Even underemployed college graduates fare better than those without degrees; postsecondary education pays off

Here’s some good news on the value of higher education, reported by Inside higher Ed.

Two economists at the Federal Reserve Bank of New York on Monday released a summary of their recent research that finds the stereotype to be false and the economic difficulties of recent college graduates to be overstated. The headline of the summary: “Working as a barista after college is not as common as you might think.”

The economists — Jaison R. Abel and Richard Deitz — don’t deny that the economic downturn that started in 2008 depressed the job market for new graduates, and left many of them underemployed. But citing Census Department data, they show that most of the underemployment took place in jobs that pay better than food service and that most recent graduates have moved past their initial employment in jobs that didn’t require a bachelor’s degree.

Fears that a college degree doesn’t lead to a job may discourage prospective students, Inside Higher Ed says. That’s why it’s important to get the information right and have the right information publicized. As we have written

Education expands opportunity. By 2020, 70 percent of Washington jobs will require postsecondary education or training. Preparing our students for these opportunities requires high-quality education at every level.

The FRBNY analysis says majors matter (link is to the abstract, full report here).

The patterns we uncover suggest that those recent graduates who major in more technically oriented and occupation-specific fields tend to have much lower underemployment than those with majors that are more broad and general.

Overall, though, it’s a good story.

Finally, our analysis suggests that underemployment is a temporary phase for a good number of recent graduates, particularly among those who start their careers working in a low-skilled service job, as many transition to better jobs after spending a few years in the labor market.

(Although the report doesn’t address it directly, we wonder if high minimum wage discourage hiring young people who may benefit from the work experience as they climb the career ladder.)

The authors also have a short reader-friendly article here

While the recession was hard on everyone – and in many areas, the sluggish post-recession recovery still takes a toll – postsecondary education pays off in expanded opportunity for graduates.