The State of Young College Grads 2011

I started writing about tough times for young college grads in 2006, when I was at BusinessWeek. Seems like a different day and age, doesn’t it?  Since then things have only gotten much much worse.  By my latest calculations:

  • Real earnings for young male college grads are down 19% since their peak in 2000.
  • Real earnings for young female college grads are down 16% since their peak in 2003.

These figures are for full-time workers, ages 25-34, with a bachelor’s degree only. See the charts below.

I want to ask an economic question, a political question, and a policy question.  First, no one has given me a good explanation yet of why young American college grads should have been hit so hard. Is there increased competition with young college grads around the world?  Are new college grads lower quality than their predecessors? Has information technology reduced the need for young grads? I really would like to know.

Politically, Obama captured the imagination of this group in 2008. Are young college graduates going to sit out the next presidential election in disgust?  Is there any candidate that can excite them?

Finally, if  we were going to design some economic policies to help young college grads, what would they be?

 

Comments

  1. Boohoo, college guys aren’t making $73k anymore and the college women aren’t making $56k anymore. Cry me a river, you do realize that both incomes are still higher than the median income, right? The bigger issue is unemployment and you’ve noted that’s also lower for college grads. As for why this is, probably a mix of all three reasons you suggest. The big issue is really getting tech and related information jobs going again, that’ll be the kick that gets the broader economy jumpstarted. But as long as those in tech are fairly clueless and all you have is privacy scams like Facebook, not enough is going to happen on that front and we’ll continue treading water.

    • Ajay – The median does not account for the returns to education. Those that occupy the 32% of society that have invested in their own human capital (usually at great expense) logically should make more than the 68% that have not. Otherwise, why would you incur both monetary and opportunity costs associated with becoming educated? The median also does not account for the increased productivity that a college education brings which is why the market pays a college graduate more than a non college graduate.

      • Even – I agree with everything you said, but I take issue with one thing: your characterization of the 32% as those who simply made a different choice, i.e. the choice to ‘invest in their own human capital’. Please do not lose sight of the fact that, for a great many people, college is simply not a good option because of their abilities. I am not trying to be politically correct here, but only sensitive. Some people cannot master college level material. I think it disrespectful to imply that they simply chose not to invest in education.

    • Even, that’s a good question, why would you incur those costs? The fact is that most of what is taught in college these days is a waste of time, even in technical majors like engineering. Just because you spent more money on something doesn’t mean it’s worth it, hopefully people will finally realize that about college. Now, if you simply enjoy learning about art history or macroeconomics, by all means, go for it, but the excuse that such stuff helped you on the job has always been silly, which is why it should never have been subsidized. The govt subsidized both housing and education in recent decades, pushing both into worthless bubbles. The collapse of the education bubble is going to be massive.

      • I didn’t enroll in college because I thought it would make me a more skilled employee or offer a better work ethic. I left the work force and went to school because every job I was able to find without a degree had me working along side men nearing retirement age who were still living paycheck-to-paycheck with no retirement and social security failing. I went to school because without a degree, I worked 50-60 hours a week sweating and skipping lunch and I couldn’t afford to buy a car because the bus fare to get to and from work and the occasional need to see a doctor (as these jobs didn’t offer great insurance, or any at all) kept my bank accounts empty.

        But seriously, good luck with that car designed by the guy who didn’t go to college and take physics classes.

    • Golly. You mean a 19% pay cut should make me happy because at least I’m still making more than the stoners who were on the vo-tech bus in high school? What kind of test is that? Economies are supposed to grow, period. When they don’t, it’s time to look for new policies. Period.

      • human mathematics says:

        Economies are supposed to grow, period.

        We never understood why they grew in the first place.

        Take a look at the Angus Maddison charts. Fantastic growth hasn’t always been the story. Can’t be taken as a given.

    • Look at this way, you’re not getting a “19% pay cut,” you’re actually getting a real job with realistic pay, rather than being inflated by a land bubble and then losing that job altogether when the bubble collapses. I don’t think those stoners are making the median household income of $50k, unless it’s a two-earner household, in which case a college degree-holder is still out-earning two earners by herself.

      I agree that the economy should grow, but that isn’t a right given to you by god. Get out there and earn it by solving some tough problems, like how to monetize the internet or compiling medical decision software to replace doctors, and you will actually bring that growth and earn it. As for new policies, if you think that’s where growth comes from, we’re in more trouble than you think. The best the govt can do is get the fuck out of the way and stop chopping off growth everywhere it finds it.

      • you are forgetting a few things the price of tuition does not reflect the market and average pay after graduation. The costs for tuition each year continually rise and rise so the majority of students have to take larger and larger loans at higher and higher interest rates. The people who decided to not continue after high school or went to technical schools, yes will struggle to make what the average college grad does but they also dont have to worry about 100,000 plus in loans that most grads have to pay off, where as the non-grads have no debt to pay off.

        and just an FYI the unregulated growth of the housing market by the banks is what got us in this mess cutting more regulations would only make it worse.

    • human mathematics says:

      Ajay, how do you know that “tech and related information jobs” are the next growth area? Who is going to “get them going again”?

    • human math, isn’t it obvious that tech and information jobs is where the growth is going to be in the coming information economy? That’s pretty much the only option. As for who’s getting them going, we’re currently in the middle of a mobile boom, which has made Apple the largest company in the world. I think micropayments is the bottleneck for the information economy to really take off. Once you can monetize information efficiently, a whole host of services will take off. The key is monetizing the internet and whatever form that takes, whether micropayments or ads, the uncertainty about how to do so is what’s holding back another tech boom right now.

      • human mathematics says:

        Ajay, it is not obvious. My wife taught herself Rails but now works in a call center. Tech jobs are sexy enough to be in the news and that causes a perceptual bias IMHO.

      • human mathematics says:

        Take a look at http://dlr.sd.gov/ and search in Pennington & Meade counties. Here are some sample jobs:

        • Experienced Carpenter
        • Flight Paramedic
        • Child Care Advocate
        • Chemical Dependency Technician – PRN
        • Collector – Office Assistant
        • Ag Equipment Technician
        • Assistant Baker/Fryer/Cutter
        • State 911 Coordinator
        • Sheepherder
        • Service Technician / Diesel Mechanic
        • Waitstaff
        • Web Developer
        • Welder, Productoin
        • General Floor Worker
        • General Manager
        • Graphic Designer
        • Gutter Installer
        • Head Football Coach
        • Mortgage Coordinator
        • Mobile Home Laborer
        • Night Auditor Front Desk
        • Non-CDL Delivery Driver

        Sorting by salary, the top five jobs are:
        • Medical Officer (Primary Care)
        • Medical Officer (Psychiatry)
        • M/E Engineering Department Manager
        • Pharmacy (Resident)
        • Sales Representative, Insurance

        IT is on there but by no means dominant.

        Of course San Francisco dominates the Web, but its population is only 800k = .2% of the USA, and less than a permil of the world.

      • human math, OK, maybe it isn’t obvious to everyone, but it is to me. ;) Funny, I learnt Rails on my own too, but ditched it eventually. If it were obvious to everyone where the growth is going to be, we wouldn’t be in a recession now, as companies would be investing heavily in those areas and hiring people. Any recession is driven by the fact that we collectively don’t know where the opportunities are. However, there are always a few entrepreneurs who do know and they start companies that lead us out. I’ve laid out a diagnosis and my prediction for the way out above, we’ll just have to see if I’m proven right.

