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Why College Graduates Are Increasingly Working Low Wage Jobs

By Travis Waldron  

"Why College Graduates Are Increasingly Working Low Wage Jobs"

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The Wall Street Journal reported last week that, according to Labor Department data, roughly 284,000 American college graduates are working minimum wage jobs. While that is down from its 2010 peak, it is still double the number who worked such jobs before the Great Recession.

As the Journal notes, the share of college educated workers in minimum wage jobs hasn’t changed — it is still roughly 8 percent. What has increased, however, is the number of college graduates working for hourly pay:

Instead, they’re ending up slightly higher up the ladder, in jobs that pay an hourly wage. In 2002, college graduates made up 13% of all hourly workers. That figure has risen every year since, hitting 17.8% in 2012. There are now 13.4 million college graduates working for hourly pay, up 19% since the start of the recession. While the Labor Department doesn’t provide data on how much those jobs pay, it’s a safe bet most of them aren’t the kind of jobs students were hoping for when they graduated.

These increases, both in minimum and hourly wage jobs, are likely due to explosive growth in low-wage sectors since the end of the recession. Low-wage occupations accounted for a fifth of job losses during the recession, but they made up 58 percent of the jobs added since the recession’s end, according to a recent study from the National Employment Law Project. Meanwhile, mid-wage occupations, which would generally cater to recent college graduates, made up 60 percent of recession losses and just 22 percent of jobs added since it ended.

Low-wage sectors, in fact, have grown faster than the overall American economy since the end of the recession, according to NELP. The expectation is that growth in mid- and high-wage occupations will offset that boom as the economy strengthens, but studies have offered a different picture. The Economic Policy Institute, in fact, projects that one-in-four workers will be in low-wage jobs in 2020, roughly the same number that worked in those jobs immediately after the recession in 2010.

So while low-wage jobs came back faster than they left, mid- and high-wage jobs could continue to return at a far slower pace. That will leave college graduates less able to contribute to the economy (especially as they deal with huge student debt burdens). But since they still fare better than less educated workers, it also means many workers will be pushed down the wage ladder or out of the labor market altogether.

‹ Econ 101: April 1, 2013

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