Recession Hits Harder at College Grads Without an Advanced Degree

I’m sure many of you read the  NYT article about the 26-year-old college grad with almost $100,000 in student loans.  The article was fascinating and horrifying, but it didn’t mention a key factor–since the girl in the article graduated in 2005, the  real wages of college grads without an advanced degree have fallen substantially.

 Take a look at this chart.

I’ve plotted median usual weekly earnings of fulltime workers, adjusted for inflation, and indexed to 2001Q1 =1. The dark blue line shows the weekly wages of workers with an advanced degree, while the lighter line shows weekly wages of workers with a bachelor’s degree only.

The real wages for college grads with a bachelor’s have  been in a downswing since 2004.  That offers at least a partial explanation of her problems…she got caught by a weakening labor market for bachelor’s degrees.  

To put it another way–college grads who are clothed with the protection of an advanced degree have on average managed to hold their own during the financial crisis, and even gain ground. Since mid-2007, their usual weekly wages are up by 3.7% in real terms, putting them at their highest level for the past ten years.

‘Naked’ college grads–that is, those without advanced degrees–have not fared nearly so well during the recession. Their real weekly earnings are down 0.7% since mid-2007, and they are well below their 2004 level.

Is this simply supply and demand,  a function of which industries were hit, or is there something else going on?


  1. One hypothesis: more andore university grads are females obtaining liberal arts degrees. the girl in question graduated with an interdisciplinary degree in religious and women’s studies. She’s basically qualified to do what?

    It would be interesting to see a graph of the earnings of engineering students compared to the general grads.

  2. Could be a selection bias at issue: people who just have regular B.A.s or aren’t as smart/skilled as people with graduate school degrees even before the differential in education are taken into account (as I’d imagine the higher you achieve, the more likely you are to be going to grad school).

  3. steve malanga says:

    Might some of this be attributable to the fact that there are some 6 million K through 12 teachers in the country, many of whom have advanced degrees as a requisite for certification, and their unemployment rate has remained low and wage gains have continued in places where contracts are in force?

  4. Not everyone can be a f’ng engineer. Dont worry in a good decade or two engineer wages will go down as outsourcing speeds up to India, Pakistan, China, Vietnam, Thailand and all those other places.

  5. Mike Mandel says:


    That’s one possibility, but it could also be the lawyers and the doctors.

  6. SMIA1948 says:

    If we are going to have a free society, decisions about things like how much to borrow (or lend) have to be left to the people directly involved. In a population of 300 million, every imaginable kind of mistake will be made. This does not mean that there should be a law or government program to deal with each one. And, all the laws, regulations, and government programs in the world will not create perfection.

  7. It’s a pricing in effect caused by more widely available degrees/titles. Around me a very large proportion of people have PhD titles, though they do roughly the same work as people with M.S./B.S. level titles – diagnosing/fixing bugs and incremental development of legacy products. (To the extent they do “real” work – quite a few participate between part time and full time in the operational management superstructure.) Original R&D content is very low (for my definition of original) – but in the reality of commercial tech certainly the “1% inspiration, 99% perspiration” principle applies. Most of the time we are engaged in the 99% – implementing the 1% which in turn is rather more application of known principles or their refinement for our domain.

    We had similar discussions before. When every Bachelor upgrades to PhD, then there will be no more unemployed Bachelors and they will all be unemployed PhDs. Unless a corresponding number of PhD level jobs suddenly materializes or we have severe unmet demand of unfilled PhD level jobs that the newly minted Bachelor-PhDs will fill.

  8. There may be a demographic effect too. It would be interesting to see a breakdown of “recent grads” vs. “total grads”. I suspect that the credentialism escalator has only kicked into full gear in the 90’s. Based on empirical observation, many (older) luminaries of tech only have Bachelor titles. Perhaps the older guard is lighter in “advanced degrees”. If this holds water, then perhaps it is a matter of “prime age” vs. “over peak” unemployment, with a hint of “age” discrimination.

  9. T.Dagger says:

    I do know that I made more in 1999 than I do now, adjusted for inflation. In 1999 I had some college coursework but no degree. I went back to school and earned a Bachelor’s and then on to complete a Master’s degree. It’s 2010, I’ve been unemployed for a year, and my last job would have needed to pay me 25% more to equal what I made in 1999.

    Staring at econometrics on a computer screen, I think economists are missing what it’s like in the real world.


  1. […] Michael Mandel finds that the recession has hit college grads with BAs harder than those with advanced degrees: “To put it another way–college grads who are clothed with the protection of an advanced degree have on average managed to hold their own during the financial crisis, and even gain ground. Since mid-2007, their usual weekly wages are up by 3.7% in real terms, putting them at their highest level for the past ten years.” […]

  2. […] to Mike Mandel at Mandel on Innovation and Growth, this data has been aggregated.  Adjusted for inflation, weekly expected salary for an […]

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