        You’re kidding me, right? You’re complaining that there aren’t enough tech jobs in South Dakota?! Why would you expect there to be a lot of tech jobs there in the first place? You’re right that there’s more options in SF, but frankly they’re pretty bankrupt of ideas over there. The next tech boom will be much more dispersed, so people will be working from everywhere then, but right now you still need to move to one of the hubs if you want work. That’s not necessarily SF, as there’s IT work in a lot of other cities, but you can’t expect to stay in SD and find much. All that changes with the next boom, but until then, you’re stuck with what we’ve got.

      • human mathematics says:

        Ajay, I am not complaining that there are few tech jobs in South Dakota. I am pointing out that the economy does not consist of tech jobs, as evidenced by what’s available in Greater Rapid City.

        Have a look at http://bls.gov/news.release/cewqtr.t01.htm for a list of the most populous counties and tell me if you think Catawba NC, Snohomish WA, Kalamazoo MI, McHenry IL, Collier FL, and Lubbock TX are hubs of IT hiring.

        To say that tech jobs comprise the bulk of the US economy or its growth-path is to confuse certain subsets of Boston and SF with the general whole.

      • Of course, “the economy does not consist of tech jobs,” who said that it did? Even if it did, SD or the other locales you list are no indication of what’s going on nationally. But there are many tech jobs in places like Austin or Chicago or other regional centers, particularly in the mobile market right now, with mobile apps booming. You are erecting a strawman “that tech jobs comprise the bulk of the US economy,” when nobody said that till you just did. What I said is that the tech/info boom that’s coming next will get the economy kick-started again as that is the growth path and it will be widely geographically dispersed this time. Boston and SF/Silly Valley are clueless about this and will fade as tech hubs, just as LA and NY will fade as media and finance hubs.

        But the fact that most won’t ever work in tech jobs is irrelevant to the fact that a tech boom will bring a lot more highly-paid tech jobs, whose money will collectively feed into the economy, as those workers buy services from all the non-tech professions you list. The big growth will actually be in information jobs, that will be enabled by micropayments. Once you can effectively monetize information services online, all manner of information activity, from podcasting to blogging to online apps, become very profitable and a lot more people will be employed providing information to those services than the relative handful of techies who build the software infrastructure.

      • human mathematics says:

        Ajay, I did misquote you: you’re talking about future growth, not present state. But the same message applies. The whole of Austin is 1/500 of the US population and most people, even there, have “normal” jobs like waitstaff, coach, general manager, office assistant, paramedic, house painter, and so on.

        I only listed a few counties from the top 300 counties by population, but together they comprise the lion’s share of US economic activity. Scroll through the list of average wages in these places and I think you will find it hard to imagine IT jobs accelerating in even half of those 300 counties.

        The growth in mobile is great for apps developers, but the number of purchases of mobile software can’t add up to a lot of jobs. Compare that trend to, for example, the greying of America. That trend will ineluctably increase quantity demanded of certain kinds of services — which have enough mass behind them to employ a significant fraction of 150mm people. Demand for mobile apps will produce a small number of better-paying jobs.

        Americans aren’t going to all start making websites and mobile games for each other to d*ck around on. Instead, they’ll continue taking out each other’s trash, serving meals to each other, sing obnoxious marketing jingles at Christmastime (with one’s hand hovering above the other’s wallet-pocket), and a select few will do “intellectual” labour.

      • human mathematics says:

        Ajay, to your multiplier argument. Let’s say 150,000 Americans are able to monetise their activities because of micropayments. (That’s a very generous figure since popularity of blogs, podcasts, etc is distributed as a power law.) Even if they each got an extra $30,000/year apiece (also unrealistically high) and spent it all right away, the US multiplier effect is estimated to be between .2 and 1.5. Divide that by 300,000,000 in the population and it is less than pennies per person. So it’s a no go even with optimistic numbers.

      • You didn’t just get me wrong in terms of future vs present: you still seem to think I’m saying that most people will be doing tech jobs, even though I just said tech jobs will obviously not be a majority. But there will be a much bigger boom in information jobs, say Yelpers who get paid for their reviews or podcast connoisseurs who’ll tell you which ones you will enjoy, once all that information can be efficiently monetized. You create whole new categories of work this way, that takes the jobless off the unemployment rolls, while allowing those doing the normal jobs you list to make more money trading with the newly employed. IT jobs will also greatly increase, as you still need techies to build that software infrastructure, particularly in many of the 300 counties you list. There are many talented software developers in all those places, but because they don’t live in a regional hub, they’re often excluded today. Well, telecommuting is about to really take off too- we already see it being widely used in open source and a few forward-looking tech companies- so they will be able to work from anywhere with an internet connection, which includes much of the US today.

        The mobile market just powered Apple to become the largest corporation in the world, not to mention the thousands of developers and other big mobile firms benefiting. I think you underestimate the torrid growth in mobile right now. As for the “greying of America,” considering many boomers are hanging around the workplace and are reluctant to retire right now, that’s not taking off anytime soon. That transition will be big, but not for a decade or two. Of course Americans aren’t going to make websites and games to dick around on, they’ll create apps to save each other money or sites like yelp.com to recommend the best restaurants to each other. As for “taking out each other’s trash, serving meals to each other,” robots are about to do all that physical labor in a couple decades, so humans won’t be doing that in the medium-term either. Not sure what “‘intellectual’ labor” you think only the “select few” can do, but the great mass of people already post a lot of information online: they’ll just start getting paid for it soon. :)

        150k new information workers? Don’t make me laugh, that’s like saying only 150k were involved in the ’90s tech boom. :) It’s going to be much bigger than that, hence “boom.” Blogs and podcasts are simply the most public examples that people are already familiar with, I listed some more examples above and entirely new categories will be created. Even with podcasts, one Brian Williams or Scott Pelley making $10 million/year will be replaced by hundreds of online news podcasters making $50k/year, so a big portion of the change will be replacing a few current “stars” with a giant market of niches. And power laws likely don’t apply as much to the online market as you think: that’s more a vestigial remainder of the fact that we’re still stuck with antiquities like advertising and don’t always have proper filtering software like yelp or newegg to replace it yet, ie we haven’t made the online transition fully yet. I consider buying niche products from brands that I’ve never heard of newegg, companies with no marketing budget, because I can use other customers’ reviews to weed out the crap. $30k/year is hardly unrealistic, the top podcaster currently pulls in a couple million/year already. Only a handful will make that much, but there are already many making a good living online. As for you multiplier numbers, those are based on what? This isn’t some Keynesian “stimulus” spend, ie digging ditches and covering them up again, this is real innovation that opens up whole new markets and entirely new market activity.

        The fundamental issue is that the PC and the internet allow wholly new ways of doing business, completely new avenues for growth that are choked off by our antiquated pre-internet payments system. Once we have a real online payments system, ie micropayments, all those online transactions can finally clear in the online market and a whole host of activity that has been uneconomic so far starts to take off, because it can finally be paid for. That will have wide repercussions across the entire economy, because while the information sector of the overall economy is currently relatively small, it has incredible disproportionate impact because it is the meta-economy, ie I make decisions affecting much larger purchases based on information I pay nothing for online and soon will pay a little for. This is about to set off a giant wave of change across the entire economy, regardless of the size of the information sector growth itself, which will be sizable in its own right.

      • human mathematics says:

        Ajay, the New York Times is having a hard time getting people to pay for content. Currently they’re asking $1 after 20 free articles. Are you telling me that EconTalk (2k-10k listeners) is going to be able to make more?

        Keep in mind that in order for this putative boom to make a dent in jobs numbers, it needs to be on the order of 10e−2 (unemployed %) × 10e6 (working pop) × 10e5 (American salary). In other words O($1,000,000,000) needs to come from blogs, podcasts, Yelp reviews, whatever. What needs to be a billions-large industry is currently orders of magnitude beneath that.

