College graduates, brace yourselves for some disappointing news.
Wages for university grads are 2.5 percent lower than what they were 15 years ago, according to the latest edition of the Economic Policy Institute's annual report on the labor market prospects of new workers. The research found that young college grads’ hourly wages currently sit at an average of $17.94, or just over $37,000 annually. In 2000, the average hourly rate was $18.41.
This drop has hit female grads hardest: Their wages fell from $17.74 in 2000 to $16.56 in 2015 -- a 6.7 percent decrease. Wages for their male counterparts actually increased by 1 percent over the same time period -- from $19.44 to $19.64.
Female grads, per the study, earn 15.7 percent less than their male counterparts, or roughly 84.3 cents to a man's dollar. Meanwhile, the wage gap between men and women in the national workforce overall sees women earning only 78 cents to a man's dollar. While the gap is narrower for female college grads, according to the EPI's study, these data show that having a higher education degree does not necessarily mean equal pay for young women.
“It’s possible that since we’re looking at averages, we’re not picking up on growth in high-end jobs,” senior economist Elise Gould, one of the study’s authors, said of the diverging wages among men and women.
Men are not faring much better, though. Their 1 percent wage increase is minuscule, considering the fact that it represents a period of 15 years.
The national unemployment rate is currently at 5.4 percent, which signals a promising wage advantage for those just entering the workforce, The Wall Street Journal noted recently. But the EPI study, which focuses on younger workers, found that unemployment remains high for college graduates, 7.2 percent of whom are without jobs.
The unemployment rate for grads was 5.5 percent in 2007, before the recession. The EPI researchers point to dwindling demand for goods and services, which negatively impacts companies’ ability to bring in new hires.
Despite their degrees and skills, many grads find themselves downgrading to less-desired employers when jobs are scarce, the researchers found.
This can be detrimental to young professionals' careers, since low starting salaries will likely set them back for subsequent jobs. Research has shown that those who graduate in a poor economy can expect wage losses for as long as 10 years as a result of low initial wages.
For young people, this loss “probably puts off other investments because they don’t have the income to pay for it, like buying a car or a house,” Gould said.
The report also found that college grads aren’t heading to graduate school as a way to ride out the poor job market. Enrollment rates for additional schooling, like master’s programs, are relatively equal to enrollment rates before the recession. While the percentage of women in grad school has picked up following a continuous decrease since 2010, enrollment rates for men dropped 6 percentage points between 2011 and 2014.
Many college students take on campus jobs to pay their tuition, noted Will Kimball, another author on the study. “If there aren’t enough opportunities for them to earn money or put themselves through college, that certainly will impact their ability to enroll in further programs.”
In order for college graduates to see better prospects, policies that bump up employment and salaries must be enacted, and all workers -- not just new graduates -- will need to have greater bargaining power.
“The biggest thing is to approach an economy that has full employment, where people can negotiate better wages and get better jobs when employers need more workers,” Kimball said.
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