Lower wages. Recent high school and college grads are earning less today than before the recession. Since 2000, the inflation-adjusted wages for high school grads dropped 10.8 percent, while those for college grads dropped 7.7 percent. CNN Money said, “If wages had merely remained about the same, for example, today’s young graduates would be earning about $2,500 to $3,000 more per year.”
- Declining job benefits. “In 2000, about 53 percent of newly employed college grads received health insurance from their job. Now only 31 percent do,” CNN Money said. Employer-provided pensions continue to decline.
The Class of 2014 is the sixth consecutive class to enter a profoundly weak job market, which will have long-term negative impacts on them. “Research shows that entering the labor market in a severe downturn can lead to reduced earnings, greater earnings instability, and more spells of unemployment over the next 10 to 15 years,” the EPI said.
On a positive note, the EPI report said it’s not too late to make a difference in the bleak situation recent graduates face.
Because the scarcity of job opportunities for the Class of 2014 is a symptom of weak demand for workers more broadly, what will bring down young workers’ unemployment rates most quickly and effectively are policies that will generate strong job growth overall. These include fiscal relief to states, substantial additional investment in infrastructure, expanded safety net measures, and direct job creation programs in communities particularly hard-hit by unemployment.
Are you a 2014 grad? What has your experience been with the job market? Share your thoughts below or on our Facebook page.