        As for the idea that Famous Guy’s $10mm will spread out a hundred ways — we have heard this claim since The Long Tail (2004?) and rather the opposite has occurred.

      • human math, the NYT is incompetent, so what? They originally tried charging for the most worthless part of their entire marginal publication, the op-eds, which are a joke in almost any newspaper, and surprise, surprise, people didn’t pay. Now they’re trying to finally charge for the news itself, which they should have been doing all along, and doing decently with their new model, but you can’t save a sinking ship so they will be bankrupt soon enough. Of course Econtalk won’t make more, because it is fundamentally a smaller niche, but it would make much more per listener, that’s for sure. :) In any case, Econtalk is put out by a non-profit foundation, so they may never leave that free model. However, the top podcaster online pulled in $1 million just in advertising revenue last year, not counting sizable ancillary revenue for live performances and merchandise. He likely doubled that with the bigger name sponsors he pulled in this year, employing more than a dozen formerly unemployed friends in the process.

        Your magnitudes are way off: it’s 10e-1 unemployed, 10e8 working population, and 5 X 10e4 for average salary, which comes out to $500 billion, much bigger than your relatively paltry $1 billion. ;) And that’s certainly possible, as that only works out to about 3% of GDP. Hell, we could easily cut that amount out of the bloated federal govt budget and have that growth right now. :D One big aspect you’re missing is that I mentioned that online apps will really take off when micropayments are used to monetize them. Software is already a big business, it will get much bigger when it has a better online payment model. :) Of course entertainment like blogs or podcasts will always be a small part of the vast sea of information jobs that will be created, many which do not even exist today, but nobody ever said we’d all be making money as bloggers. That was just an example of a job that already exists today and is widely known that will greatly expand once it can be monetized. In sum, $500 billion is nothing compared to the growth that is coming, it will easily dwarf that, partially because it will also destroy many existing markets. For example, there are trillions in education and medicine right now and both will be destroyed by online information markets in the coming years, whether online learning or diagnostic decision software.

        As for your long tail argument, yes and no, it is definitely happening but a few of the rich have also been getting richer. For example, Katie Couric’s ridiculous $15 million/year contract at the CBS evening news was bigger than any that came before, but she was fired and her replacement pulls in about a third of that. When CBS is destroyed by online news, which will happen within 10-15 years, nobody will be making even that much. So the way to interpret Couric’s contract and others you might have in mind is as the last wave of the ridiculous pre-internet era, right before that entire milieu is finally killed off by the internet. You will never see it again and good riddance. :) Of course, there will always be a highly talented few that make millions online, hence the podcaster I linked above, but you will have to be truly talented to make that money online, not just some hack who benefits from limited distribution, like most who now make the big money on TV or radio.

      • human mathematics says:

        Ajay, I’ve been thinking about why what I see as obviously false, you see as obviously true. What unstated beliefs are keeping us from agreeing? Here’s what I’ve come up with:

        (1) I can agree with you that micropayments / nanopayments technology is potentially a big deal. Like the invention of a new digging technology, it has the _potential_ to change how canals are dug.

        (2) But, that’s not a complete argument. You can dig a trench, but if it doesn’t actually divert the river, you won’t get any water to where you’re trying to get it to go to.

        Back to (2) in a sec.

        I think your trashing of the NYT has to be a joke. The NYT is well-capitalised, has a household brand name, and produces world-class content. The reason they can’t make money is that people refuse to pay for reading material online. That could be a mutable norm, or it could be immutable economic logic. As long as any one of Slate, The Economist, WaPo, BBC, Guardian, FT, WSJ, NYT, and on and on, are offering good enough substitutes for free, paywalls will just drive the lion’s share of users to the alternatives.

        Back to the river analogy. There is a saying among web geeks that “Readers view ads / paywalls / etc as errors in the system, and route around them.” Just like your trench won’t draw water if the river cuts a new path, your attempts to charge for blogs, podcasts, SaaS, whatever, won’t draw money if customers can simply go elsewhere for a free “good enough” alternative.

        So what I think needs to happen for micropayments to change the web and add jobs, is that internet users need to be shackled and confined so that their only option is to pay; then the horse might stop bucking and accept $.00003 per pageview or whatever it would be. I don’t see that happening anytime soon, if ever.

      • human mathematics says:

        By the way, your statement that the US government wastes 3% of GDP is a common misconception. The US government wastes less than a permil of incoming tax revenue.

      • Let me begin by saying that my micropayments argument obviously isn’t “obvious:” if it were, somebody would have done it already. ;) I’m making a prediction based on past evidence, one I’m fairly certain will come true because of the preponderance of evidence and theory for it. It is the NYT that is a joke, which is why they had to borrow $250 million a couple years ago from the world’s richest man at way above-market rates. They have now paid that loan back this summer, after selling off some assets to raise cash, hardly the moves of a “well-capitalised” brand that the markets trust. The reason they couldn’t make money is that, until recently, they idiotically refused to charge for it online. The Economist and WSJ are not free, they run primarily subscription services with a sampling of free content, which is why they are doing very well financially and are the standards that everyone else is now trying to copy. I don’t read the rest of the rags you list, but what they do is irrelevant, as they are all dying. You do repeat the common “web geek” argument, that paid cannot compete with free, an argument so stupid that future generations will look back on it in wonder some day.

        The paid models that currently dominate haven’t always done well, because they force you to enter your payment details for each transaction or pay up front for a year’s subscription, but a micropayments system doesn’t have those problems. As for the notion that free will always provide a viable alternative, I don’t see it putting the WSJ or Economist out of business, both of which are thriving. To the extent free even is able to talked about in the same breath, it’s because dumb venture capitalists fund content and link farms like HuffPo, which leech off others and pay their writers nothing. If you think real content creators are quaking at such crap sites like HuffPo, you are deeply ignorant of this market. Extreme measures like shackling or confining are not necessary when your “competition” is crap like HuffPo, you just need to build a micropayments system that makes payment easy for real content creators. Haha, “the US government wastes 3% of GDP is a common misconception. The US government wastes less than a permil of incoming tax revenue?” That’s a good one, keep ‘em coming, I need the laughs. XD The US govt wastes far more than 3%, I simply said we could cut 3% easily because that would be about $500 billion, the amount we were talking about.

      • human mathematics says:

        Ajay, micropayments are obvious. Many programmers have built webapps that are supposed to “make micropayments a reality”.

        Why is the “web geek” argument stupid? It’s just econ 101: the definition of a substitute.

        Regardless of the HuffPo being “crap”, it sold for $300M. We’re not talking about quality here, we’re talking about money, jobs, profits, etc. Whatever they’re doing, is an example of how to make money on the internet.

        Ajay, spending you disagree with is not the same as government waste. Waste is an inefficient means of doing something which could have been done more efficiently. Thus the Iraq War, while a costly discretionary budgetary choice, was not wasteful.

        You may disagree that that money should have been spent, just as you may disagree with the level of social security, medicare, or medicaid spending. Actual waste accounts for ~0.1% of total US government spending.

      • Hmm, weird how comments now have a “Reply” link up to a certain level of nesting and no further, guess it’s better than the many levels of nesting and ridiculous indentation you see on some blogs.

        human math, you are right that micropayments are obvious for some niches, for example, I believe they’ve been in use in South Korean gaming sites for many years. But those are simple internal micropayments systems, while I’m talking about a general micropayments system that actually works across multiple sites and technologies, which is the real advancement. Unfortunately, everybody so far has either been too dumb to take that next step or horribly botched their attempt. I tried to use Bitpass years ago and it was ridiculous how many times you had to click just to make a purchase: those are the kinds of UI issues that have killed the few cross-site attempts.

