“Members of the Class of 2012,
As a former secretary of labor and current professor, I feel I owe it to you to tell you the truth about the pieces of parchment you’re picking up today.
You’re f*cked.” – Robert Reich
Pretty strong words from President Clinton’s Labor Secretary, someone whom you would expect to give Obama a little rhetorical support in an election year. Nevertheless, I’ll give a slow clap for honesty.
No matter how you slice it, it’s ugly out there for college graduates (to say nothing about those who don’t have a college degree). There are few jobs. As Reich says, “fewer than half of the graduates from last year’s class have as yet found full-time jobs. Most are still looking.”
But looking and finding are two different things. Many past graduates continue to strike out in their job search, meaning the pool of applicants is growing exponentially while the number of openings remains fairly steady. Each new graduating class compounds the problem – adding more workers to an already bloated market.
Many will eventually become disillusioned with spending eight hours a day tweaking their resume to show why their literature degree would make them an excellent fit for a managerial position at Kroger’s. That’s one of the significant reasons behind why the labor force participation rates have plummeted for workers aged 16-25.
According to research conducted by Diana Furchtgott-Roth, Senior Fellow at the Manhattan Institute, the biggest decline in labor force participation rates has paradoxically been among the youngest workers who should be in their prime. “Over the past ten years employment has increased among Americans 55 and over by 8.9 million,” Furchtgott-Roth writes. “At the same time, it has declined by 3.1 million in the 25 to 54 age group, and by 313,000 among those aged 20 to 24.
Moreover, younger workers without a job are staying unemployed for a long time. Forty-seven percent of unemployed workers between the ages of 25 and 54 were out of work for 27 weeks or longer.
That problem was evident in the latest jobs report. The New York Times reports:
“The share of working-age Americans who are either working or actively looking for a job is now at its lowest level since 1981, when far fewer women chose to do paid work.
. . . The decline in labor force participation is partly because baby boomers are hitting retirement age. But economists had expected the wave ore retirements to be at least partly offset by the number of workers rejoining the labor force as the economy improved.
‘There were a lot of younger people who had gone back to school to get more education and training, and we thought we’d see more of them joining the work force now,’ said Andrew Tilton, a senior economists at Goldman Sachs. Instead, the number of young people in the labor force also fell.”
While the number of young workers is plummeting, so too are the paychecks of many graduates. A new study conducted by the Economic Policy Institute finds that “long-run wage trends for young graduates are bleak.” Indeed, the wages of high school graduates fell by a whopping 11.1 percent and the wages of college students fell by 5.4 percent.
But while wages are falling, college tuition, and thus student loan debt, is soaring. As a result students are being forced to move back in with mom and dad. In 2005 thirty-six percent of recent college graduates lived at home following graduation. That figure reached 43 percent in 2011.
All of that is just a long-winded explanation of what Robert Reich summed up in just two words: “We’re f*cked.”