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Students graduate from college with the expectation that they will quickly land a high-paying job.
Graduates of 2012 face challenges.
For the past several years, most colleges have seen costs rise, donations decline, and assistance from state and federal governments shrink. Few courses are removed from the catalog and even fewer professors terminated. Attrition and flat salaries have been insufficient to stem the tide. The burden is loaded onto the students. Coming full circle, colleges work ever so hard to facilitate student-loans for the students to pay those higher costs.
Over 66% of the graduates will leave the platform with college-induced debt. The government student-loan debt, alone, will average more than $25,000 per student.[1] The average student will make $44,000 in the first year on the job, about $20.50 per hour. In terms of inflation-adjusted dollars, this will be only slightly more than similar graduates earned in 1989, almost a quarter century earlier.[2] After taxes, the average graduate will take home around $37,000. If the newly-hired graduate dedicates a full 10% of the take-home pay each month to repay the student loan (an unrealistic figure after housing, food, etc.), the loan repayment will require at least twice as long as did the education, itself. Realistically, loan repayments often extend into decades.
For 2012, the top five majors in order of largest to smallest number projected to be hired are: Engineering, Business, Accounting, Computer Science, and Economics.
The bottom five majors in the same order are Social Services, Humanities, Agriculture, Health Services, and Education.[3]
Only 49% of the graduates will have landed a job by this time next year. As a recent comparison, for the years 2005-2008, that average would have been 73%.3
Why is the college job market so bleak? There are many reasons and they all contribute. I try to list a very few in order of effect.
1.) Government policies, misguided incentives, and pointless restrictions have discouraged the growth of all businesses except the government, itself, and those businesses like health-care that are hugely government-funded.
2.) Fewer and fewer US citizens are graduating with STEM (Science, Technology, Engineering, and Mathematics) degrees. As shown above, this is the brightest spot in the job market.
3.) The job market is worse than reported. For example, in February, two million people gave notice of leaving their jobs, the highest figure since 2008.[4] This gives the false impression that the job market is improving because those jobs are statistically counted as being available for hire; many of these jobs will not be replaced, however, and many of those persons who left their jobs will be competing for other jobs.
4.) The competition for jobs is increasing because of the backlog of available graduates from prior years who did not find a job.
The list could go on but I would fear partisan interpretation rather than factual consideration. Make your own list of reasons. The fact remains that this year’s graduate will face formidable challenges in the job market.
In the next blog, I post my own remedies.
[1] Source: The Institute for College Access & Success, in independent organization.
[2] Source: Economic Policy Institute, a left-leaning think tank.
[3] Source: National Association of Colleges and Employers.
[4] Source: US Labor Department