Recent College Grads Can't Get Jobs? Blame the Parents!
Just over a year ago, I wrote in a column that 2009 was "the worst year ever" to graduate from college: "Layoffs have flooded the job market with grizzled veterans more motivated than your average 22-year-old with nothing but a beer-and-Bisquick habit to support."
At the time, I was right. The bad news? 2010 is looking like it might well be an even worse year to graduate. U.S. employers are expecting to hire 7% fewer college graduates from the class of 2010 than from the previous year. Between December 2007 and January 2010, the size of the labor force fell 6.3% for young adults and grew 8.5% for workers for 55 and older, according to a new study from the Economic Policy Institute.
How Parents Help -- and Hurt
Those figures are due to poor stock market performance over the long run and falling home prices that have left many older workers with much smaller nest eggs than those calculators on personal finance websites suggested that they would have by now. So they are staying in the workforce, leaving little room for young job seekers whose employment prospects have already been bludgeoned by a weak economy.
The study also found that young people who have found jobs tend to be underemployed, working at positions below their skill levels and outside their areas of training. During the first four months of 2009, less than half of college graduates under 25 were working at jobs that required a degree.
For better or worse, depending on your political perspective, the health-care reform bill makes the situation a little less precarious. By allowing young people to stay on their parents' health insurance plans until 26, young college graduates can freelance, bartend and per diem their way through the recession without having to worry about being a broken leg away from the poorhouse.
Recession's Long-Lasting Effects
And then when the economy turns around, they'll pick up decent jobs and be fine, right?
Not exactly. Recent research has shown that the effects of graduating in a recession are long-lasting. In 2006, the National Bureau of Economic Research reported: "Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9% of annual earnings in the initial stage, eventually recede, but slowly -- halving within five years but not disappearing until about 10 years after graduation."
The recession's impact on employment is bad enough. But young people's dismal job situation worsening because their parents are taking forever to retire just adds insult to injury.
Maybe there's some justice in letting parents pay for their kids' health insurance for a few more years.
Zac Bissonnette's book Debt-Free U. will be published by Penguin in the fall.