        Your web geek argument is dumb because ads make very little money compared to paid subscriptions, which is why all the “free” sites, whether Yahoo or HuffPo or whatever, free ride off paid subscribers of the WSJ, NYT, and other pre-existing papers. If those paid publications, who usually make less than 10% of their revenue from online ads, had to rely only on online ad revenue all of a sudden, they’d all go bust and so would all the “free” sites that repurpose their content. There is not a single online source of general-purpose news that relies primarily on online ads and that has any kind of scale. That fact tells you what happens when all the paid sites they leech off of go bust: the leeches die also.

        If you think HuffPo selling to the dumbos at AOL is any indication of money or success, I’ve got a bridge to sell you. Those morons at AOL bought Bebo for almost three times that then had to resell it a couple years later for almost nothing. If you don’t know that whole enterprise is going bust, only a matter of when, you’re not equipped to comment on these issues.

        The Iraq war is a good example, you really think it was not wasteful? I bet you could find bloated budgets and many examples of how it was riddled with waste, much of it has been covered in the news already. So whether you agree with that war or not, it is yet another example of how all govt is shot through with waste. The fact that I even have to point this out suggests that you’re not paying attention to this issue at all.

      • human mathematics says:

        Ajay, is your argument that nanopayments would make for a better economy? Because then I would be inclined to agree with you.

        Willet is the latest in a stream of attempts at general micropayments systems. I think PayPal or Amazon have micropayments services now which will really determine whether the idea is viable or not. It’s harder to swallow the idea that the previous micropayments services “horribly botched” something than that it’s either difficult to get traction, or just a logical-sounding idea that doesn’t work in practice.

        I think we are judging HuffPo on different grounds. I’m not saying that it does societal good or something. It’s just an effective business. Arianna Huffington won by doing exactly what she did. From an economic perspective, sure, you could argue that HuffPo doesn’t make the world a better place. From a business perspective, it’s better when you have to do less work and still get paid $300M. Working really hard, creating great things, and not getting paid is not viable business.

        Obviously subscriptions make more money per view _if you can convince people to pay_. But that’s circumventing rather than addressing my earlier point.

        _________

        I’m not an expert on the Iraq War, but reading news articles crying out about putative waste doesn’t make you an expert on it either.

      • Not sure what distinction you are making between nano and micropayments, but yes, it will revolutionize the economy. Never heard of Willet and I don’t see any website for it either, only some site that claims to be oriented towards “social browsing.” Any time I see the word “social,” I know it’s a dumb idea. :) Paypal and Amazon offer something that they call “micropayments” but really aren’t for various reasons, in Paypal’s case because they have a lower limit of 5-10 cents, which obviously disqualifies it as micropayments. Yes, if you have no capacity to reason or examine evidence, your alternate conclusions for why micropayments haven’t worked might seem equally or even more plausible, but I’ve looked at the evidence and the only reason micropayments haven’t succeeded is that those few attempting it were basically incompetent. One day when micropayments are dominant, you will finally look back and realize I’m right. :)

        Not sure what your rambling exposition about HuffPo has to do with anything. You claimed initially that their $300 million exit showed that it was “an example of how to make money on the internet.” I pointed out that she only got that exit because AOL is overstuffed with morons, not because HuffPo was a good or “effective business,” and the combined entity will go bust. I’m more than happy to wait and see who’s proven right on that one. :D

        Since online ads still bring in less than 10% of news revenue, it doesn’t matter that subscriptions also make a lot more per view: what matters is that paid models make a lot more money, period. Not sure what point you think I’m circumventing, as my point that ads still make no money perfectly addresses why your web geek argument is idiotic, because those “free” sites make no money and so can’t last.

        You don’t need to be an expert on the Iraq war or govt to be aware of the vast evidence of massive govt waste. The fact that I have to point out this well-known fact, that is backed up by a massive amount of literature, marks you as deeply ignorant of this topic, and even worse highly deluded that you persist in your crazy claim of minimal waste.

      • human mathematics says:

        Ajay, it appears Dr. Mandel has attempted an analysis of how many jobs the app economy has created so far: http://t.co/y2LaeyAp

        I think it’s inappropriate of you to refer to what I wrote as “rambling” when all of your responses are longer than mine.

        You also use more pejorative language. Not constructive.

        My point about HuffPo is this: you and I can speculate about what’s a good business and what isn’t. But the founders of that business made a lot of money, that’s a fact. Conversely, micropayments have been “on the cusp” for a decade and no returns have yet materialised. I will be happy to see you proven right, but what’s the evidence that this revolution will ever actually come to pass?

        http://www.getwillet.com I believe is it. Or just check ycombinator news history for other micropayments attempts.

        I read in Bloomberg about “Stripe” getting $100mm in funding. We can cross our fingers and hope that’s the beginning of nano / micropayments.

    • I am calling bull**** on the $73,000 dollar number. These numbers are ridiculously high.

    • Guessing that you aren’t college educated.

      • Really dependent on where you live. My wife, w/ an MBA is just hitting 40K (banking industry, not a good time), and I only recently got to 50K w/ a BS and 5 years experience. Maine really isn’t a hotbed of employment opportunities. I imagine living in/around Boston would inflate the numbers a bit, but at a cost of living increase.

    • You’re dumb. If you pay 30-100k for higher education. You are supposed to make more.

    • Jared, It is well known that college is a big waste of time, but unfortunately many employers use it to weed out resumes. So it is true that you had to get that worthless college pass to get into better jobs, but that’s only because many employers still hire very stupidly. Like many other things these days, that will change in the coming years. As for cars designed by non-college graduates, I have only owned Honda in my life, which was started by Soichiro Honda, who never had a formal education, let alone a college degree. If you think you need to go to college to learn physics, you must be deeply ignorant of all the other options available today.

      mike, if you read up a couple comments, you’ll see that I think college is a big waste of time, but the fact remains that as long as employers stupidly use it as a filter to throw out resumes, those without college degrees are shut out of certain jobs, at least initially. And just an FYI, the highly regulated govt-sponsored enterprises of Fannie and Freddie got us into this mess, along with dumb politicians like Barney Frank who pushed them to lend more, which some very regulated banks unfortunately abetted. The difference between the market and govt is that the dumb banks largely failed, while dumb politicians like Barney get re-elected and get handed even more regulatory power. Dumb decisions are punished in the market, but they’re often rewarded in govt: that’s why more regulated Europe is routinely poorer than even our poorest US states, like Alabama. Cutting all these regulations is the only way out, but you have to actually know what you’re talking about to see that.

      Holler, no, you’re dumb. You’re not supposed to make shit. You’re sold “skills” by the colleges and you’re supposed to use that to earn your money. If you can’t hack it, perhaps you should look in the mirror or reconsider if that “education” was worth it in the first place.

  2. Michael,

    First, no one has given me a good explanation yet of why young American college grads should have been hit so hard.

    I have given you this answer many times. You just don’t accept it.

    Are new college grads lower quality than their predecessors?

    YES.

    Rather, ‘college grads’ have become a diluted group, since more and more grads are just studying fluffy fields with few career prospects. Your analysis should focus on tradtional, career-oriented majors like Engineering or Accounting, with mention of how these are a shrinking percentage of degrees awarded.

    A mere ‘college grads’ metric will look bad due to the number of fluff majors being pursued.

