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Lower Pay for College Grads–Today and Tomorrow

If this year’s college graduates needed a reminder of the severity of the job market they’re entering, a recent (9 May) Wall Street Journal article provided it, and then some. Sara Murray’s “The Curse of the Class of 2009” cites economic studies and anecdotal evidence showing that bachelor’s degree recipients during recession years generally get lower starting salaries than those who get their degrees during boom years, and tend to earn less for some time after they graduate.

The smidgen of good news in this report is for science and engineering graduates: Their immediate prospects may stink, but if they can land a job in their fields, their earnings bounce back quicker than their non-science and non-engineering counterparts.

Murray cites Yale economist Lisa Kahn, who mined the National Longitudinal Survey of Youth, a government database, to find pay trends for white males who graduated from college during the deep recession in the early 1980s. Kahn found that those getting bachelor’s degrees during those recession years earned 7-8% less than similar graduates from non-recession years in their first year out of school.

And to compound the problems faced by recession-era grads, it took many years for their pay to approach the pay of their non-recession colleagues. After 12 years, Kahn reports, recession-year graduates earned 4-5% less than those who graduated during economic-growth years. Even 18 years following graduation they still earned 2% less than those who graduated during better times.

Many grads during recession years, Murray says, must make hard choices between taking lower-level, lower-paying jobs outside their fields and continued unemployment. Grads interviewed by Murray said they are working as bartenders, models, and in part-time or temporary jobs, to make ends meet. And while they work in these non-professional and lower-paying jobs, they are not keeping their professional skills sharp, which will hurt their chances of getting better jobs when times improve.

A key factor in future wage growth seems to be the ability to land a job in your field. Murray cites Till Marco von Wachter, a Columbia University economist, who studied wage data of Canadians graduating from 1976 through 1995. He found that those who took jobs in the fields that they studied for, even lower-paying jobs, were able to land better jobs with more comparable pay to their colleagues when economic times improved.

Von Wachter found this pattern particularly with science and engineering graduates. Recession-era graduates with degrees in biology, chemistry, physics, and engineering who got jobs in their fields tended to catch up to their peers quicker than those who studied in other fields.

What can you do when even low-pay jobs in your scientific or technical field aren’t available? Murray says more graduates are taking public-service positions in programs such as AmeriCorps or Teach for America. A teaching job in math or science, for example, may not be the research position you really want, but it may keep you close to developments in these fields.

Or, if you can swing it, get a graduate degree. Murray says more college grads are pursuing this option. She cites Council of Graduate Schools statistics that applications for the 2007-2008 were up 8% over the previous year.