Every year, right about this time, stories start flooding websites and articles start appearing in newspapers spouting off about how bleak the employment future looks for young college grads. Once again schools find themselves defending to the public that a college education is still worth the price. The question everyone should be asking is whether this fear of unemployment is justified. And given current statistics, the answer to that question is no.
Underemployment versus Unemployment
First, we need to look at the difference between two terms that most people seem to think are interchangeable: underemployment and unemployment.
Underemployment (referred to as U-6 by the Bureau of Labor Statistics) combines three groups: the unemployed, part-time workers who’d prefer full-time jobs (workers who are literally underemployed), and “marginally attached” workers (a small subset of people neither working nor actively looking for work, but who would be willing to work if there were more good opportunities available). Last year the number of underemployed hovered at just under 10 percent.
Unemployment (also known as U-3) as defined by the Bureau of Labor Statistics are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work. In March, the unemployment rate was at four and a half percent.
See the difference?
While both numbers are important, it is also important that credence is given to the right one when it comes to justifying grads return on their educational investment. So, let’s see what those numbers tell us.
The Future Looks Bright
Here’s the good news. According to the National Center for Education Statistics (NCES), the employment rate is higher for those with higher levels of education. For example, in 2015, the employment rate for 20- to 24-year-olds (referred to as “young adults”) with a bachelor’s degree or higher, was higher than the rate for young adults with some college but no bachelor’s degree (89 vs. 76 percent). The employment rate for young adults with some college was higher than the rate for those who had completed high school (67 percent), which was in turn, higher than the employment rate for those who had not finished high school (51 percent). This pattern of a positive relationship between employment rates and educational attainment was also seen for 25- to 64-year-olds (referred to as “older adults”).
And it gets better.
The January 2017 report from the Bureau of Labor Statistics (which contains numbers for December 2016) states the unemployment rate for college graduates was only two and a half percent. That means that only one out of every 40 college graduates is unemployed. This is half the unemployment rate of those with high school degrees and one-third the unemployment rate of those with without a high school degree. This means higher education institutions are on the right track in preparing their graduates to be viable members of today’s workforce. And graduates can have confidence that the money they’re spending will pay off with rewarding careers.
So, while an Ivy League grad may be serving up double soy lattes at a Starbucks… somewhere in the world, their reason for do so probably has nothing to do with the current unemployment rate.
Share in the comments your thoughts on new grads and unemployment. Is it fact or fiction?