Class of 2013 faces dim job prospects and depressed wages
The Great Recession and its aftermath have decimated job prospects and earnings for young workers, a new EPI briefing paper shows. In The Class of 2013: Young graduates still face dim job prospects, Heidi Shierholz, Natalie Sabadish and Nicholas Finio find that for the fifth consecutive year, new graduates will enter a profoundly weak labor market and will face high unemployment and underemployment rates and depressed wages.
Because young workers always experience disproportionate increases in unemployment during downturns, young workers have confronted particularly high unemployment rates since the end of the Great Recession. For young high school graduates, the unemployment rate is 29.9 percent, compared with 17.5 percent in 2007, and the underemployment rate is 51.5 percent, compared with 29.4 percent in 2007. For college graduates, the unemployment rate is 8.8 percent, compared with 5.7 percent in 2007, and the underemployment rate is 18.3 percent, compared with 9.9 percent in 2007. (The definition of underemployment includes the officially unemployed, people who want a job and are available to work but have given up actively seeking work, and people who are working part-time but want full-time jobs.)
Young workers have also seen their wages decline. Between 2007 and 2012, the wages of young high school graduates dropped 11.7 percent, and the wages of young college graduates dropped 7.6 percent. However, the wages of young graduates fared poorly even before the Great Recession began, as most groups of young workers also saw wage declines between 2000 and 2007. In all, between 2000 and 2012, the wages of young high school graduates declined 12.7 percent, and the wages of young college graduates decreased 8.5 percent. For full-time, full-year workers, this represents a roughly $2,900 decline in annual earnings for young high school graduates and a roughly $3,200 decline for young college graduates.
While attaining additional educational is often identified as a possible option for young people during periods of high unemployment, there is no evidence of young workers “sheltering in school.” Since the start of the Great Recession, college and university enrollment rates have not meaningfully departed from their long-term trend for either men or women. In fact, though some students have had the financial resources to take shelter in school, the lack of substantial increase in enrollment suggests this group has been offset by students who have been forced to drop out of school, or never enter, because a lack of work meant they could not afford to attend.
“Through no fault of their own, these young graduates are likely to fare poorly for at least the next decade through reduced earnings, greater earnings instability and more spells of unemployment,” said Shierholz. “Instead of focusing on deficit reduction, policymakers should be passing policies that will generate demand for U.S. goods and services, and therefore demand for workers who provide them. This is the key to giving young graduates entering today’s labor market a fighting chance.”