College Graduate Underemployment Essay

College Graduate Underemployment: How Deep is the Hole?

As a college education becomes increasingly favorable in today’s society and college tuitions continue to rise, students and parents alike are beginning to ponder the usefulness of a college degree. Indeed, some individuals argue that increasing costs alongside the overabundance of graduates in the job market show that college education is rapidly losing value. However, others believe that the enhanced starting salaries of college graduates in addition to the skills acquired in the college environment prove that college education is still of great importance. Despite the many advantages and disadvantages discussed, many people fail to recognize one of the greatest factors in the worth of college education: whether graduates actually acquire better jobs. The shocking truth is that a large percentage of college graduates must accept low-skill, low-salary jobs when they cannot find meaningful work. Could this phenomenon play a greater role in the college debate than it is currently given credit?

College graduate underemployment

(CGU) is formally defined as the condition in which an individual works a job where his or her ¨formal and work experience training are technically underutilized and thus undervalued¨ in comparison to others with the same experience (Cunningham). Derek Thompson, the senior editor of The Atlantic, gives us an example of this in his article ¨A World Without Work,¨ in the form of Karen Schubert, ¨a 54-year-old writer with two master's degrees [who] accepted a part-time job as a hostess at a café” because she could not find full-time work (13). In her conversation with Thompson, Schubert admits, ¨I think I would feel like a personal failure if I didn't know that so many Americans have their leg caught in the same trap¨ (Thompson 13). Indeed, she is not alone in her plight. According to ¨The Labor Market for Recent College Graduates,¨ a web tool created and maintained by the Federal Reserve Bank of New York, as of September 2016 the underemployment rate among recent college graduates was a staggering 44.2 percent, meaning that about four in nine graduates were not earning a job that necessitated their expensive degree (¨Labor¨). As Adam Smith, the man renowned as the father of modern economics, states in his book The Wealth of Nations, when it comes to education, “[t]he work which [a man] learns to perform, [. . .] over and above the usual wages of common labor, will replace to him the whole expense of his education,” yet this is simply not the case for that 44.2 percent (103). With such a profound percentage of college graduates not finding jobs waiting for them, one begins to wonder: to what extent does college graduate underemployment discredit the benefits of college education in the United States?
Unsurprisingly, GU can have serious negative economic effects on graduates, particularly in the context of student debt. Devon Flanagan, a graduate of Suffolk University Law School and current Connecticut Superior Court law clerk, puts forth that ¨an estimated thirty-nine million citizens have federal student loans¨ (Flanagan). Getting a well-paying job soon out of college is imperative for the individuals in that thirty-nine million, but not everyone finds one. Marcy Gordon, a reporter for Associated Press and student debt expert, characterizes this struggle through the story of Kristin Cole, a graduate of Michigan State University's law school who loses a quarter of her salary monthly to repay her student debt (28). Cole explains, ¨I could never buy a house. I can't travel. I can't do anything. [. . .] I feel like a prisoner,¨ pointing out that to pay her bills she may need to find a simple job “doing something [she’s] not real dedicated to, just for the sake of being able to live” (Gordon 28). When graduates are trapped by debt, as in Cole’s case, they often must accept underemployment as their only option, leaving them unable to claim the economic benefits of attending college.
Considering economics, what exactly are the benefits of college? Justin Draeger, the president of the National Association of Student Financial Aid, posits that “ [i]n job zone 3, where almost 40 percent of jobholders have some college education, the median annual income is a little over $35,000,” compared to the fact that “the majority of jobholders [who] have a high school diploma or less [have a] median annual income [of] less than $13,000 a year” as of 2009 (18-19). Draeger also notes that “the majority of college graduates are likely to end up in job zones 4 or 5, where the median incomes are around $50,000 and $60,000, respectively” (19). This illustrates the significant average salary boost acquired through a college education. Similarly, Jaison R. Abel and Richard Deitz, head of the Regional Analysis Function and Senior Economist for the Federal Reserve Bank of New York respectively, found that 39.6 percent of college graduates landed in job sectors with average salaries over $50,000, compared to only 17.7 percent of those with only a high-school diploma (“Underemployment” 36-37). These findings show that graduates are also more likely to earn high-paying positions. On average, a college degree earns more than a high school diploma both in dollars and likelihood of landing high-end jobs.
However this does not answer the real question; does this trend continue to hold true for the underemployed?

Abel and Deitz sought to answer this question by calculating the average economic return by bachelor’s degrees in various majors. They found that the lowest return rates were in education majors, averaging a nine percent return overall and seven percent return for the underemployed, additionally noting that the average yearly return from investing in stocks is also seven percent (Abel and Deitz, “Benefits” 7). An investment returning at least the same amount as stocks is usually a sound investment, and college exceeds or meets that amount even when a student graduates with a low-returning major and becomes underemployed (Abel and Deitz, “Benefits” 7-8). When looked from this perspective, the economic benefits of college appear to stand firm even when underemployment is

considered.
Furthermore, research has found that underemployment is often only a transitional phase in a college graduate's working life. Abel and Deitz concluded that “underemployment is a temporary phase for many recent graduates as they transition from school to the labor market” (Able and Deitz, “Underemployment” 25). They found that while “[a]t age 22 [. . .] the likelihood of [a student] being underemployed is nearly 50 percent, [. . .] this figure falls to around 42 percent by age 27,” and, more convincingly, that the probability of working a low-skilled service job fell from thirteen percent to about six and a half percent in the same period of time, showing an almost fifty percent decrease (Abel and Deitz, “Underemployment” 25). This illustrates that, as graduates age, they are progressively less likely to remain underemployed, adding to the idea that CGU is temporary. Looking from a different perspective, a report by the Pew Research Center found that of adults age eighteen through twenty-four, only eleven percent saw their current job as a career, with this percentage increasing for adults in their late twenties (thirty-four percent) and early thirties (forty-nine percent) (“Young”). Recent college graduates will likely continue on to other jobs before settling down in their chosen career, in the process moving out of their underemployed status into higher paying positions. Both this trend and falling underemployment rates relative to age support that CGU is often only a temporary condition, limiting its effects on a graduate’s economic success in the future.