By GREGORY N. HEIRES
The recession may be officially over, but the economy continues to be bad news for recent high school and college graduates.
When members of the Class of 2013 graduate later this year, many of them will have to live with their parents because they can’t find jobs.
High school graduates who do find jobs are likely to work in the poorly paid service sector while college graduates will face a very tight labor market and won’t find the position they want.
Many college grads will take on positions that pay less than they’d hoped to earn. Or, they will take positions for which they would be overqualified in better times.
A free health-care plan and a traditional pension? Nowadays, of course, that’s the stuff of dreams.
For the fifth year in a row now, graduates will face a poor labor market with dim jobs prospects, depressed wages and high unemployment, according to “The Class of 2013,” an April 10 report by the Economic Policy Institute in Washington, D.C.
“The weak labor market has been, and continues to be, very tough on young workers,” the report says. “At 16.2 percent, the March 2013 unemployment rate of workers under age 25 was slightly over twice as high as the national average. Though the labor market is now headed in the right direction, it is improving very slowly, and the prospects for young high school and college graduates remain dim.”
As President Barack Obama looks to strike a “grand bargain” with Republicans on the deficit and entitlements, it doesn’t look like graduates can count on Washington for significant help. There’s no talk about a new stimulus even though we are living in economic hard times—the Great Recession and ensuing years—that the authors of the report, Heidi Shierholz, Natalie Sabadish, and Nicholas Finio, describe as “the longest, most severe period of economic weakness in more than seven decades.”
Automatic cuts in government spending mandated by the budget deal known as the sequester will result in as many as 750,000 lost jobs, according to the independent Congressional Budget Office.
While an important advance for working people, Obama’s proposal to raise the federal minimum from $7.25 to $9 isn’t a sure thing. If it does pass Congress, the new minimum wage would not be fully in effect until 2015.
Over the past year, employment prospects for young workers have improved modestly as the economy has slowly turned around. But the unemployment rate of young high school and college graduates remains higher than before the 2007 recession. According to the EPI study:
- For young high school graduates, the unemployment rate is 29.9 percent (compared with 17.5 percent in 2007) and the underemployment rate is 51.5 percent (compared with 29.4 percent in 2007).
- For young college graduates, the unemployment rate is 8.8 percent (compared with 5.7 percent in 2007) and the underemployment rate is 18.3 percent (compared with 9.9 percent in 2007).
The long-term wage picture for young high school and college graduates is “bleak,” the EPI report notes. They can expect to earn less than they would have if they graduated in 2000. Adjusted for inflation, the wages of young high school graduates fell 12.7 percent from 2000 to 2012. Wages dropped 8.5 percent for young college graduates. Because the downward pressure on wages is so woven into the fabric of our economy now, it is unlikely that most of the young graduates will make up for the lost income in their lifetimes.
It’s a familiar story by now, but young graduates cannot count on finding jobs with good benefits. Between 1989 and 2011, the percentage of young high school graduates with employer-provided health insurance fell from 23.5 percent to 7.1 percent. The share with pensions went down from 9.7 percent to 5.9 percent.
During the same period, the percentage of young college graduates with health insurance decreased by nearly half, from 60.1 percent to 31.1 percent. The share with pensions declined from 41.5 percent to 27.2.
With this economic outlook, it looks like activists from the Occupy Movement could be the most successful recruiters on college campuses in the coming months.
Posted on thenewrossroads.com on April 15, 2013.