Friday, September 5, 2014

Job Prospects For Recent College Graduates In US

This study by the NY Fed sheds some light on the demand for recent college graduates in the US.  The unemployment rate has fallen for recent grads; it is only 5% compared with 10% for non-college grads.  However, under employment is a serious problem .  46% of the jobs taken by recent grads are jobs that have not typically required a college degree.  On the other hand, many of those jobs are well paying.  Those jobs have been growing while demand for college graduates has been flat for the last 18 months.  The underemployment rate of 46% is well above the 35% rate for less recent college grads.

The good news for recent college grads is that they have a low unemployment rate compared to non-college grads and they are finding well paying jobs.  That is one of the reasons why the NY Fed concluded that a college education was still a good investment.  Its bad news, however, for non-college graduates.  They are losing well paying jobs, that used to be available to them, to recent college graduates.  In other words, recent college grads are doing well relative to non-college grads.  They are doing less well in comparison to college grads who preceded them.

This study suggests that turning out more college graduates is not the solution for the unemployment problem.  The supply of college grads that we are producing exceeds the demand for college grads.  The skill gap that many politicians and pundits blame for our high unemployment rate is unfounded. 

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