Recession Hurt Young Graduates, but Not as Much as Less-Educated Peers

January 09, 2013

The recession took a toll on recent college graduates, whose employment rates and earnings dropped from roughly 2003 to 2011. But they still fared quite a bit better than their peers with less education, suggesting that college degrees continue to protect even young workers. Those are the main findings of a report released on Wednesday by the Pew Charitable Trusts' Economic Mobility Project.

The report, "How Much Protection Does a College Degree Afford? The Impact of the Recession on Recent College Graduates," uses data from the federal government's Current Population Survey to examine labor-market outcomes for 21- to 24-year-olds with high-school diplomas as well as those with associate and bachelor's degrees.

Other research has shown that college graduates of all ages fared better in the recession than did people with less education. The Pew study focused on people in their early 20s because of the many headlines about struggling recent graduates, Diana Elliott, the project's research manager, said at a news conference.

Researchers, she said, took a "holistic" look at possible employment outcomes, including whether bachelor's-degree holders were either overqualified for their jobs or underemployed, meaning in the latter case that they worked part time or were poorly paid.

While employment rates for 21- to 24-year-olds at all three education levels dropped during the recession, decreases were smaller the more education the group had. Before the recession, about 69 percent of young graduates of four-year colleges were employed. During the recession, that rate fell to around 67 percent, and after the recession it dropped further, to approximately 65 percent.

For high-school graduates, the situation was worse. About 55 percent of that group was employed before the recession, 51 percent during it, and 47 percent in the period afterward. So while college graduates' employment rate dropped 7 percent over that time span, high-school graduates' rate fell 16 percent, according to the report.

Associate-degree holders fared better than did high-school graduates but not as well as those with four-year degrees.

"Any amount of postsecondary education does improve the labor-market outcomes," Ms. Elliott said.

As for wages, young workers in all three groups showed drops from the period before to after the recession. For those with four-year degrees, however, wages were higher to begin with, and they decreased less.