Young College Grad Unemployment

This morning’s jobs report saw the unemployment rate for all 25-34 year olds drop to 9.3%, the lowest level since March 2009.  Good news, for sure. But that comes after a year where the unemployment rate for young workers barely  budged.

In particular, the unemployment rate for young college graduates did not fall at all from the end of 2009 to the end of 2010. Take a look at the chart below, which reports the unemployment rate for young workers, age 25-34, by education. I compared  the fourth quarter of 2009 with the fourth quarter of 2010 (not seasonally adjusted). (The data is not yet available for January 2011, so I’m lagging by one month).

What’s striking here is that young workers with a bachelor’s degree only faced an unemployment rate of  5.2% at the end of 2009, and a statistically identical unemployment rate of 5.3% at the end of 2010.  No wonder young college grads felt like they were on a treadmill to nowhere in 2010 (for a good story on this topic, see my old comrade Peter Coy’s cover story in BusinessWeek this week, the Youth Unemployment Bomb).

However, I suspect that the decline in the young worker unemployment rate in January foreshadows a much much better 2011 for young grads. Here’s hoping!

Comments

  1. I wonder if the unemployment rate for the advanced degrees is more a product of accumulated education or the general characteristics (income, gender, ethnicity, etc.) of the people obtaining graduate studies?

    • Interesting point, but I don’t think this is very significant. A standard (and plausible) explanation is that candidates with higher level degrees generally have a leg up on those with a lower level degree in the job search. Also that (until now) fewer job categories requiring higher level degrees have been automated or offshored.

  2. I am still waiting for Michael to include the most obvious piece of this story, which he insists on excluding :

    The quality of college grads is dropping. Cheap lending and slick marketing by universities is leading a lot of people who would not otherwise go to college, to attend. That employers are reflecting the true market value of new grads is not wrong on their part.

    And yes, most of these superfluous college grads are WOMEN. Women now outnumber men by quite a margin in the undergrad setting. Most of these women are studying useless humanities degrees. Surely private-sector employers cannot be expected to pay these women $50,000 straight out of college.

    Michael is assuming that the quality of college grads has remained constant over time. It has not.

    • I don’t agree that humanities degrees are useless. They will not increase their holders’ prospects for a prime job, and may otherwise not be worth the money sunk into them (in terms of career income), but that’s not the same thing. One would wish that many a scitech or business graduate had a bit more of the kind of perspective conveyed by the humanities/lib art instilled in their technocratic skull. Myself included.

    • Aside from that this is misogynistic posturing. There are “fluff” degrees within or outside the humanities held in not unsubstantial number by men, and the “fluff” careers staffed with their holders. In good part people of both genders are responding to the fact that employers increasingly require degrees for office jobs, and to the rhetoric that a college-level degree is a prerequisite for a middle class career. It’s a positive feedback loop. The more people get degrees, the higher the barrier to entry into a limited prime job pool is raised.

      • Yawn…..any man who calls another man a ‘misogynist’ for stating objective facts is, in a word, a bottom-of-the-barrel loser.

        You seem to have missed the daily articles about a higher-ed bubble.

        The quality of college grads is declining, and the fact that Universities are becoming unfriendly to male students (Duke Lacrosse, anyone) is a part of this.

        Most Humanities degrees today are garbage. This was not true a generation ago. But today, such degrees are little more than leftist brainwashing.

      • That certain college degrees are useless or garbage is not an objective fact but at best an opinion based on a subjective value judgement. You inferences in regard to women and not further specified graduate quality don’t make it more compelling.

  3. The graph is missing the most obvious category on the left side of the scale. The unemployment rate of high school dropouts. I suspect it would be much higher still than the unemployment rate of HS grads.

  4. I agree with TFH that college curricula are fairly useless a lot of the time and it’s probably true that the soft degrees are the most useless, with a lot more women enrolled there. However, the BLS indicates that the female college graduate unemployment rate is less than half that of men, so they certainly seem to be taking better advantage of that degree than men. Probably has a lot to do with the medicine/education/govt skew to the jobs market right now, that Mike keeps pointing out, and how those fields tilt female. Oh well, those markets are about to be destroyed by the internet, guess they’ll all have to move on to something else.

