It’s no secret that young Americans with a college degree have an easier time finding jobs than those with only a high school diploma. Last year, the unemployment rate for young adults with only a high school diploma was almost 10 percentage points higher than for those with a bachelor’s degree.
Yet their success in the job market often came from lowering their sights and elbowing aside less educated people to take lower-skilled positions they once might not have pursued. In what is being called the “Great Squeeze,” college graduates are squeezing out other young adults with more modest educational records.
Related: The 10 Best Cities for Young People to Find Jobs
Since 2009, many of the occupations with the fastest employment gains for young people have been lower-skill jobs that typically pay less, according to a new report by economist Diana G. Carew of the Progressive Policy Institute.
Production, health care support and food preparation and serving occupations were the three main occupational groups to see gains for young Americans across all levels of educational attainment. The downside is that all three groups have mean hourly earnings significantly lower than the national average for all occupations.
Notably, young college graduates saw a 15 percent increase in office and administrative employment while more generally employment in this group declined, the report stated. “This is consistent with the argument that young college graduates are struggling with high underemployment,” Carew wrote – and in the process are squeezing their less educated rivals aside.
The plight of the nation’s “Young Invincibles” – the 80 million Americans age 16 to 34 – has gotten a lot of attention recently, especially because of the push by the Obama administration to enroll young adults in Obamacare to improve the makeup of the insurance risk pools.
Young people aged 18 to 34 have struggled with double-digit unemployment rates for almost six years and account for half of the 10.9 million unemployed Americans, according to government figures. The youngest members of this cohort face unemployment rates of 15 to 16 percent, or over twice the 6.7 percent national average. And many have moved in with their parents and given up looking for work.
Related: As Millennials Lose Ground, So Will the Economy
A recently released study by the organization called Young Invincibles, a national research and advocacy group for young Americans, concludes that the employment crisis among young people is taking its toll on federal and state governments in the form of lost tax revenue and social welfare costs. Among the key findings of the new report: The total annual cost to federal and state governments for severely high unemployment rates among 18-to-34-year-olds is almost $8.9 billion.
Related: Why Is the Recovery so Agonizingly Slow?
Carew is director of the Young American Prosperity Project at the PPI. Her study, scheduled for release Thursday morning at a conference on jobs and wages for young Americans, offers this bit of encouragement to young people who had a rough recession and almost no real recovery: a labor market recovery is coming, although it will be gradual and uneven by educational attainment.
Here are three other key findings:
- Labor force participation rates for young Americans with a post-secondary degree have been stable since 2010, but are falling for those without one. Between 2007 and 2013, the decline in labor force participation among young Americans translated into an additional 3.3 million young Americans outside the labor force.
- Unemployment is falling for young Americans across all levels of educational attainment as the broader labor market recovery gains momentum. Still, in 2013 the unemployment rate for young people with only a high school diploma remained almost 10 percentage points higher than those with a BA – 14.1 percent compared to 5 percent respectively.
- Average annual real earnings rose in 2012 for young Americans with a high school diploma and for those with a college degree. The increase in real average annual earnings comes after almost a decade of decline, although the real earnings for those with some college education but no degree saw a continued drop in 2012.
“The financial strain on young college graduates has been further exacerbated by the concurrent rising student debt burden, and high tuition,” the report said.
While there is no panacea for the problems, Carew urges government policy makers to help young graduates and those still in school to better align their skills with the needs of employers.
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