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.