Skip to comments.Pocket Of Pain For Young Graduates
Posted on 09/07/2006 6:26:29 AM PDT by Hydroshock
Details Buried Deep In Census Bureau Data Show A Sustained Drop In Earnings For 25- To 34-year-Old Grads, To Their Lowest Level Since 1997 Email This Story | Print This Story
Subscribe to BusinessWeek Young college grads are taking it on the chin. That's what the new data from the government show -- and it's not a pretty sight.
On Tuesday, Aug. 29, the statisticians at the Census Bureau released the latest numbers on income and poverty, for 2005. There were plenty of meaty figures, both good and bad, to chew on. On the good news side, median household income rose by 1.1%, adjusted for inflation, the first such gain since 1999. The poverty rate dipped a bit, from 12.7% to 12.6%.
On the bad news side, real median earnings of full-time workers declined, with the earnings of men dropping to the lowest level since 1997. And income inequality widened a bit, with the top 20% of households getting more than 50% of all the income.
Perhaps the most distressing figure was one buried deep inside the detailed tables. It turns out that the median earnings of young college grads, adjusted for inflation, fell by an astonishing 3.3% in 2005. That's on top of similar declines in 2004 and 2003. All told, the earnings of young college grads are down by almost 8% since 2002. [For a related chart, see BusinessWeek.com, 8/29/06, "Young College Grads in Free Fall."]
By young college grads, we mean full-time workers between the ages of 25 and 34, with a B.A. but no advanced degree. These are people who first entered the workforce during the past 10 to 12 years, some during the boom, some during the early years of the bust. What they've experienced over the past several years is an unrelenting downdraft in wages, probably the first sustained decline for college grads since the 1970s.
What's more, many of them have also been stuck on the wrong side of the housing boom. Just coming out of college, they didn't have the savings or the income to buy a house. And with home prices rising faster than their incomes, it's been very hard for them to catch up.
There are signs that the market for the latest crop of graduates coming out of college has improved a bit. But for the group just before them, it's a real rough ride.
Must be even tougher for high school only grads.
I am a high school only grad and retired now. I did ok but always regretted not going to college, envied those who did and blamed no one but myself.
Good luck to all these kids, I'm sure the competition is fierce.
comp sci not being among those...
Yep, we are paying $60,000 to engineering grads with no experience.
Since college has devolved into a 4-year rolling drunken party, it is not surprising that employers are not willing to pay so much for people who have college experience.
Colleges are turning out a worse and worse product, every year. These days, you couldn't flunk out if you tried.
They failed to mention that 1998-2002 grads were WAY overpriced during the Net boom.
What do you call a History Graduate?
Meaningless statistic. Maybe in the last 10 years a lot more kids have gone to college, but in soft majors. So instead of taking a job as a checkout clerk at Walmart right out of high school, these kids are getting 4 years of training and now they have a job as an administrative assistant somewhere. So they make more money than they would have 10 years ago.
BUT, there are now thousands of more graduates, all in soft fields which pay a lot less than what the typical graduate from a science/math/engineering college would make.
By using the MEDIAN income, adding a lot of NEW people at the bottom of the scale PULLS DOWN THE MEDIAN INCOME.
In fact, the media does this all the time. When we had 6.2% unemployment, the median income was HIGHER, because the median income only counts full-time employment.
Now we have 4.7% unemployment, but a lot of those workers got jobs that paid below previous "MEDIAN". They are much better off than they were unemployed, but now they show up as full-time workers, and they pull down the MEDIAN income.
And the way it's worded, you think people are having their wages go down, but NO SINGLE PERSON has their wage go down based on this statistic. The person who graduates today into a MEDIAN income of say 20 bucks an hour isn't the SAME person who graduated in 2001 with a MEDIAN income of 21 bucks.
It's the same trick they use with the minimum wage, when they say people on minimum wage have had their earnings decrease over the last 7 years. But in fact, almost nobody earning minimum wage today was also earning it 7 years ago. It is true that a person taking a minimum wage job today makes less than a person who took a minimum wage job in 1996, but they are different people. Anybody still making minimum wage after 7-10 years must be a really bad worker, but almost nobody is in that situation.
BTW, the same is true of the "living below poverty level". A good portion of those living below poverty in a given year are people who simply don't have a job for that year, but in the next year they get a job. So the democrats scream about how the number of "poor" went up, but in fact it's mostly because the unemployment rated spiked, which temporarily put people below the poverty level (note the poverty level does NOT count any government service like unemployment insurance or Katrina payouts).
And because some rich people stop working (and therefore earning money that gets counted), there are a lot of people who were in the top 1% one year, who are in the poverty group the next year. They also drive up the "uninsured" numbers, even though they can easily self-insure and therefore don't bother to buy insurance.
It's ok. CEO and executive compensation is way up.
It's the 'gray ceiling' at work.
Get any sort of a handle at all on the big problems and the little ones will vanish of their own volition.
I disagree. Daughter #1 just graduated with a BS in Comp Sci from a top 10 Comp Sci school. Took a slightly lower offer to live in a more rual area with much better housing prices. Making in the mid 50s and just bought a house.
Grads in Engineering, Chemistry, Pharmacy, and Nursing, id est degrees that train you for SOMETHING, are doing well indeed.
I would agree with you that Pharmacy and Nursing grads are doing well, in fact there seems to be a shortage. But, at least locally, there have been a glut of engineering grads, I know a couple younger guys who are still looking, more than a year later, and they aren't slackers, they continue to look while working in retail.
Bingo! Also more college grads, an inferior employee (product of today's colleges), and a 4.7% employment.
How are you going to back up that statement?
There is no middle management role for English and History grads anymore. There is no middle management anymore.
15 years ago they said a comp sci degree was the way to go. Is that a bad idea today?
$60,000 is a good salary. But do they have to move to Alaska to get it?