In the Class of 2019: College edition, EPI Senior Economist Elise Gould and Research Assistants Julia Wolfe and Zane Mokhiber provide in-depth analysis of the labor market for young college graduates, ages 21–24—examining their demographics, wages, and employment prospects as they begin their careers. Members of the college Class of 2019 currently have better job prospects than the classes who graduated into the immediate aftermath of the recession. However, compared with those who graduated into the 2000 labor market, the Class of 2019 still faces economic challenges including high levels of underemployment, worsened wage gaps for women and black workers, and the rising cost of college and resulting debt.
“While by many measures the labor market for young graduates is almost back to where it was before the recession, the economy of 2007 is a low bar,” said Gould. “We should be looking to the late 1990s and 2000 for comparison, in which an extended period of labor market strength translated into better opportunities for workers across the board.”
While the unemployment rate for white graduates has essentially recovered to its 2000 level, unemployment rates for other racial/ethnic groups remain well above their 2000 levels, and the gaps between the white unemployment rate and the black, Hispanic, and AAPI unemployment rates for young graduates are significantly larger than they were in 2000. Wages for young college graduates have been growing steadily since 2014, but are just above where they were in 2000—representing two decades of lost wage growth for young graduates.
“Yes, the labor market is improving for young college graduates, but it is improving unevenly,” said Wolfe. “Young people of color are graduating into a much different post-college labor market than young white workers. Women and black workers face wage gaps right out of college.”
Young women and black college graduates face large and growing pay penalties in the labor market relative to young men and white graduates, respectively. The gender wage gap for young college graduates has grown to 12.9 percent, and young black college graduates are paid 12.2 percent less than their white counterparts—evidence that workers cannot simply educate themselves out of gender and racial pay gaps.
The authors find that young women are more likely than men to have a college degree—women make up half of 21- to 24-year-olds but 57.4 percent of young college degree holders. Meanwhile, white and Asian American/Pacific Islander young adults are more likely than black and Hispanic young adults to hold a college degree.
Importantly, fewer than one-fifth of adults ages 21–24 are college graduates. While many Americans go on to increase their educational attainment throughout their 20s and 30s, most do not wind up completing a four-year college degree. Outcomes for recent high school graduates will be the subject of a forthcoming report, Class of 2019: High School Edition.
“Any policies we undertake to improve job prospects for young workers must also help the vast majority of workers without a college degree,” said Mokhiber. “Looking at the labor market for college graduates alone does not paint a full picture.”
The recent wage growth for college graduates does not make up for decades of wage stagnation, nor for the rising cost of college and resulting debt. Between the 1978–1979 school year and the 2017–2018 school year, the inflation-adjusted cost of a four-year education, including tuition, fees, and room and board, increased 173.0 percent for private school and 160.0 percent for public school, while median family income increased just 22.7 percent. As a result, an increasing share of students must take on substantial debt to access the benefits of a college education. Between 2004 and 2014, the number of student loan borrowers increased by 92 percent, and average debt per borrower increased by 39 percent in real terms.