Fewer U.S. College Grads Are Stuck With $25,000 Entry-Level Jobs
(Bloomberg) -- 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.
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.
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.
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.
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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