How valuable is a college education? Very valuable, according to the Federal Reserve Bank of New York’s latest report, “The Labor Market for Recent College Graduates.”
The unemployment rate and underemployment rate of recent college graduates, which it defines as graduates between 22 and 27, is substantially below that of non-graduates, and their wages are sharply higher.
According to the report, the unemployment rate for recent college graduates in September, its latest available data, was 4%, the lowest rate since October 2008, during the financial crisis. In addition, the jobless rate for college graduates was less than half that for all young workers — 8.8% — and below the rate for all workers, including college and non-college graduates, which was 4.8%.
The New York Fed also reported that over time college graduates have even better luck in the job market. All college graduates — defined as graduates from age 22 to 65 — had an unemployment rate of 2.6% and an underemployment rate — the percentage holding jobs that don’t require a college degree — of 34.3% in September, versus 44.2% for recent college graduates.
The relatively high underemployment rate probably reflects the larger share of job postings that don’t require a college education compared to those that do. According to the New York Fed, the index for non-college job postings in September (using a base of 100 for 1967) was 135 versus 108.9 for the index of college job postings.
Even when college graduates were employed in jobs that didn’t require a college degree, they tended not to work in low-wage jobs. Only 13.3% of recent college graduates were employed in low-wage jobs in September, while less than 8% of all college graduates employed in such jobs.
Recent college graduates also had substantially higher incomes than high school graduates: $43,000 compared with $26,000 for high school graduates as of January 2016, based on the latest New York Fed data.
Digging deeper, based on data for 2014-2015 that won’t be updated until early 2018, nine of the 10 top-paying jobs for college graduates early in their careers were in the field of engineering, with median wages ranging from $54,000 to $70,000. For mid-career jobs, defined as those aged 35 to 45, engineering accounted for eight of the 10 top-paying jobs, with median wages ranging from $85,000 to $110,000.
Education accounted for five of the 10 lowest paying jobs mid-career, with wages ranging from $39,000 to $47,000, but only one of the 10 lowest paying jobs for early careers.
Ironically, education jobs had the lowest unemployment and underemployment rates for college graduates early in their careers and mid-career.
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