By Cameron Saucier
Tyler Erickson stood proudly on the stage, gazing out into the smiling sea of parents, friends and supporters that came to see his graduating class of 2013 from the Rochester Institute of Technology. Erickson grasped his diploma, shook a hand and exhaled a breath of relief. In that brief moment, he reflected over the four years of strife he had overcome to build his career. Erickson’s future seemed auspicious.
Nine months later, 25-year-old Erickson was working at an Apple store as a sale associate earning slightly above minimum wage.
Graduating from one of the top technical universities in New York, it wasn’t that he couldn’t find work within his field of study. Erickson said he had difficulty finding a company that was willing to give him an adequate salary.
“I had a great interview right out of college with a company in Charlottesville, Virginia,” Erickson said. “They needed someone to manage their online and digital communities. They asked me about compensation. I said around $40,000 a year seemed fair.”
Erickson said he had done his research, knowing that the average salary range for someone in his marketing degree field was $40,000 to $110,000. To be safe, he chose the lowest possible salary.
“I never heard from the company again,” he said. “It really left a sour taste in my mouth. I think it was because they saw my wage expectations as too high.”
Examining salaries for post-graduates.
Increasingly, college graduates have to dip below their desired compensation to stand out in the hyper competitive, entry-level job market. As a result, many struggle to find equitable salaries that match their degrees, while companies feel little pressure to increase entry-level wages.
“College graduates’ wages don’t always adjust well,” said Bart Hobijn, senior microeconomic researcher at the Federal Reserve Bank of San Francisco. “Many (graduates) are entering low-paying positions where the growth of starting wages is slow.”
Chris Sonzogni graduated from Elon University in 2013 with a dual degree in creative writing and English. Shortly after graduation, he took a job as a content manager with a tech startup in Wilmington, North Carolina. Sonzogni managed his company’s social media, blogged for its website and handled its marketing division.
“I was making $10 an hour with no prospects for advancement,” Sonzogni said. “This wasn’t something I felt like I’ve worked for or been accustomed to.”
In July, Hobijn and his research partner, Leila Bengali, published a research report about the wage growth gap for recent college graduates in the U.S.. The two isolated college grads as a segment of the labor market, delving into statistics from the Current Population Survey, which is used by the Bureau of Labor Statistics to measure median earnings and unemployment rates.
“What we found was that college grads are very desirable workers,” Hobijn said. “But they are not protected by factors that make other workers’ wages rigid and slow to adjust to conditions such as recessions.”
With very few exceptions, wage growth for post-grads has been limited for all occupation groups. Within the most popular fields of engineering, business and finance, median weekly earnings have actually decreased from 7.7 percent in 2011 to 2.6 percent in 2014, according to Hobijn’s research.
Additionally, Hobijn said recent graduates have lower wage growth compared to other full-time workers. From 2011 to 2014 median weekly earnings for recent graduates increased about 2 percent less than the earnings of other full-time workers.
Hobijn’s findings were reflected by a May report from the Economic Policy Institute (EPI) entitled “The Class of 2014.” The report looked at the job prospects and economic conditions for the most recent college graduates in the U.S. It showed that inflation-adjusted wages for young college graduates have dropped 7.7 percent since 2000.
“What we’re seeing is employers having limited openings and a lot of job applications,” said Alyssa Davis, a co-author of the EPI report.
The report also found that the unemployment rate of young college graduates was 14.5 percent as of March 2014, nearly double the overall U.S. unemployment rate at 6.7 percent.
“Young college grads are faced with higher rates of unemployment and underemployment,” Davis said. “When there is high unemployment and weak labor market prospects, there is also weak wage growth.”
Even as the U.S. job market recovers from the Great Recession and its aftermath, wages of young college graduates have dropped by 6.9 percent since 2007. The wage decline is worse for women, at 10.1 percent, than for men, at 4.0 percent, according to the EPI report.
“Young workers are not getting a big enough piece of the pie,” said Davis, “because recovery has been agonizingly slow due to government action. Bad economic times can effect the earnings of college grads 10 to 15 years down the road.”
Encouraging the pursuit of higher education
Although college graduates are increasingly accepting low-wage and part-time jobs, some economists believe that a college degree is still worth the gamble.
“While it’s been tougher for college grads, it’s also worse for non-college grads,” said Jaison Abel, a research officer for the Federal Reserve of New York.
Abel co-authored a 2014 study that looked at whether college graduates were finding good jobs. The report concluded that while unemployment and underemployment for recent college grads have trended upward since 2001, high levels of economic distress for recent graduates aren’t a new phenomenon.
“… new college graduates typically take some time to transition into the labor market and find jobs that utilize their education,” the report detailed.
Abel said that over time, a college education could still be useful and important. “This is an investment you’re making, “ he said.
Part of the key to profiting from a college degree is choosing the right major. Abel said there is a strong link between a major choice and an occupation choice. Certain technical majors, such as computer science or engineering, typically have higher entry-level wages.
“How you spend your time in school is a big factor,” Abel said.
Today, both Erickson and Sonzogni have stable jobs with salaries that exceed their living expenses. Even so, the two said their wages could be more competitive compared to industry averages.
Erickson now works for Create Digital, a marketing firm based in Glen Allen, Virginia. Sonzogni works at a non-profit, economic development organization called GenFKD in New York.
“My current position pays me substantially higher than my past job at Apple,” said Erickson. “I negotiated to receive higher compensation and showed the value of my education.”
Erickson said that although he finally found work within his major, he couldn’t help but feeling misguided about the redeemable value of a degree perpetuated by professors and academic advisers.
“Higher education sets an unrealistic expectation about jobs and compensation for everyone that graduates,” he said. “Either they’re clueless or the companies aren’t keeping up with industry trends.”