Text #10: Tricky Timing for the Class of 2016

This year’s high school graduates were 10 years old when the economy hit the skids in 2008. Many college graduates in the class of 2016 were 14. Yet, their economic prospects remain darkened by the enduring effects of the Great Recession.

That is not to say there has been no improvement. The class of ’16 has more and better-paying job opportunities than earlier post-crash graduating classes, according to a new report from the Economic Policy Institute. But for the most part, today’s graduates still face employment conditions that are worse than in 2007, the year before the recession, and are much worse than in 2000, when the economy was last at full employment.

The recent unemployment rate for college graduates ages 21 to 24 was 5.5 percent, compared with 4.3 percent in 2000. Their underemployment rate — which includes the unemployed, those who have briefly left the work force and those stuck in part-time jobs — was recently 12.3 percent, compared with 7.1 percent in 2000. And in 2015, nearly 45 percent of college graduates ages 22 to 27 were in jobs that did not require a college degree, compared with 38 percent in 2000. Over the same period, student debt has soared, which means that many of today’s graduates are trying to pay off more debt with less secure jobs.

The situation for new high school graduates is far bleaker, in part because many lower-wage jobs are being filled by college graduates. Among high school graduates ages 17 to 20, unemployment is nearly 18 percent, compared with 12 percent in 2000. One in three are underemployed, compared with roughly one in five in 2000.

The soft labor market has depressed wages, with average hourly pay for young college graduates, recently $18.53, barely higher than it was in 2000, adjusted for inflation. Young high school graduates are averaging only $10.66, lower than in 2000, adjusted for inflation.

Without full employment to help push up pay, wages and salaries for all workers lag even as corporate profits rise. But the consequences for young people are particularly severe, because early bouts of unemployment, underemployment and low pay can continue to harm job prospects and earnings over a long period. One’s pay and position starting out has a big impact on subsequent raises and promotions, and thus on accumulated wealth over a career.

This trap is especially dangerous for racial minorities and women, who even in the best of times have to combat bias in hiring and pay. For young black college graduates, the recent unemployment rate, at well over 9 percent, is double that of young white graduates. Young female college graduates earn 79 cents for every dollar earned by their male peers, a gap that is bound to get worse as men at the very top of the wage ladder capture an increasing share of total pay.

These persistent problems are the result of political failure. Job growth and pay growth were weak and largely ignored as policy issues for most of the 2000s, even before the Great Recession. To restore full employment after the crash would have required sustained government investment in many areas, including infrastructure, education, health care and energy technologies.

Even piecemeal labor market improvements have been stymied or delayed. A higher federal minimum wage would lift wages for low-earning graduates, and updated overtime rules for salaried workers would liftmiddle-class pay. But lawmakers last raised the minimum wage in 2007, and it will be 2017, at the earliest, before they do so again. Similarly, the administration is expected to issue new overtime rules soon, but at this late date, putting them into effect will fall to the next administration.More public spending could have raised demand at a time of diminished private-sector spending. But Republicans in Congress have rejected that approach and have embraced budget cuts that have hampered broader recovery and growth, at times with the support or acquiescence of Democrats and administration officials.

In the meantime, the class of 2016, like many before it, will graduate into a tough economy in which even the college educated are not assured a toehold.

By THE EDITORIAL BOARD for the NY TimesMAY 14, 2016

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RESPOND:

- What is this article saying?

-Is it hopeful or bad news for you guys as almost college students?

-Use evidence from the text to explain your thinking.

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