    Secondly, female salaries are being artificially boosted by the public sector, and fierce feminist lobbying to steer stimulus funds and other government money away from male-oriented jobs and towards female-oriented ones. Never mind which is needed in the economy at a particular time. See Christina Hoff Somers’ article in the Weekly Standard :

    http://www.weeklystandard.com/Content/Public/Articles/000/000/016/659dkrod.asp?pg=1

    So this answer has been provided to you many times, Michael.

    • I’ve gone through this at least twice. Went through Military Tech schools for Electronic Tech and worked at Tektronix afterwards when “Electronic Tech” was a “future” that all the schools were pushing. Saw the introduction of automated (cheap Computers) testing that drove >50% of those jobs away until off-shoring dumped the rest. Saw that coming and went to Enginnering school during the day and worked at night. Graduated and at my first job at Boeing saw a large part of the Engineering jobs moved to Japan for what was then the 777 program which was eventually cancelled (to be revived a few years later). The off-shoring of Engineering jobs continued. Worked ~ 8 years at a GaAs Semiconductor company until the Telecom crash of 2001 and couldn’t find Engineering jobs for the next 8 years. Not in this area and couldn’t move because of family health issues so I took a Technician job after a few years. Finally got an Engineering job again to have another crash ~ 1 year later. This time gone back to school for a another Bachelors in Computer Science. Just in time for them to be talking about off-shoring the SysAdmin jobs in Cloud Computing.

      Takeaway? Just keep drinking the cool-aid that that it’s all “those kids nowadays”. And the fluffiness of the subjects. Keep drinking and maybe you’ll be dead before it gets too bad to keep the blinders on.

      Robert

      • Hi Robert,

        I think if you had been able to move to San Jose you could have found an engineering job. The Oregon semiconductor market is small. Same with Dallas, Raleigh and to some extent SoCal. In Oregon, you have Intel, Tektronix, TriQuint and…?

        -Jay

      • Wasn’t talking about “me”. Yes, probably could have if I had moved and now that my Mother has died instead of just being sick I can. Was talking about the contraction of jobs going on in this country that has been going on for a long time. And not from “kids just wanting to study fluff”.

        Robert

  3. mike shupp says:

    Obviously we’ve an excess of young people with educational credentials beyond the needs of the existing labor market, seeking greater wages than businessmen think they merit.

    It’s traditional to argue that well educated workers — i.e., over educated workers — are a desirable thing. In their personal lives, they’re better, happier people who absorb the cultural and intellectual issues of the day; they’re more apt to be attentive and thoughtful voters; they’ll do a better job of managing their retirement and healthcare spending, etc. As employees, the better educated are more easily trained; they’re capable of performing well when promoted; they suggest useful innovations; they do a better job of representing the company when they deal with suppliers and customers.

    But this excellence is expensive in normal times. Employers don’t really care if their employees can read novels in foreign languages, can discuss labor economics with a church pastor, or fill in in a pinch for an ailing shop foreman. It’s enough that employees learn their jobs and perform them without major flaws. Paying for greater capability is a huge annoying pain, which must be borne when labor is scarce. Fortunately, in recessions, with an abundence of unemployed labor, would-be employees moderate themselves; their “wage demands” melt down to “wage requests” and perhaps even further to “wage ideas.”

    It looks as if employers (some employers, anyhow) will find themselves in this happy situation for the next five, possibly even the next ten years, which will let businessmen finally teach their un-unionized laborers just how little they are worth in the modern globalized economy; it will also serve to teach the overschooled masses that academic credentials are a foolish acquisition for all but a handful of workers. The woods are full today of managers with nothing but high school degrees who are exceptionally eager to make this last point — in fact, they’re always full.

    I don’t want to tell you that a substantial fraction of the American workforce is going to be pushed into slavery and feudalism. That’d violate the Constitiution, after all, and in America, we all love our Constitution. Let’s settle for saying that businessmen are not going to be pulling millions of lower class workers into the middle class for a long time to come, and that neither political party is going to lift a finger in the worker’s behalf.

  4. mike, I was with you for a couple paragraphs, then I realized you were being sarcastic. ;) You seem to think employers are plugging along without a care, whereas they are being buffeted by technology and globalization as much as anyone else. Yahoo, once a dot.com darling, has been floundering for years. Borders, who all the local bookstores were once scared of, has in turn been put out of business by Amazon. Microsoft, the big bad monopolist that the govt went after in the ’90s, has been passed in market value by IBM, the first time IBM has been worth more in 15 years. Of course, when unemployment is up, that gives the upper hand to employers, but companies are as susceptible to getting axed as anyone else.

  5. ” Are new college grads lower quality than their predecessors? ”

    At the elite schools, kids are putting in time studying like never before. The competition is much tougher than it has been in the past. The top students from other countries, especially Asian countries, are providing a lot more competition.

    Steve

  6. mike shupp says:

    Ajay, let me get a microscope out, tape down the performing flea and provide the right sized fiddle, and we’ll all be able to listen to violin music at an appropriate volume. I concede times are tough for businessmen, and they don’t want to waste their resources on overskilled employees and grandiose government programs … but times are ALWAYS tough for businessmen. Realistically, in any society at any time, who precisely is going to be tapped (or “bled” or “taxed” or “coerced”) to pay for social goals — whether “high civilization” or “welfare” or “essential defense infastructure” — if not the institutions and individuals who expand resources (or “wealth” or “riches” or “surplus ” or “unfair shares”)? Businessmen, in other words. Do cathedrals and choirmasters and artists and political science instructors and rock musicians and army generals and theoretical physicists just come falling out of the heavens? or do they all have to be paid for somehow?

    Of course I’m being sarcastic again. Let’s try this: There’s a conflict between the liberal ideas of widespread affluence and social splendor and businessmen’s notions of thrift, husbandry of resources, and maximizing return on investments. This is inevitable. If we don’t see it so blatantly in earlier cultures, it’s partially because businessmen have been coerced so thoroughly by state-sanctioned robbers (“the nobility”, “the church”, “the Greater Manchester Transit Authority”, “the county planning office”, “the New Mexico National Guard”, etc.); partially because businessmen themselves subscribe to various social objectives (religion, public schools, law enforcement, etc).

    But now we’ve reached a point where that conflict IS obvious, it’s one of the basic issues at the center of national politics, and people are taking sides. Should we increase the wealth of “the poor”, not just absolutely but in relative terms, at the expense of “the wealthy”– yes or no? Should we encourage 40% or more of America’s children to enter and (ideally) graduate from college? Or is 10% more than enough? Is it actually worthwhile to even try to educate all of America’s children, or should we write off say 5% as too dumb or too Spanish-speaking? Or 50%? What fraction of the nation’s wealth should we spend on improving the health and material comfort of the unemployed and thus unproductive elderly? And so on.

    Look about. Perhaps the Good Times will return quickly and the tension will diminish; perhaps wars and economic misfortunes will concentrate all our attentions in some different direction; perhaps there will come A Sign From God which will enlighten all of us. But if not … I think there’s a storm brewing. I won’t insist this will come to gunfire and (much) blood in the streets. I think instead the upshot is that we are going to become a very different country, with large numbers of perpetually unhappily liberals and conservatives, both convinced that for utterly insane reasons the USA turned aside from the path of sense and justice. But eventually they’ll all be dead, the elementary school teachers will learn not to tell their students that “Anybody in America can grow up to become President”, and Homeland Security will arrest and waterboard the dissidents who paint such slogans on walls and freeway overpasses. Life will be good.

    Enjoy the violin music.

