Brody El-Achi, a rising junior at American University in Washington, D.C., is struggling with sky-high tuition while facing a static job market with stagnant wages. And he’s wondering if the struggle is worth it.
“The fact that I have to pay over $230,000 for four years of education is ridiculous.” he said this week. “The crazier part is that the average graduate starting salary in my field of study is $40,000. This means I would need over five years of working and spending all of what I make to paying off school.”
El-Achi’s worries are all too typical. The dream that a higher education is a ticket to a well-paying, stable career after graduation is being replaced by the reality of crushing student debt – a problem so serious that some presidential candidates are including the idea of free higher education in their platforms – and a job market that leaves a large percentage of graduates either jobless or underemployed.
That’s the reality examined by Alyssa Davis and Will Kimball, research associates at the Economic Policy Institute, in their briefing paper, “The Class of 2015: Despite an Improving Economy, Young Grads Face an Uphill Climb.” During a media call hosted by EPI on Wednesday, they detailed how a steep recession and the anemic recovery that followed have left college graduates with the worst job prospects in 70 years.
For example, young college graduates’ unemployment rate is 7.2 percent and their underemployment rate is 14.9 percent. High school graduates fare even worse – unemployment is at 19.5 percent, and underemployment is 37.0 percent.
Students are not optimistic about their prospects either; a Harvard poll found that 73 percent of students think it will be difficult to find a job after college, with 12 percent saying it would be very difficult.
The EPI report also states that the wages of all graduates “have failed to reach their pre-recession levels, and have stagnated or declined for almost every group since 2000.”
According to one study cited by Davis and Kimball, nearly half of all recent college graduates were working in jobs that did not require a college degree in 2014. That’s a sign that today’s chronically high unemployment is not a function of workers lacking education or skills, but is a consequence of a weak demand for goods and services, which leaves scarce demand for hiring.
Some believe that graduates are “riding out” an unfruitful job market by seeking further education. But Davis and Kimball said there is no evidence that’s happening. In fact, the percentage of college undergraduates who are neither enrolled in further education nor employed stands at 10.5 percent. For high school grads, the share is a cringe-worthy 16.3 percent.
“The rising cost of college coupled with the stagnation of wages makes higher education an increasingly difficult investment,” Kimball said.
The United States needs policies that make higher education affordable and a job market that makes pursuing a degree worthwhile. In fact, the policies that would reinforce graduates’ job prospects are the same policies that would generate broad-based demand for all American workers.
Specifically, that includes the Federal Reserve Board “prioritizing low rates of unemployment when making monetary policy” and not raising interest rates, the paper said. Congress should enact targeted employment programs and direct funds to infrastructure. In addition, we should strengthen collective bargaining rights, raise the minimum wage, update the overtime threshold so that lower-wage workers aren’t misclassified as “managers” for the purpose of evading overtime pay, provide earned sick and paid family leave, regularize undocumented workers, and “end discriminatory practices that contribute to race and gender inequities,” the paper said.
When policies are adopted that give workers more power, lower unemployment, and create a living wage, we will have a stable labor market that rewards those who have pursued an education.