With the 2021 college graduation season in full swing, there is some good news for this year’s class: Their first job’s pay is slightly improving.
The percentage of recent grads who are taking jobs that pay less than $25,000 and don’t require a degree fell to 10.5% in March, the lowest rate since November 2001, according to New York Federal Reserve research.
Better Salaries
Fewer college grads are stuck in 'non-college' low wage jobs
Source: New York Federal Reserve
Note: Low-wage jobs are those that tend to pay around $25,000 or less. Rates are calculated as a 12-month moving average. College graduates are those aged 22 to 65 with a bachelor's degree or higher; recent college graduates are those aged 22 to 27 with a bachelor's degree or higher. All figures exclude those currently enrolled in school.
As the U.S. economy recovers from the Covid-19 pandemic, well-paid entry-level jobs are still not easy to come by, however. The percentage of graduates who hold what the Fed identifies as “good non-college jobs” -- positions with a full-time average annual wage of $45,000 or more -- has been declining in the past 20 years.
Data show that about one-third of all college graduates are in a job that typically doesn’t require a college degree, a rate of underemployment that has remained fairly flat for about three decades now.
No College Needed
About 40% of recent college graduate and one-third of all college graduates are estimated to be employed in a job where a degree is not necessary.
Source: New York Federal Reserve
Note: The rate is defined as the share of graduates working in jobs that typically do not require a college degree. A job is classified as a college job if 50% or more of the people working in that job indicate that at least a bachelor’s degree is necessary; otherwise, the job is classified as a non-college job
For this year’s grads, the job-hunting outlook has improved. The unemployment rate for recent college grads has halved since last June, at the peak of the pandemic. At 6.4%, it remains twice as high as the 2017-2019 average. But it is 3.9 percentage points below unemployment among young adults without a bachelor’s degree, which stood at 10.3% in March, data show.
U.S. Bachelor’s Bump
Percentage-point benefit in unemployment rates for college graduates compared to young workers (age 22 to 27) without a degree
Source: New York Federal Reserve
The Fed research also highlights a widening pay gap among college graduates, through 2020. Annual incomes for the top 25% of bachelor’s degree holders rose to $69,000 last year, and while incomes in the bottom quarter also improved, they remain not much higher than the median high-school graduate salary.
Job and pay prospects for college majors that provide occupation-specific training such as chemical engineering, nursing and pharmacy tend to fare better than more general majors, the data show.
Growing Split
Divergence in salaries among college degree holders widens
Sources: New York Federal Reserve
In recent decades, real incomes have largely stagnated except for those toward the top of the distribution as degrees have become more commonplace.
In 2020, more than 3.6 million Americans ages 18 to 24 year held a bachelor’s degree, up from 3.1 million three years earlier.
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May 22, 2021 at 07:00PM
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