College grads avoid brunt of layoffs
Published: Saturday, January 10, 2009 at 2:10 p.m.
Last Modified: Saturday, January 10, 2009 at 2:10 p.m.
For one group of workers, the recession hasn't hit quite so hard.
Their unemployment rate was nearly half the overall workforce in December. When they do lose jobs, they tend to find work more quickly than others. Their wages are higher, and they typically have enough savings to survive between jobs.
Yes, it still pays to get a college degree.
Despite recent high-profile layoffs of bankers, accountants and other highly educated workers, college graduates are faring much better than the labor force as a whole. For December, their unemployment rate was 3.7 percent, compared with 7.2 percent for everyone regardless of academic pedigree.
The reason is simple: A degree usually leads to higher-paying, more stable jobs. And if that job goes away, a highly educated worker can always take a step down the career ladder. Or, they may not have to.
"We've made a big committement where we're still recruiting on campus," said Jennifer Allyn, managing director in office of diversity at PricewaterhouseCoopers. "We hired 3,000 people last year and we plan to do the same this year. It's not like it's going into a deep freeze."
College grads "have a privileged position in the labor market," said Lawrence Mishel, president of the Economic Policy Institute in Washington.
That's not to say they haven't been hurt by the recession. The December jobless rate is just shy of the record for college grads — 3.9 percent hit in January 1983.
Tom and Shelley Ziech both have master's degrees and impressive resumes. They both lost their jobs last year.
The Milwaukee couple makes ends meet by drawing on unemployment insurance, severance packages and personal savings. So far, they have avoided spending retirement investments.
Tom Ziech said he's confident the couple will be back at work soon.
"I have felt fairly optimistic, but I don't know why. I don't really have anything to back that up," he said with a laugh. "But I feel optimistic I'm going to find something."
The spread between college graduates and overall unemployment has persisted through every recession since at least the 1970s.
The 3.9 percent unemployment record in 1983 for college grads compared with an overall jobless rate of 10.4 percent. Though the Labor Department lacks comparable figures for college graduates before 1992, other department data suggest the jobless rate for graduates peaked around 3.9 percent in 1983.
The spread is there in good times, too. Since 1992, the jobless rate for college graduates has hovered near 2 percent. It's risen as high as 3.4 percent in 1992 and as low as 1.5 percent during the dot-com boom in 2000. By contrast, the jobless rate for high school dropouts rose as high as 12.2 percent in 1992. The lowest it ever got was 5.8 percent in 1999, and it climbed to 10.9 percent last month.
College grads also earn more.
When workers graduate high school, their average wage jumps about 32 percent, from $11.38 to $15.01 an hour. If they attend college but don't get a degree, their wages rise about 13 percent. But if they graduate, their average hourly wage leaps 77 percent to $26.51 an hour. Getting an advanced degree boosts earnings 27 percent, to $33.57, according to a 2008 study from the Economic Policy Institute.
Still, Mishel predicted the unemployment rate for college graduates will reach a record 4 or 5 percent during 2009 and that educated workers "are going to experience the kind of pain that has been common for people with less education."
The power of a degree also has been partly diluted by broader college attendance. Ten percent of workers had a college degree in 1973, 12.7 percent in 1979 and 21 percent in 2007, according to the Economic Policy Institute.
"Back in the 70s and 80s, a much smaller percentage of the work force had a college degree," said Steven J. Davis, a scholar with the American Enterprise Institute think tank in Washington. "When your mother told you to get a college degree so you can get a secure job, well, that was a much more powerful track to the secure job."
College grads have more options when they're job hunting than people with less education. As a rule, it's easier to move down the work-force food chain than to move up, said Sylvia Allegretto, an economist at the University of California, Berkeley.
Kris Kleindienst, co-owner of Left Bank Books in St. Louis, is used to seeing a few college graduates with a "book disorder" apply for clerk positions. But this year, she is interviewing trained engineers in their 50s who are out of work.
"It's totally ridiculous that they would come here to work, on many levels, but they are applying," she said. "If you have to take a job that is beneath you, then this is a great environment."
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