  7. Mike, not sure what to make of your rambling and often seemingly contradictory response. Why would the govt pay for cathedrals and choirmasters? Why should it pay for artists or instructors or physicists or generals? Rock musicians? Please, they can support themselves. Yes, there is a conflict taking place, and it’s not about the poor or children going to college, both of which are small expenses. It’s about whether we cut down the govt that robs 35% of our economy every year, which isn’t enough for its gaping maw so it borrows even more up to World War II levels of debt, all in our name. Much of that is pure waste, whether useless departments like Housing and Education or rampant Medicare fraud, all while corrupting and degrading the markets it influences most, medicine and education. This is an opportunity to retrench and finally take a giant hack at cutting govt back down to size; the alternative is to take another large step in the direction of Greece or Italy or any other insolvent socialist democracy, ie corruption and decline. Given how the recent debt ceiling debate went, I suspect what will pass is the latter as a nation becomes corrupt long before its institutions reflect that and a very large contingent in this country has become fat and satisfied.

  8. Steve Jobs’ untimely passing, and the fact that has obviously attained near tech saint status, inspires comment on the question of why so many young are unemployed. I believe that the proportion of college students choosing engineering is something pitifully small like 4%. Yet, at the same time, many people of all ages admire Steve Jobs, whose technical astuteness clearly underlies his success. For the older techy, I fear that the admiration stems somewhat from personal bitterness at seeing prospects dwindle. There is so much conflicting data, some of it seemingly designed to help avoid hiring Americans, some of it designed to discourage kids and parents from technical careers, and some fashioned so as to make us believe there is a shortage of math and science minds, so that I find it impossible to conclude anything. Business desires prevail in so many arenas that it is hard to believe that they have overseen a whole generation of people with educations that they don’t want.

    That said, I suspect that the real reason for age group unemployment concentration is due to age clustering. Again, I cannot find the specific data, but young people are part of a group as large as the baby boomers, hitting the workforce at the same time that potential baby boomer retirees are being battered by plunging home values, repeated market disappointments, unemployment threats of their own, and even threats to Social Security and Medicare and rare and meager pensions, so many among them who have jobs are not about to yield them if given the choice.

    In other words, I’m suspecting an overwhelming number of young job seekers compared to other post-baby-boom generations, combined with a huge number of older employees desperately clinging to their jobs, and few compelling skills offered by the youngsters. I do not believe that all employers are eager to be seen throwing older employees to the wolves. Surely the sheer mass of young folks will eventually create undeniable demand, just as the baby boom did, but not yet, or maybe never, if nobody can get a grip on this chicken/egg, jobs/demand problem.

  9. LAO, Steve Jobs never got a college degree, nor studied engineering for the brief time he was there. As for his “techical astuteness,” my limited understanding is that he was never that technical- for example, I don’t think he ever wrote any code, unlike Bill Gates- though he obviously understood some aspects. That is the real lesson of Steve Jobs, someone who never got an engineering “education,” or a degree of any kind, yet was able to outdo all the executives who did. As for age “clustering,” I don’t think any subsequent generation was ever as big as the baby boom generation, so that’s likely not a contributing factor.

    The real issue is that, just like in the ’20s and ’30s, we have radical new technology that is obsoleting a bunch of old jobs- back then the new tech was electricity and mechanization, today it’s the internet and software- and globalization is taking off once again. There was a trade boom back then, we’re seeing another one today. The bottleneck is that we haven’t figured out yet how to take full advantage of this new tech to create entirely new types of services and work, at least fast enough to keep up with the old jobs being obsoleted. That’s the cause of this recession and no doubt it has been made worse by govt meddling, just like it was back then. We’ll figure it out, but what emerges will be radically different from what we have today, and it certainly won’t consist of much manufacturing.

    Mike, one of my previous comments never posted, likely because it had a couple links. Perhaps you can extricate it from the spamtrap.

    • Ajay, Any number of sources will tell you that there are about 80 million “millennials” and about 80 million baby boomers.

    • LAO, some do estimate the Gen-Y group to be as big as the boomers, but I had generally read that the “echo boomers,” ie the millennials, weren’t as big a group. Regardless, even if there are many more Gen-Y people entering the workforce than Gen-X, I suspect that’s not nearly as important as the forces of tech and globalization that I listed. Those forces have definitely caused more unemployment among young millenials than boomers, but I don’t think the number of millennials is the main issue.

  10. mike shupp says:

    First of all, back in the dawn of history, like 1995 or so, the preface of the Occupational Outlook Handbook was already mumbling about a coming overstock of college graduates. Current trends were that by 2005, there would be more collge grads in the work force than jobs requiring college. And that was without thought of the Clinton era defense build down, the Dot-Com Bust, and the Great Recession. So partially, times are bad for new college grads because they’re excess, and also, times are bad.

    In addition, it seems relevent that in a time when employers are anxious to save on labor costs, new out-of-college graduates are unattractive hirees. They wish above-average wages relative to comparably skilled workers, for one thing, thinking their education has earned them a premium. But beginning employees in white collar fields are notoriously unproductive — a rule of thumb is that engineers right out of college don’t earn their pay until they have 6 to 12 months of job experience. New employees require oversight from higher paid, more experienced workers who generally have thier own work to perform. And new employees have low retention rates — another rule of thumb is that one beginning engineer in three will be at another firm or even out of engineering entirely within a year of his first hiring.

    So the new college grads are getting ignored because companies don’t want them right now and don’t see a near term need for them. Also, in a lot of white collar areas, interns are a more than satisfactory substitute for new grads. Interns get low — or better yet, NO — pay. They’re as eager to learn as the new grads, just as capable of picking up new skills and becoming socialized to company procedures and culture, they’re generally more respectful toward managers and the people training them, they accept their short-term hiring status. Some decades back, a handful of people in work-study programs would get 6-8 months of industry experience before their college graduation; its now common to find interns with 2-3 years of poorly paid or unpaid experience while picking up the rudiments of their future careers.

    What sucks is that when or if employers get back to hiring, a college grad four years out of school with no applicable experience is not going to look more attractive than a college grad one year out of school. An awful lot of people who once expected white collar jobs with middle class status as a natural occurance are going to be disappointed — probably until the ends of their lives. Not enough people to alter the course of American politics, of course, but enough to make encounters with bitter unhappy people a commonplace.

  11. I missed this thread due to other priorities. Overall, I’m mostly with mike shupp. Adding to this –

    “So the new college grads are getting ignored because companies don’t want them right now and don’t see a near term need for them.”

    – companies in established fields, especially larger companies which can absorb incremental frictional costs into a larger fixed cost/revenue base, have been having the option of hiring at-least-somewhat qualified workers in cheaper offshore locations. In some industry sectors this has gone as far as most entry level hiring being moved offshore for a decade or so. Now as domestic workforces are seriously getting into the the over-40 and even over-50 segment, employers may for once find it *truly* difficult to backfill younger domestic talent with a few years sector experience under their belt, simply because the aggregate industry hasn’t hired much locally.

  12. Is there increased competition with young college grads around the world? Are new college grads lower quality than their predecessors? Has information technology reduced the need for young grads? I really would like to know.

    My mid sized company is not hiring college grads for open entry level positions because we can hire an experienced worker for the position at the same pay as a young college grad. There is no need to invest in training the experienced worker. I am in my 20’s and advocate for young grads because I observe that they are often motivated and fast learning employees. Not everyone sees it that way. Many of the hiring managers are baby boomers and lean toward experience over motivation and intelligence as the key factor in hiring decisions.

    • It depends on what your company’s business is, and for how much experience counts, in terms of making an effective and efficient contribution. In general, fresh grads are hired a lot in (1) “up or out” companies that have high churn, and where the ramp up time to a reasonable contribution level is rather short (or where workers are worked so hard that they burn out quickly and have to be replaced), and (2) in early growth fields (where there is no substantial experience base and everybody is still learning, but there is a certain base skill threshold).

