Courtesy of Mish
The USA Today reports graduating class of 2012 is in for a rude awakening as Half of new graduates are jobless or underemployed.
A weak labor market already has left half of young college graduates either jobless or underemployed in positions that don't fully use their skills and knowledge.
Young adults with bachelor's degrees are increasingly scraping by in lower-wage jobs — waiter or waitress, bartender, retail clerk or receptionist, for example — and that's confounding their hopes a degree would pay off despite higher tuition and mounting student loans.
Median wages for those with bachelor's degrees are down from 2000, hit by technological changes that are eliminating midlevel jobs such as bank tellers. Most future job openings are projected to be in lower-skilled positions such as home health aides, who can provide personalized attention as the U.S. population ages.
Taking underemployment into consideration, the job prospects for bachelor's degree holders fell last year to the lowest level in more than a decade. "I don't even know what I'm looking for," says Michael Bledsoe, who described months of fruitless job searches as he served customers at a Seattle coffeehouse. The 23-year-old graduated in 2010 with a creative writing degree.
About 1.5 million, or 53.6%, of bachelor's degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years. In 2000, the share was at a low of 41%, before the dot-com bust erased job gains for college graduates in the telecommunications and IT fields.
Out of the 1.5 million who languished in the job market, about half were underemployed, an increase from the previous year. Broken down by occupation, young college graduates were heavily represented in jobs that require a high school diploma or less. In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).
According to government projections released last month, only three of the 30 occupations with the largest projected number of job openings by 2020 will require a bachelor's degree or higher to fill the position — teachers, college professors and accountants. Most job openings are in professions such as retail sales, fast food and truck driving, jobs which aren't easily replaced by computers.
Useless Degrees
The USA Today talks about the "underemployed". Is that really what's going on?
Just what job does someone majoring in Political Science, English, History, Social Studies, Creative Writing, Art, etc., etc., etc., expect to get?
Arguably, graduates in those majors (and many more) should be thankful to get any job. Therefore, those who do land a job should therefore be considered fully employed, not underemployed.
In turn, this means a college education now has a negative payback for most degrees.
Bledsoe, currently making just above minimum wage, says he has received financial help from his parents to help pay off student loans. He is now mulling whether to go to graduate school, seeing few other options to advance his career. "There is not much out there, it seems," he said.
There is nothing out there for many degrees which means that going to graduate school will do nothing but waste more money. Nurses are still in demand, but technology and engineering majors are crapshoots. If you can land a technology or engineering job it is likely to be high paying, but if not, the next step is retail sales.
Who Benefits From Student Aid?
Students get no benefit from "student aid". Rather, teachers, administrators, and corrupt for-profit schools like the University of Phoenix do.
Obama wants to throw more money at education, and that is exactly the wrong thing to do. Instead, I propose stopping student aid programs and accrediting more online schools to lower the cost of education so that degrees do not have negative payback.
Sadly, there is a trillion dollar student loan bubble, and that debt overhang will negatively impact the economy for years to come. Let's not make the problem worse. It's time to kill the inappropriately named "student aid" program.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
