Stacey Kalivas should be celebrating her graduation from college later this week. Instead, the 22 year-old is getting ready to move back home with broken dreams and in debt. Kalivas is a member of the class of 2013, the fifth successive wave of students to enter into a stubbornly weak U.S. labor market—marked by high unemployment, a large number of part-time workers, and many who have given up the hunt for jobs. “It’s kind of tough to be graduating and not having anything,” said Kalivas. The finance major will graduate from Bryant University in Smithfield, Rhode Island, on May 18.
It has been nearly four years since the end of the worst U.S. economic downturn since the Great Depression, but the recovery has been too spotty to patch up the deep scars. Growth has struggled to rise much above two percent on a yearly basis, with quarters of relatively strong expansion typically followed by lulls. Employers have been reluctant to ramp-up hiring, leaving unemployment at 7.5 percent—nearly three percentage points above its pre-recession level. Employers plan to hire only 2.1 percent more new college graduates this year than in 2012, according to a survey from the National Association of Colleges and Employers. Last fall they thought the increase would be 13 percent.
A separate survey by staffing firm Adecco found that about 58 percent of 500 hiring managers across the country have no plans to hire new graduates. Of those hiring, more than two thirds said they would take only one or two candidates. These grim statistics resonate with Kalivas. In her search for a job as a financial analyst, she has applied for seven positions. “It’s frustrating because I feel like I will be more than qualified for the job description, but I am not even making it past the first stage,” she said.
Similar tales are recounted by other students.
“Nobody is hiring or accepting interns,” said Brian Dobson, who recently graduated from the University of New Hampshire with a degree in political science. The 29-year-old Iraq war veteran has submitted resumes to 15 companies hoping to find employment in either public affairs, marketing, or as a lobbyist. All have been met with rejections.
A study by the EPI found that 52 percent of employed college graduates under the age of 24 were working in jobs that did not require a degree last year. That was up from 47 percent in 2007.
HIGH GRADUATE UNDEREMPLOYMENT
The Class of 2013 is competing with four other groups of graduates going back to 2009, many of whom are still struggling to get a job or find full-time work.
Brian Hackett graduated in 2010 with a political science and public policy degree. “I am working part-time at a research company, but it’s not enough hours, it’s not enough pay and it’s not my career path. That’s the type of rut a lot of people like myself are falling in,” said Hackett.
In April, unemployment among workers under the age of 25 was at 16.1 percent, more than double the national rate.
While the unemployment rate for young college graduates between the ages of 21-24 who are not enrolled in further schooling is 8.8 percent, the underemployment rate, a gauge of those only working part time or who want a job but have given up looking, is at 18.3 percent. The jobless rate for this group was 5.7 percent in 2007; the underemployment rate was 9.9 percent.
“In addition to the substantial share who are officially unemployed, a large swath of these young, highly educated workers have either a job but cannot attain the hours they need or want a job but have given up looking for work,” said Heidi Shierholz, a senior economist at the Economic Policy Institute (EPI) in Washington. The tough labor market is forcing college graduates to settle for jobs that do not require a degree, a trend economists refer to as cyclical downgrading.
Lauren Hughes, a double major in theater and English, is heading in that direction. After graduating from Hillsdale College in Hillsdale, Michigan, she will work as a waitress in her home town of Huntley, Illinois. But she hopes it will be only for a few months. Hughes will make about $4.95 an hour, but with tips she figures she can take home between $45 and $110 a day—money she will save for a job hunt in New York’s theaters in the fall. Hughes is also looking at secretarial work, copy editing, and teaching as a back stop. “I am not very optimistic,” she said.
Emily Savage is looking to go the same route after a frustrating search for jobs in the fields of conservation biology, genetics, and molecular biology. “It’s kind of disappointing. I am probably going to get a job that’s not in my field to survive for the next six months and apply to grad school,” said the Penn State University biology major. “A minimum wage job might be my only option.”
Dobson, who did two tours in Iraq between 2003 and 2006, is not far behind. He and his wife moved in with his parents when he enrolled in college after four years of active duty in the Army. He has tried jobs that give veterans preference. “I need to get back into the workforce. My plan is to find any employment that is possible, whether it is at Applebee’s or Lowe’s, whoever is hiring,” he said.
A study by the EPI found that 52 percent of employed college graduates under the age of 24 were working in jobs that did not require a degree last year. That was up from 47 percent in 2007.
In the fight for jobs, the young graduates are also up against a large group of older Americans forced to work beyond their retirement age to rebuild nest eggs shattered during the recession. The share of Americans aged 65 years and older with either a job or looking for one is at a 51-year high.
LIFETIME OF LOW WAGES
The combination of unemployment and menial jobs puts young workers on course for a life of low wages and earnings. “For the young who are getting out of school, studies show a lot of their earnings growth comes in the first 10 years after they get out of school,” said Keith Hall, a senior research fellow at George Mason University’s Mercatus Center.
According to the EPI, young college graduates with full-time jobs earned an average hourly wage of $16.60 last year, roughly $34,500 a year. That is down 7.6 percent from 2007. Benefits are also a problem. Between 2000 and 2011, the share of young graduates whose jobs provide for retirement plans dropped to 27.2 percent from 41.5 percent, EPI said. The trend is troubling given that most students are graduating from college with huge debts.
Dobson is fortunate. The government took care of his tuition costs through the Post-9/11 GI-Bill, which provides financial support to service personnel. But Kalivas and Savage are not so lucky. Each owes about $30,000 in student debt. According to the New York Federal Reserve Bank, the share of 25-year-olds with student loan debt has risen to more than 40 percent from about 25 percent in 2004. The non-profit Institute for College Access & Success says students who graduated last year had average debts of $26,600.
“The next generation will find it hard to buy their first home or finance other large purchases,” said Julia Coronado, chief North America economist at BNP Paribas in New York.
Kalivas, the would-be financial analyst, will take a break from her job search for a month after graduating. “A lot of companies have been telling us to look for positions opening up in the second and third quarter. They are starting to advertise some positions,” said Kalivas. “I am going to move back with my parents, unfortunately, but I do plan on getting out as quickly as possible,” she said, with a laugh.