    • When “hard degree” positions are overweight in men, then “soft degree” positions should be overweight in women, provided somewhat balanced gender participation in college. Labor immigration may skew the picture in some industries, but probably not very much overall. And what are the positions most threatened by offshoring/globalization? Not the “soft degree” ones.

      In the tech industry, the picture is very clear – male dominated engineering groups, female dominated non-engineering. In firms with offshore subsidiaries, engineering groups are “here and there” (and sometimes “there and here” if you get my drift), non-engineering is “mostly here”. This may be one factor in the gender difference you are mentioning. Your explanation is just in the larger picture, not at the firm level.

    • cm, this isn’t an arithmetic problem, saying that the math works out that way says nothing about the underlying situation. In fact, given how much the hard degrees are dominated by men and the overall gender participation reaching 60% female now, the soft degrees are now dominated by women. Ultimately, both are shortchanged by the college scam, those doing soft degrees because the curricula are fairly fluffy and useless, while still charging a high price. Those doing hard degrees are also scammed because the curricula are padded out to all hell to push them out to four years. They could get done in a year or two and then do some internships using those skills. Some may stay on those jobs full-time, others may do some more coursework if they need it. This great waste is why online learning will destroy the university and schools in the next decade or so. Immigration and offshore work “at the firm level” has nothing to do with this topic, not sure why you bring those up. However, it is the soft degree work that is most threatened because both the hard and soft degree work is equally offshoreable, as all that matters is whether it’s information work that can be done from anywhere, but the soft degree work can usually be automated too.

      • It seems we are not disagreeing on the “math” part.

        Having a “hard” degree myself, I vehemently disagree that you can be done within 1-2 years with a BS/MS level program, as much as you cannot convey the depth and breadth of a high school curriculum in 4-6 years. But perhaps you mean something else – there are certainly a lot of “ancillary” jobs that may not require 4+ years of course/lab/thesis work, and which could do with a 1+ year “white collar vocational” cert-level program. But then we are talking about that is not equivalent to BS/MS. And the holders of those certs will be pretty much confined at that level of job. Like e.g. somebody who knows enough about cars can do diagnostics and repairs, but will not be able to design cars or car components without a solid engineering foundation.

        W.r.t. offshoring (less so labor immigration as a good many visa workers at least in the posher firms have a degree from a US institution), I think it is very much relevant. What is being offshored are predominantly technical and back office functions, i.e. things of varying “skill” level but based on general and universally taught principles – e.g. there is one global science that is the same everywhere (more or less). Technical functions are heavily male dominated, back office is mixed with perhaps a female slant. What is currently not offshored, and won’t be anytime soon, is HR, legal, compliance, US finance/accounting, US sales/marketing etc. Outside of tech, anything that is subject to US regulations (various fields) or related to “defense”/national security stays in the US, for the time being.
        On a related note, people with a technical background and people in general seem to underappreciate the significance of general “business overhead” in the administrative, managing, and other operational categories. No successful firm has ever run with engineers or whatever applicable subject matter staff alone. Incidentally those allegedly “fluff” job functions are not based on any strong theory that is taught in school. They are usually staffed with “generalists” that have, and would certainly benefit from, a “fluff” (i.e. nontechnical) educational background. Those jobs are not going away, and neither are they going to be automated. And as I mentioned further above, IMO the geeks could benefit from some humanities/lib art perspective too.

    • We are disagreeing that your math is relevant and I noted that it’s off because the overall gender participation is not actually balanced. As for education, you have defined your conclusion, ie a BS/MS level program or the current high school curriculum, and then make the silly point that it can’t be compressed, completely missing the point. The point is that the current curricula are largely useless, any math beyond simple counting is useless for 99.99% of the population when your smartphone adds up your grocery bill and has a built-in calculator. That means teaching algebra, geometry, trigonometry, etc in high school is a complete waste of time. Having done a “hard” degree myself, I know that my curriculum was padded out with worthless technical classes that most of the engineers would never use again. The only reasons they were required is either because they were considered a base part of the curriculum 50 years ago and were just never taken out or more ancillary subdisciplines were forced on the students to pad the degree to 4 years, extracting more money from the students. What I said is the jobs that you think require a current BS/MS, ie design that uses engineering, can be done by graduates who finish in a year or two, not sure why that’s hard for you to understand.

