Economic snapshot | Wages Incomes and Wealth

Wages of young college graduates have failed to grow over the last decade

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Briefing Paper: The Class of 2012: Labor market for young graduates remains grim

During college graduation season, attention often turns toward the labor market prospects of the young men and women preparing to enter the workforce. We can get a sense of the earnings this new crop of graduates might expect by looking at the wages of young (age 21-24) college graduates. In 2011, young college graduates had an average hourly wage of $16.81 per hour, which translates into an annual income of roughly $35,000 for a full-time, full-year worker. Average hourly wages for young female graduates remain substantially less (13.9 percent) than those of young male graduates.

The wages of young college graduates have fared poorly during the Great Recession and its aftermath. Between 2007 and 2011, the wages of young college graduates dropped 4.6 percent (5.1 percent for men and 4.1 percent for women). As the figure shows, however, the wage growth of young graduates was weak even before the Great Recession began; they have fared poorly over the entire period of general wage stagnation that began during the business cycle of 2000–2007. Between 2000 and 2011, the wages of young college graduates dropped 5.4 percent (1.6 percent for men and 8.5 percent for women).

The wage declines since 2000 stand in sharp contrast to the strong wage growth for these groups from 1995 to 2000. During that period of low unemployment and overall strong wage growth, wages rose 19.1 percent for young college graduates (18.7 percent for men and 19.5 percent for women). The stark difference between these two economic periods illustrates how the wages for young graduates vary considerably depending on the health of the U.S. labor market. Young graduates who enter the labor market during periods of strength (e.g. 1995–2000) face much stronger wage prospects than young graduates who enter the labor market during periods of weakness (e.g. 2001 to the present).

For more information on the labor market prospects of this year’s graduates, read our recent report, The Class of 2012: Labor market for young graduates remains grim.