The job market for college graduates this year is the strongest since the Great Recession, according to economists at the Federal Reserve Bank of New York.
The unemployment rate for recent college graduates, age 22 to 27 with at least a bachelor’s degree, is just under 4%, down from more than 7% in 2011, and even less that the national jobless rate of 4.4% as of April 2017.
In addition, salaries for college grads are up; the median is now around $43,000 per year, up from just under $40,000 in 2012.
The underemployment rate for college grads has also fallen. The rate, which measures the share of graduates working in jobs that typically don’t require a college degree, stands at 43.5%. That seems like a big number but, according to New York Fed economist Richard Deitz, is nothing to worry about.
In a Q&A on the bank’s website, Deitz noted that the high underemployment rate tends to be temporary, a function of new graduates starting in low-skilled service work before shifting to better jobs as they gain more experience. Contrary to media reports, “only a small fraction of recent graduates” worked as a barista or some other low-skilled job in the years after the Great Recession, said Deitz.
How well college graduates fare in the job market depends largely on their college major. Those with majors that build quantitative or technical skills or provide occupation-specific training tend to fare better than those whose majors are more general and less quantitative, said economist Jaison Abel.
For example, the underemployment rate is 20% for young chemical and electrical engineers and 25% for accounting majors, but 60% for graduates who majored in geography, communications or fine arts, according to Abel. Underemployment and unemployment rates are also relatively low for graduates who majored in sectors of the economy that are growing, such as nursing, pharmacy and education.
Deitz advised college graduates to keep in mind that even if their first job out of school doesn’t make use of their major they will transition into better jobs as they gain experience. “It’s important to be patient,” advises Deitz. “College is an investment that pays dividends over your entire working life. … You have many decades to go to reap the economic benefits of your college degree.”
The New York Fed has created an interactive website with data on the labor market outcomes for recent graduates, which is updated regularly and can be useful for college students and new graduates. It includes the latest unemployment and underemployment rates and early career and mid-career median wages for more than 70 majors plus the share of workers in those industries that have graduate degrees.
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