Recent College Alumnae, Get ready to Starve

Alumnae of the 2009 collegiate year are departing out into the unknown in the most terrible labor market from the time when their parents graduated. Countless graduates will get addicted to careers that have zero to do with their degree, if they get a job at all. With a general average 9% unemployment rate, it is evident that throwing additional job seekers into the marketplace does not provide the best statistics for employment acquisition. Even worse, they will make lower wages for at least the next decade, as opposed to folks who graduated in better times, such as 2006 and 2007, before the economy in part disintegrated.

For most 2009 college graduates, fate will be the key. According to Lisa Kahn, a Yale School of Management economist, the injury that can be done to a brand new career by a depression can last for up to 15 years. She used the National Longitudinal Survey of Youth, a government data base, to assess the effects of a depression on an persons career by tracking earnings of white men who graduated before, throughout and after the bottomless 1980s recession.

Kahn found that for each percentage-point rise in the unemployment rate, those who graduated and joined the workforce during the recession earned 7% to 8% less in their fields than similar workers who graduated in better times. The effect persisted over many years, with recession-era grads earning 4% to 5% less by their 12th year out of college, and 2% less by their 18th year out. Essentially, someone who graduated in December 1982 when the unemployment rate was at more or less 11% made, on average, 23% less his original year out of college and 6.6% less 18 years out than one who graduated in May 1981 while the unemployment rate was under 8%. For a normal worker, that would signify earning $100,000 less over the 18-year period.

According to economists and experts, one explanation behind waning wage potential is that the caliber of jobs obtainable in a downturn, and their accompanying pay, tend to suffer. High-end firms take on fewer people and drive down salaries because jobs are in high demand and people are likely to accept a job for less and less money. In turn, it also means that numerous graduates end up with lower-wage, lower-skill jobs at lower quality, less prestigious firms or in firms out of their field of interest. As soon as the economy picks up and they try for better jobs, these workers have to learn skills they should have been developing directly out of college. In the meantime, colleagues who graduated in a healthier economy have already developed these skills and progressed much further, making them more probable to receive a better position.

This year, employers will employ 22% less college graduates than last year, according to the National Association of Colleges and Employers, an organization of career counselors. Simultaneously, colleges are expected to see the record number of graduates in a decade. The normal starting salary for graduates who do get jobs, meanwhile, dropped to $48,515 this spring, down 2.2% from the same time most recent year. Not to fret though. College education was not for nil. Collegiate level workers still make more than those with high school diplomas.

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