      Wow, do you know anything about offshoring? The biggest sector of offshoring is Business Process Outsourcing (BPO), which offshores many of the business processes that you claim can’t be done. Yes, there are silly regulations that try to get in the way, but just as it is impossible for the govt to stop offshore internet gambling, it is essentially impossible for them to stop the offshoring or automation of all the business functions you list. Nobody ever said engineers are enough to staff a firm, but the fluff degrees definitely don’t prepare anyone for a non-technical job, as you yourself admit that no theory is transmitted. Rather, you fall for the hokum advertising that the liberal arts colleges put out, that if you just take a broad enough selection of worthless or recreational classes it will somehow prepare you by becoming a “generalist.” I’m not saying there aren’t valid business cases and the like that would prepare one for a non-technical position: I’m saying that the soft degrees as currently taught are mostly free of such useful material. Further, to the extent those jobs consist of repetitive information work, they will be automated or outsourced away, just like was done to repetitive manual labor over the last 50 years. Most people might benefit from some humanities/lib arts perspective, but to force it on them is just stupid. That ridiculous notion is only put forth because money-grubbing academics sell it to a receptive audience such as yourself.

      • You are expending a lot of words to restate what I suggested in my comment – that many “supporting” jobs can be done without having gone through a full BS/MS program.

        As for the humanities, they (can) give you something called “perspective”, which many people seem to be sorely lacking. The point is *not* to impart on you “skills” in any particular subject matter, unless you want to pursue a career in a humanities subject. Whoever looks at the humanities from the angle of commercial income potential is missing the point.

        I do agree that charging substantial amounts for programs under the false pretense of being a stepping stone to a middle class or even upper-quartile career is a ripoff.

      • On BPO, I think this is pretty much the kind of work I meant by “back office”. To the extent it follows general principles or somewhat-formal procedures, it can be outsourced anywhere a modicum of pertinent skills and technical infrastructure is present.

        What I characterized as resistant to outsourcing/offshoring is work that either requires or greatly benefits from spatial or cultural proximity (i.e. is difficult to distribute or remove from its locus) or that requires case-by-case judgement (i.e. the opposite of following formal rules in a limited domain). Many jobs have such content.

        This is not to say automation or offshoring of such job functions will not be attempted. Only time will tell.

    • No, I explicitly disagreed with what you said in your comment, when you said that higher-level design jobs can’t be done by people who did only 1-2 years of coursework. They can do those jobs because the 4-year BS can be stripped down to a year or two after you take out all the junk. I agree that people may find non-monetary value in the humanities apart from a job, so then why force them to get that degree for a job? We’re only talking about education from a jobs perspective, what they decide to do in their own leisure time is immaterial. OK, so we both agree that lower-level work can be offshored but then you’re missing all the higher-level information work that can be outsourced too. The US has no monopoly on computer programmers or finance/accounting, both can be done from abroad. Sales and marketing will be automated away, not in the sense that you’ll have software doing those functions, but those functions will be obviated by other technical approaches. For example, you will never see an ad in 20 years, you’ll just tell your computer you want a meal or a new car and a semi-intelligent computer agent will seek out the best match for you. :)

      • Well, let me just say I don’t share your assessment about how simple and fungible everything is and what job functions can be (usefully) automated. As I said before, that’s not to say that one thing or the other will not be attempted. After all we have self-checkout scanners in stores and many people “use” them.

  5. As a 2007 college graduate I still have associates who have been unable to find full time employment. They are mostly women that have “useless” college degrees (International Studies). My girlfriends who recieved accounting or pharmacy degrees are ALL employed.

Trackbacks

  1. [...] This post was mentioned on Twitter by EMSI, Michael Mandel. Michael Mandel said: The unemployment rate of young college grads was flat in 2010 http://wp.me/pIGEy-kw [...]

  2. [...] unemployment numbers like these, no wonder so many young people think it’s worthwhile risking a lot of student loan debt to go to [...]

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