In “Global Youth Unemployment Hits 35 Million As Recent Grads Lean On Parents,” we documented what we have called the “pitiable plight” of recent college graduates whose degrees now cost in excess of $35,000 and who are entering a job market bereft of real opportunities for gainful employment. The OECD estimates that in member countries, as many as 35 million people aged 16-29 are out of work. In a related story, Sallie Mae (from which the nation’s number-one issuer of student loan-backed ABS was spun last year) recently reported that better than two-thirds of parents expect to provide financial support to their children post-graduation. With this in mind, consider the following data on youth unemployment in the US.
From Generation Opportunity (a nonprofit):
- The effective (U-6) unemployment rate for 18-29 year olds, which adjusts for labor force participation by including those who have given up looking for work, is 13.8 percent (NSA). The (U-3) unemployment rate for 18-29 year olds is 7.9 percent (NSA).
- The declining labor force participation rate has created an additional 1.828 million young adults that are not counted as “unemployed” by the U.S. Department of Labor because they are not in the labor force, meaning that those young people have given up looking for work due to the lack of jobs.
- The effective (U-6) unemployment rate for 18-29 year old African-Americans is 19.6 percent (NSA); the (U-3) unemployment rate is 12.8 percent (NSA).
- The effective (U-6) unemployment rate for 18-29 year old Hispanics is 14.1 percent (NSA); the (U-3) unemployment rate is 9 percent (NSA).
- The effective (U-6) unemployment rate for 18-29 year old women is 11.7 percent (NSA); the (U-3) unemployment rate is 7.5 percent (NSA).
“College graduates will spend the upcoming month looking toward their futures – but as they celebrate, their ability to get a job remains top of mind. Young people have seen their economic situation improve in 2015. While we’re glad for that, April’s jobs report still shows a 13.8 percent youth unemployment rate, a discouragingly high number for those who are hoping to embark on their careers in the next few weeks,” the group’s Director of Policy Engagement at Generation Opportunity Luke Kenworthy says.
“If you look at the numbers starting in 2009, we’ve been in the longest sustained period of unemployment since the Bureau of Labor Statistics began collecting their data following World War II. This misconception that we don’t want jobs or that we’re lazy and entitled is nonsense,” a spokesman added, in a statement to Newsweek.
According to the OECD, one of the reasons recent graduates have so much trouble finding jobs is that their degrees aren’t preparing them for life in the workplace with 10% of new graduates displaying poor literacy skills and 14% exhibiting subpar numeracy skills.
But it’s not just the skills gap. College degrees (even graduate degrees) have become so commonplace (thanks in part to the proliferation of student loans) that they are no longer sufficient in and of themselves to guarantee their holders will find good jobs. One 25-year old who lives in the nation’s capital told Newsweek that even with her master’s degree, she has found waitressing is the better option in today’s job market:
Millennials face higher university tuitions and student loan debt than ever before, as well as stiffer competition when they enter the workforce. A 25-year-old who recently earned a master’s and is living with a friend in Washington, D.C., tells Newsweek she is waitressing while looking for a job better suited to her qualifications.“It’s hard,” she says. “They don’t want to pay you extra for your master’s. There are enough people with master’s degrees that they can require them.”
As a reminder...
Millennials have also discovered what we’ve been harping on for months: for most Americans, there simply is no wage growth.
Millennials are getting lower earnings compared with the nation’s median income, versus people of that age a decade ago. “We find that because of the difficulties facing millennials, they are delaying these important life decisions, like getting married, buying a home, starting a family,” Pasch says.
In a study by Carnevale’s center at Georgetown, the age at which young adults on average reach the median wage, across education levels, increased from 26 to 30 between 1980 and 2012. Those hardest hit were high school graduates and young men. Full-time employment for high school graduates declined 13 percentage points for the period, while the rate for university graduates declined by 8 points. As of 2012, young men earned only 58 percent of the mean wage, down from 85 percent in 1980.
Circling back to the issue of whether millennials are getting what they paid for (or, more appropriately, what they almost certainly didn't pay for and never will) from US colleges and universities, it's looking increasingly likely that the push to educate America's youth (spearheaded by easy access to borrowed money) may end up backfiring, as prospective students assess the difficulty recent graduates have had in finding jobs that are commensurate with their experience and ask themselves if four years of their lives and $35,000 in debt is really worth it. Here's Newsweek again:
Carnevale says graduates are feeling let down by their universities, even as the institutions jack up the cost of tuition. “I don’t know if you noticed,” he says, “but we have a debate raging in this country right now over whether universities are supposed to teach for enlightenment or to prepare students for the job market. You still see presidents at some very prestigious universities arguing for the former, not the latter.”
Of course that could be because graduates from "very prestigious universities" are often i) deeply connected thanks to family pedigree and ii) heavily recruited, making it easier for them to find jobs and thus rendering the distinction between teaching "enlightenment" and teaching hard skills less meaningful. Whatever the case, you can probably count "presidents at some very prestigious universities" unconcerned because as the following excerpt makes clear, they're doing just fine.
Ivy League presidential pay is looking more like the big leagues.
Columbia University paid President Lee Bollinger $4.6 million in 2013, a 36 percent increase from the year before, according to a tax filing released Tuesday. Yale University recently revealed it paid former President Richard Levin a bonus of $8.5 million when he retired in 2013 after 20 years.
Presidential pay at elite universities is increasingly resembling that of corporate America, with performance bonuses and exit packages. While colleges say the rewards reflect the complexity of running multi-billion-dollar organizations, professors, alumni and others have questioned whether it is appropriate for nonprofits.
Here to sum up what it's like to be a millennial with a newly-minted $35,000 degree hunting for a job in America is another recent graduate from the DC area who told Newsweek the following:
“You’re like, ‘I’ll do anything and apply for everything, but usually it’s an electronic filing and you’re spending all your time on it and never hear back. So far, I have applied for around 30 jobs, if not more, and have heard back on two of them. I didn’t get either job because I don’t have enough experience. These are entry-level jobs, but experienced people are taking them.”
Good luck millennials and remember, there's always the farm.