Graduating from college is a heady time, but then comes reality: Finding a job. It turns out that reality still bites.
Even though the economy has improved since the recession, the class of 2016 is entering a job market that's still hobbled by weak trends, such as higher levels of unemployment for young Americans and stagnant wages, according to a new study from the left-leaning Economic Policy Institute.
Young college grads, for instance, are suffering from an underemployment rate of 12.6 percent, compared with 9.6 percent in 2007, before the recession started. It's even worse for recent high-school graduates, with about one-third currently underemployed, compared with roughly 27 percent in 2007, the study found. Underemployment means people who want a full-time job but are working in a part-time role, or who are working in a job that requires fewer skills than they have.
"The Class of 2016 still faces real economic challenges, as evidenced by elevated levels of unemployment and underemployment, and a large share of graduates who still remain 'idled' by the economy," wrote the EPI's Teresa Kroeger, Tanyell Cooke and Elise Gould in the research report.
As if that's not bad enough, wages are also suffering, they found.
Young high school graduates are earning average wages of $10.66 an hour, or 2.5 percent below what the group earned in 2000. Young college grads are earning $18.53 an hour, or about the same as in 2000. Meanwhile, costs for everything from rent to food have continued to rise.
Women are even worse off when it comes to pay, with the researchers finding that the gender pay gap hits their wallets right out of high school or college. Women who are recent high school grads are paid 92 cents for every dollar earned by men, while college grads who are women earn 79 cents to every dollar earned by their male counterparts.
"It is noteworthy that stark wage disparities between men and women occur even at this early part of their careers, when they have fairly comparable labor market experience," the researchers noted.
At the same time, many are entering the workforce with higher levels of debt, thanks to tuition fees that have increased far faster than median family income. The inflation-adjusted cost of a four-year education rose by about 120 percent for private colleges and 125 percent for public institutions between the 1984-1985 and the 2014-2015 enrollment years.
"Graduating in a weak economy has long-lasting economic consequences," the report said. "Economic research suggests that for the next 10 to 15 years, those in the Class of 2016 will likely earn less than if they had graduated when job opportunities were plentiful."
Below are more highlights (or lowlights) from the report:
- The unemployment rate for new college grads is 5.6 percent, compared with 5.5 percent in 2007.
- Young high school grads have an unemployment rate of 17.9 percent, compared with 15.9 percent in 2007.
- Recent grads who are "idled" -- neither enrolled in school nor employed -- is still higher than before the recession. For college grads, the rate is now almost 10 percent, compared with 8.4 percent in 2007. About 15.5 percent of young high-school grads are now idled, compared with 13.7 percent in 2007.
- People of color are especially hard-hit. Young black college grads have an unemployment rate of 9.4 percent, compared with 8.9 percent in April 2007.
- Young high school graduates of color also suffer from higher unemployment rates than their white counterparts.
- Job quality has eroded. In 2001, almost 42 percent of new college grads found jobs with pensions. That declined to just over 29 percent in 2015.
- Young people who are "idled" by the economy are more common among people of color. About one in five black high school grads are considered "idled," while 17 percent of Hispanic high school grads are neither working nor in school. About 14 percent of white high-school grads are considered "idled."