Congratulations, Graduates, Or Should I Say Condolences?
Tomorrow is May 1, and college graduation season is almost upon us. Seniors everywhere are writing their last papers, taking their last exams, and preparing for the end of their college careers.
And probably crying about the employment situation. College placement officers might as well be grief counselors.
For the last three years, the unemployment picture has been Ugly with a capital U. Those who doubt this need only look at the chart to the right. Bill McBride of Calculated Risk has a real knack for turning data into charts and words that make even non-math folks understand what the numbers are saying. (Click here for a larger version of that chart.) Putting the numbers into words at the beginning of April, Bill summed things up like this:
The current employment recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early ’80s recession with a peak of 10.8 percent was worse).
In a post yesterday, Naked Capitalism guest poster George Washington agrees, and breaks down the employment mess in depressingly clear detail.
It’s ugly all around — especially if you are a college student approaching graduation.
The Economic Policy Institute released a briefing paper last week with the ominous title “The Class of 2011: Young workers face a dire labor market without a safety net“. From their executive summary:
The Great Recession left a crater in the labor market that has been devastating for unemployed Americans of all ages. After more than two years of unemployment at well over 8%, we have a hole of more than 11 million jobs, with average spells of unemployment lasting nearly nine months. But the weak labor market has been particularly tough on young workers. In 2010, the unemployment rate for workers age 16-24 was 18.4%—the worst on record in the 60 years that this data has been tracked. Though the labor market has started to slowly recover, the prospects for young high school and college graduates remain grim.
I disagree. After reading through the whole paper, I’d say the word “grim” is far too tame. From pp 6-8:
Given that the unemployment crisis for young college graduates created by the economic downturn has yet to show signs of improvement, the class of 2011 will join the backlog of un- or underemployed graduates from the classes of 2010 and 2009 in an extremely difficult job market. In fact, it is likely that the class of 2011 will face the highest unemployment rate for young college graduates since the Great Recession began. . . .
Furthermore, as discussed earlier, the high overall unemployment rate of young college graduates masks large differences among racial and ethnic subgroups. Black and Hispanic college graduates experience significantly higher unemployment rates during economic downturns than do white college graduates . . .
In 2007, the unemployment rate for young college graduates was 5.1% for white workers, 6.6% for Hispanic workers, and 13.1% for black workers. In 2010, the disparities increased dramatically, as unemployment rose 3.3 percentage points for white graduates (to 8.4%), 7.2 points for Hispanic graduates (to 13.8%), and 5.9 points for black graduates (to 19.0%). . .
While it is true that even in the broader labor market, unemployment rates for blacks and Hispanics are higher, there arguably should be little disparity in the unemployment rates of young college graduates. Not only do they have the same basic degree, but they also are in the same labor market position (i.e., college graduates under age 25 who are not enrolled in school and are actively looking for a job).
Note: these are the folks who are fresh out of school, and so in theory ought to have all the right up-to-date training that older unemployed folks may need. Kind of puts a lie to the whole “we need to get folks retrained for the new economy, and that will take care of the jobs problem,” doesn’t it?
And to go with all those new skills, the graduates have the loans. Boy, do they have the loans. From the Dept of Education’s FinAid website:
Few students can afford to pay for college without some form of education financing. Two-thirds (65.6%) of 4-year undergraduate students graduated with a Bachelor’s degree and some debt in 2007-08, and the average student loan debt among graduating seniors was $23,186.
Think about that number for a minute, folks: that’s like graduating with a car loan but not getting the car. (Don’t even ask about loan loads for professionals, like lawyers, doctors, or clergy, many of whom complete their advanced degrees with the equivalent in student loans to a mortgage — without getting the house.) And those are the loan figures for the 2007-08 graduates. Given the rising cost of college, they are no doubt higher for 2010-11 graduates.
The most painful part of the EPI report, though, is that newly-minted college grads have almost no social safety net to help them. No unemployment insurance benefits, because they haven’t worked. Almost no possibility for even tiny support via TANF (welfare) or SNAP (food stamps). They can stay on their parent’s medical insurance, though — assuming that their parents can do that for them. Of course, to use the insurance and actually get health care, you have to be able to come up with co-pays and deductibles and out-of-pocket expenses . . .
Maybe this kind of situation explains this: a million applications for 50,000 McJobs. But here’s the worst part of that story. If you are a new graduate and were lucky enough to get hired, you are in the unenviable position of trying to pay off $23,000+ in loans on a McPaycheck.
Glad I’m not a commencement speaker this year.