Income for Recent Graduates the Highest in Over a Decade

[Pages:3]Income for Recent Graduates the Highest in Over a Decade

Stereotype of college graduates working in coffee shops is fading

By Josh Zumbrun

The labor market has taken a sharp turn for the better for young college graduates.

Incomes for the newest batch of diploma-holders are now at the highest level in more than a decade, while unemployment rates are falling quickly, according to a new report from the Federal Reserve Bank of New York.

The data show how quickly the postrecession image is fading of college graduates doomed to work in coffee shops. Their experience highlights instead a growing divide in the U.S. economy--between those with a college degree and those without.

Until recently, the economy presented a mixed picture for college graduates. Incomes for college graduates were declining, but more slowly than incomes for those without college. College unemployment and underemployment rates rose in the aftermath of the recession. Those trends then reversed, with the income gap growing as wages rose swiftly for bachelor's degree holders.

"After the great recession, there was a lot of concern about people graduating, not being able to get a job," said Richard Dietz, a senior economist at the New York Fed. People became uncertain "whether a college degree was worth it anymore."

Mr. Dietz and his colleague Jaison Abel developed this new data, which the New York Fed will begin to publish on a regular basis, to answer whether the benefits of college were beginning to deteriorate.

The newest data put that question to rest, at least for now. Bachelor's degree holders earned a median $43,000 last year, an increase of more than $3,000 from the year before. That was the highest since 2003, showing that the job market for freshly minted graduates has nearly recovered to the best years on record. Incomes are rising even faster for college students in the best majors. The top 25% of young college graduates earn at least $60,000 a year.

The unemployment rate for young college graduates has fallen from more than 7% in 2010 to just 4.9% in September. That is compared with a 5.3% jobless rate

for all workers in the U.S. economy and an unemployment rate of 10% for young workers without a bachelor's degree.

Eight of the 10 highest-paying degrees are engineering majors, with chemical engineers leading the pack with a median salary of $70,000, according to the new data.

Some of the lowest-paying majors, by contrast, also have the highest unemployment rates. Those fields include anthropology, mass media and environmental studies, with unemployment rates above 8% and median salaries of about $30,000.

Colleges tend to survey graduates in the initial year after their graduation, but it is common for college graduates to take some time to settle into a career. The New York Fed's data look at workers age 22 to 27.

The wage data is adjusted for inflation, but it is doesn't address the growing student-loan burdens facing many college graduates. About 70% of college graduates have debt when they finish school, with an average of about $29,000 per borrower, according to data from the Project on Student Debt, a nonprofit that tracks education affordability.

Those burdens are hefty, but they are small compared with the much higher career earnings of college graduates, said Anthony Carnevale, the director of Georgetown University's Center on Education and the Workforce. He estimates that the average college graduate will earn $1 million more than the average high-school graduate over the course of a lifetime. Many holders of graduate degrees will earn an additional $3 million.

The New York Fed's data also examine whether workers find employment in fields that actually require a college degree. While about 44% of workers are in occupations where college isn't required, the New York Fed finds that just under 14% of college graduates are in low-wage jobs, a figure that has declined by about one percentage point since 2010.

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