The latest crop of college graduates is entering the labor force. And, as always, the graduates will do relatively well. The unemployment rate is persistently lower and earnings are persistently higher for those with a college degree than for those without one.
The job market for recent graduates rarely looks like the job market at large. One reason: recent grads — 22-27-year-olds who have earned a bachelor’s degree and are no longer in school — tend to cluster in particular jobs and industries.
They are more than five times as likely to be advertising and promotions managers, actuaries, news reporters, and law clerks as are workers overall. They’re also disproportionately likely to be financial and credit analysts, as well as geological engineers and agricultural scientists. On the flip side, very few recent grads are bus drivers or housekeepers, or work in construction or manufacturing.
According to the latest analysis from the New York Fed, the unemployment rate for recent grads in December 2018 was 3.7% — just a hair below 3.8% for the overall labor force. That’s the smallest difference since that data series began in 1990. The unemployment rate for recent grads has typically been at least a full percentage point below the overall unemployment rate. The unemployment rate for recent grads is higher today than it was from late 2006 to early 2008 and during the 1997-2001 expansion.
There are some other red flags. Recent grads are more likely to be underemployed — in jobs that don’t require a college degree — today than between 1998 and 2003. Furthermore, median earnings for recent grads were no higher in 2018 than they were in 2000 and 1990 (after adjusting for inflation), and earnings inequality among recent grads has actually increased in that time. Together that means that the bottom quarter of recent grads make less today than they have in the past.
The latest government projections suggest that, over the next decade, jobs requiring a college or graduate degree will grow twice as fast as those requiring only a high school degree. Furthermore, if robots or algorithms end up eliminating jobs, college-educated workers would be less at risk. While 62% of people with only a high school degree work in “routine” occupations that are more susceptible to automation, only 28% of people with a bachelor’s degree and only 11% of people with a graduate degree do.
With all this in mind, today’s graduates can look forward to entering the job market. Although unemployment and underemployment for recent grads aren’t quite as low as in other recent booms, and although earnings have barely budged, the strong labor market should put them on a more solid path for employment and earnings than those who graduated earlier in this recovery. And their college degree should provide some protection both from the dips of the economic cycle and from the uncertain future of work.