      Examples for (1) are consultancies in non-niche fields, sales/marketing, journalism/media/entertainment, and other heavily “soft skill” fields. The general idea is that skill and sustained performance is hard to evaluate/predict up front, so you hire a lot of “potentials”, give them some time to see who works out, and push out the rest with stack ranking etc. It helps that a lot of people want to go into those fields due to the relatively large hiring and often generalist skill level asked.

      Examples for (2) include, but are not limited to, the whole Web 2.0 and Mobile Apps segment, and a decade ago dotcom. IT/software in general features a high churn of “paradigms” every few years or maybe once per decade, providing a lot of “fresh latest skills” opportunity for career upstarts.

  13. Frank in midtown says:

    yo AD, I’m with you on the motivation/energy thing, but you seem to be displaying some ageism with the “intelligence” factor. Do you have some proof that recent college grad’s are more intelligent than prior cohorts?

    • I’m not reading the “intelligence” remark as being directed against earlier cohorts, more in the way of “raw intelligence”, but I’m of course speculating there.

      As for the motivation/energy thing, in fields where experience counts, N years of experience more than compensate for the (alleged?) loss in physical stamina and naive/uninformed optimism (which I think the term “motivation” often designates in such context). Aside from that, as an older colleague of mine remarked some time ago when debating some job related matter, “look, I’m 50+ and I’ve seen a lot of crap”. In my opinion, a lot of the alleged loss of motivation/energy comes down to having seen “a lot of crap”, and the associated ability to recognize crap and bullshit from a distance. And the people who are the first in the office early in the morning where I work are predominantly the oldies – so much for energy.

  14. Frank, I think you’re reading your own bias into what he said. I think all he’s saying is that even if the younger candidate is more intelligent and motivated, his managers consistently pick the older, more experienced candidate. Obviously every age cohort will have roughly the same distribution of intelligent candidates, so you are actually being ageist if you select against the more intelligent, younger candidate, simply because he hasn’t lived long enough to amass as much experience. From what I’ve seen this is a huge failing in the way most companies hire, particularly now that we’re entering a primarily information economy where the ability to reason is paramount, which is why I think most established enterprises will fail in the coming years, put out of business by a wave of internet upstarts that don’t hire in such a dumb way. I will note though that recent internet firms like Google that place a large emphasis on college GPAs or PhDs are still hiring stupidly, just differently stupid. ;) They will also be put out of business by the next wave, that actually rethinks the hiring process for the information age, rather than simply tinkering with antiquated industrial-era practices.

  15. Great question. In Seattle, the difference between men and women starts at high school completion rates, college participation and college completion. At each stage the gap grows bigger and obviously it’s cumulative. Why overall are wage dropping so fast? Excellent question.

  16. Hi Mike,

    I’m 25 and employed full-time, and I’d like to add some observations.

    1) Degree inflation is real, and it’s not just the fault of the students who dare to go to college. I’ve done (temp) jobs that a trained monkey could have performed where a Bachelor’s degree was listed as a requirement.

    2) I’ve never voted in a public election. It’s not because I don’t care about the issues. It’s because politics is aggressively dumb. Has it always been this bad? Emotions win elections, not sound policy. Plus, I hate both major parties equally. Why do I have to choose the lesser of two evils? That’s still choosing evil. I could go on and on about election reform, but the bottom line is I have no faith in government and aspire only to keep out of its notice.

    3) We’re moving toward a fully globalized world economy, and honestly I can’t begrudge the people of Bangladesh their manufacturing jobs. In the future, there will be two kinds of jobs that are safe. First, there are jobs that you need a real person for in any community of any size. These run the spectrum of pay and prestige from pizza delivery guy to ER doctor. Second, there are the jobs where you are so uniquely qualified that people would want you anywhere in the world. Examples are highly specialized scientist, artist/musician, and patent-holding engineer. We’ll be telling our kids to train for jobs in one of these two categories.

  17. I think a large part of it has to do with the amount of people graduating with degrees has steadily been increasing over time. Basic supply and demand dictates a lower price when supply is increasing.

    Solutions could include increasing demand from the employeer side or placing less of an emphasis on getting a degree as mandatory to be a productive citizen.

    The situation seems almost “prisoner’s dilemmaesque”. Everyone may actually be better off if we cooperatively forgo university. But if one person attends school while the other does not, the person who goes to school is made better off. Therefore both parties end going to university and end up just as well off (if not worse) then if no one goes to university.

  18. How can you look at these data and not also ask: what the hell is up with the huge gender gap in earnings?!

  19. human mathematics says:

    This is for full-time employed graduates. Have you posted elsewhere some charts about part-time employed and unemployed graduates (bachelor’s only, age 25-34) ?

  20. If you look at the timing of the peaks, the explanation seems pretty obvious to me. One is in 1999, just before the tech bubble burst. The other is around 2005, when the real estate bubble burst. I’m no economist, but it seems like real wages would increase in a bubble and then collapse, just like everything else.

    What am I missing?

  21. “First, no one has given me a good explanation yet of why young American college grads should have been hit so hard.”

    Actually, nobody owes you one, yet, because you may not even have a phenomenon, at least not in the sense that the rest of your post seems to imply.

    What has happened to wages overall during this time? If they’ve declined by a similar amount, then grads haven’t been hit particularly hard. How has the distribution of degrees changed over the same period? That it, is the ratio of engineering to English literature degrees the same as it was at the start of the epoch? A simple change in enrollment patterns could result in a decrease in average wages without young college grads being “hit particularly hard.” Also, are unemployed or underemployed college grads included in the average? If it is, then we may be simply comparing wages at full employment to wages at a lower utilization. It might be better, in this case, to look at wages for *all* grads, old and young, because perhaps more older grads are moving into the market and actual utilization of the educated class might just be skewed toward an older population while the actual wage of the educated population hasn’t fluctuated nearly as much. Closer to your seeming hypothesis, I admit, but with some subtleties that might reduce its force.

    Do we even know that we have a phenomenon that needs an explanation?

  22. I’m a May 2011 graduate who is currently working 2 internships, one unpaid and one for minimum wage, while searching for a full time job for the past 6+ months. The answer to your question is that entry level positions have turned into unpaid internships. A large majority of “junior” and “assistant” positions require 2+ years of experience. If the government was serious about enforcing internship/labor laws, I think that a large dent could be made in the unemployment and pay rates of graduates.

    • I should also add that my degree is in graphic design, which is tech-related and supposedly a “growing field.”

    • Recent College Graduate says:

      Rebecca, your comment is spot on.

      I’m a fellow May 2011 graduate who worked two unpaid internships over the summer while also working as a contractor to make ends meet.

      Both internships were directly related to what I studied and both of my supervisors loved me. As my internship drew to an end, I inquired about the possibility of full time employment. At each one I was basically told, “Listen, we love you and would love to bring you on, but it doesn’t make sense to do so when we can just get one or two more unpaid interns to do the same thing. But we’d love for you to stay on as an unpaid intern if you’d like.”

      Businesses are using the state of the job market to exploit recent graduates and I’d be willing to bet that Rebecca’s facing the same thing. Internships are supposed to be a learning experience when they’re unpaid but I doubt that Rebecca is sitting next to a graphic designer and watching him or her work, or being given mock assignments. In reality, she’s probably being asked to do what they’d pay a graphic designer to do, but not being paid for it. At least she will have some nice samples to use in her portfolio… when she applies for another internship.

  23. On the bright side the gender pay differential is getting smaller.

  24. Rebecca, I’m a high school drop out that had to work for free as an intern to prove myself. That was well over a decade ago, and I have a great software engineering job that pays very well because of the experience I acquired over the last 13 years. Experience is more important than a degree if you’re smart enough to learn new languages, frameworks, patterns and platforms that are continuously evolving and make frequent use of them.

