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New College Grads Finally Get Job Market on Upswing

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It can be difficult to find a job after graduating from college, but this year’s class will have an easier time than recent graduates.

“The labor market for college graduates is improving,” according to a new report from the Federal Reserve Bank of New York.

The unemployment rate among college graduates continues to fall — it’s just over 5%, according to the New York Fed — but more important, their underemployment rate — which measures the share of graduates working in jobs that typically don’t require a college degree — is falling as well, reversing an earlier trend. Between mid-2011 and mid-2014, the underemployment rate for college graduates rose while the unemployment rate for college graduates fell.

 “While successfully navigating the job market will likely remain a challenge, it appears that finding a good job has become just a little bit easier for the class of 2015,” write authors Jaison Abel and Richard Deitz.  

That’s good news for all college graduates but especially for those burdened by college loans. Their average debt load at graduation is near $30,000, and most will have to begin making payments within six months of graduation, if not before. (Some loans have no grace periods; a few have longer ones.)

In their latest report, the New York Fed economists studied the Help Wanted Online database of the Conference Board to gauge the demand for jobs requiring a college degree and those that did not.  It found that demand for both types of jobs has been rising recently, but demand for college jobs, which had leveled off in 2013 and fell slightly through mid-2014, turned around last summer and is up 10% year-to-date.

The rising demand for jobs requiring a college degree  has “continued to push down the unemployment rate for recent graduates” and “has also finally started to help reduce underemployment, though the underemployment rate remains high,” the Fed economists write. The underemployment rate for recent college graduates is now 44.6%, which is down about two percentage points from last summer but up from around 38% in 2000, toward the end of the dot-com bubble.

 “Continued strong growth in the demand for college graduates may well be necessary to make a more serious dent in the underemployment rate,” write the New York Fed economists. They note that despite the rising demand for jobs requiring a college degree, it remains lower than the demand for jobs without that requirement, with a reading around 120 compared with 150 in the Conference Board index.

In the meantime, many college graduates with jobs that don’t require a college degree are finding work in relatively skilled positions paying an average $45,000, according to an earlier report by the same New York Fed economists, released last September. “Since 2013, a larger share of recent college graduates have found good non-college jobs, while the share of recent college graduates working in low-wage jobs has held steady,” they wrote. 

Source: Federal Reserve Bank of New York

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