    Don’t worry about the money in the beginning, worry about being a rockstar with a great portfolio!

    • How can back up your statement: “don’t worry about the money”… how do you expect these people to pay for food and shelter? Even minimum wage is not enough to get by on in this country.

      I worked hard to support myself in the software industry as well: even with paid internships and the cheapest college I could find (with scholarships), I am still in debt (though not nearly as bad as many). Yes, this work paid off, I just signed a full-time contract with good pay, but I still had to utilize loans: a luxury which not everyone has and is very unforgiving.

  25. Wow, incredible findings…

    I touch a little bit on the reasoning in this post. I’d love to see your insights on it.

    http://www.Blog2Success.net/higher-education

    Personally, I think it’s due to a lack of direction and purpose of going to college. Why do most people go to college? Cuz mommy and daddy and teachers said so.

    College simply isn’t feasible for the majority of teenagers, but society has a stigma against teenagers who don’t attend college. What are they called? Lazy. No future. Drop-out. Etc.

  26. Are these median or average? Is it possible the numbers are skewed by a few really high paying starting jobs that aren’t there so much any more (or were most hit by the tech bubble burst and then the financial meltdown in 2008)? It would be interesting to see this broken down into a few job categories to see if this trend is across the board or is really strong in a few categories. It would also be interesting to see a longer term plot to see if perhaps the peak in 2000 is the odd ball (I actually expect that starting salaries have been relatively flat for a very long time and the late 1990s peak is the extreme that is no longer true – but that’s just a hunch).

  27. To those who say “cry me a river”:

    I did not “invest in formal education”. I went to college for a semester. Hated it and didn’t have the liquid funds or financial aid to pay for it, so it ended up being an obvious decision.

    I am 28, and after 4 years of living at or near poverty income doing odd jobs, I honed my skills well enough that I could be employed full time in my industry.

    I am now an “employer” more than an “employee”, and besides my love for superfluous quotation marks, I would never list a college degree as a requirement for employment. 4 years of blood sweat and tears in or out of school is all the same to me.

    My long-winded point is that I think the college degree is being viewed by more and more people for what it is: circumstantial evidence that implies you had the determination to stick it out for 4 (or more) years. I have no doubt in my mind that there are MANY people out there without the real chance to get a degree that are more intelligent and productive than those who did have that chance.

    I think this data is interesting. Without being next to: associate/trade degree income, “some college” income, masters income and laborer income, it doesn’t mean a whole lot to me

  28. Recent College Graduate says:

    Another interesting trend that I’ve noticed is the rise of unpaid internships. Duties that used to be given to entry level employees as a way for them to showcase their worth to the company have now been turned into unpaid internships, and college grads are gaining industry experience and contacts, but if every company can save money by getting free labor under the guise of being an internship, then who’s going to hire these kids once they’re done interning?

    I would also guess that due to the overall state of the economy, less people are leaving their jobs (whereas in the past job hopping for better pay or a better situation was common) and less people are being promoted (as companies have reduced the number of people they promote in order to cut costs). That means less lower level and entry level jobs opening up for new college grads.

  29. I graduated in December 2002 – it took me about 5 months to get a full time job in my degree (engineering) and it was for an insulting amount. However, I was able to use the experience to jump jobs a few times, and find myself somewhat comfortable in what I make, although I am continually working to grow my career. It is 10 years later, and my current company is hiring entry level engineers for less than what I made coming out out of school. And you can’t blame it on business being slow because my field (energy engineering) is growing, and my company has doubled the engineers in my department and seen record profits in the 3 years that I’ve been there. It is 100% the economy / employment. The glut of unemployed in the economy right now leads companies to hire people with experience for their entry level positions. Why put the capital in to train new employees when you can hire someone for the same amount who already knows what they are doing? On top of that, when jobs are scarce there is no incentive for employers to give large raises because people are happy to not be unemployed, whereas in a boom economy employees would jump-ship if they weren’t happy with their salary.

  30. I produced a documentary film titled, The Tradesmen: Making an Art of Work (www.thetradesmendocumentary.com). It looks at some of the jobs – skilled trades – that are still available in which a college education is not required. There continues to be a major push for all students to go into higher education even if the academic/classroom environment is not conducive to their learning tendencies. Many carpenters and plumbers are these very same individuals who often learn better through practical application. With that said, when the media reports that there are a shortage of skilled manufacturing trade workers – and that it will continue to get worse as the Baby Boomers retire – we should wonder why higher education does not cater towards the needs for certain necessary and unmet jobs within the workforce. We need to acknowledge the diversity of jobs and intellectual skills that exist, and teach/educate in settings that are auspicious for those occupations and individuals.

    Furthermore, most trade workers I interviewed shared the gratification for the work they did, but proceeded to say that they would not recommend the industry to their sons and daughters. They wanted white collar jobs for their child: A job that required a college degree. This sentiment passed down from every American parent down to their child produces a feedback loop where every teenager unquestionably aspires for a college education (because that is what they are told will provide upward mobility and a place within the vaunted, but slowly decimated, “middle class”) even if their are no discernible skills that are acquired through the education.

Trackbacks

  1. [...] trend of declining real wages for college graduates. I discussed the plight of young college grads here.  Because real wages are declining, it’s much harder for grads to pay back their [...]

  2. [...] real earnings plunge by 19% since 2000, with young female college grads experiencing a similar decline. Meanwhile education borrowing has soared, suggesting that we are on the verge of a student loan [...]

  3. [...] real earnings plunge by 19% since 2000, with young female college grads experiencing a similar decline. Meanwhile education borrowing has soared, suggesting that we are on the verge of a student loan [...]

  4. [...] The picture for females is also not pleasant, all from the excellent Michael Mandel.  Those are simple facts, denied by some. [...]

  5. [...] Michael Mandel presents an arresting chart on the decline in real earnings of young male college graduates over the last decade, and writes, no one has given me a good explanation yet of why young American college grads should have been hit so hard. Is there increased competition with young college grads around the world? Are new college grads lower quality than their predecessors? Has information technology reduced the need for young grads? I really would like to know. [...]

  6. [...] A month ago Mike Mandel published these thought provoking charts detailing the plight of new college [...]

  7. [...] value of a degree Posted on 2011 November 13 by richardbrenneman| Leave a comment From Mandel on Innovation and Growth via Sociological Images, graphic proof that a college degree means less [...]

  8. [...] questions posed at the end by Economist Michael Mandel who originally posted these figures about the state of young college grads in 2011, he writes: ” I want to ask an economic question, a political question, and a policy [...]

  9. [...] real earnings plunge by 19% since 2000, with young female college grads experiencing a similar decline. meanwhile education borrowing has soared, suggesting [...]

  10. [...] new economic data is starting to fill in this picture of ‘why’ and ‘what’ by showing, as Michael Mandel does, that many of the participants of the Occupy protests, young adults who are either still in [...]

  11. [...] high-innovation economy to behave. One example: real wages for new college grads have been falling for a decade, even before the recession. That shouldn’t happen if there were growing [...]

  12. [...] real earnings plunge by 19% since 2000, with young female college grads experiencing a similar decline. Meanwhile education borrowing has soared, suggesting that we are on the verge of a student loan [...]

  13. [...] The absolute wages of college graduates have been falling for over a decade, even though the relative premium over “no college degree” is robust.  Still, absolute [...]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Archives

Follow

Get every new post delivered to your Inbox.

Join 64 other followers

%d bloggers like this: