Salaries For College Graduates Drop

average starting salary college graduates droppingCollege enrollment jumped during the recession, but the pay-off of a college education did not. As the Economic Policy Institute reports, the average starting salary of young college graduates, adjusted for inflation, has dropped by almost a dollar in the last 10 years.

For the last several decades, and particularly in the late 1980s and 1990s, kids starting college could expect ever-greater gains from their higher education, as the economy became more knowledge-based. In 1979, a male college graduate could expect wages around 20 percent higher than a male high school graduate, a gap that jumped to over 40 percent in 2000. For women, the advantage of a college degree in terms of real wages was significantly more.

By last year, however, those numbers had sunk to near late-1980s levels. Young female graduates are earning an average real wage of $18.43 an hour and men $21.77 an hour, compared to a peak of nearly $20 an hour for women and $24 an hour for men right before the Dot-com Bust. That's a difference of $3,266 a year for women and $4,638 for men working a 40-hour week.

During this time period, all American workers saw a modest growth in their real wages, although this was almost entirely packed into women's paychecks. For men, there has been almost no growth in real earnings in the last decade.

"Only those at the very top really saw growth during this period," said Heidi Shierholz, an economist at the Economic Policy Institute. "At all levels, we're not seeing much to celebrate."

But young college graduates have a loss of thousands of dollars a year to mourn. "They occupy an interesting spot in the labor market," said Shierholz. "They have some shelter to their educational status, but they're hurt by their age. They're more vulnerable."

The decline in real wages for young graduates is perhaps no surprise to young graduates, many of whom are biding time with low-wage work and no-wage internships until a better opportunity comes their way.

The downtick in real wages isn't just a temporary symptom of the recession. It seems that the supposed demand for high-skilled, college-educated workers has been more than filled by expanding college enrollment. And when supply outpaces demand, wages fall.

This doesn't mean college isn't worth it, however. High school graduates have seen their entry-level wages plummet since the early 1970s, and a college degree translates to an extra quarter-to-half-million dollars in earnings over a lifetime, according to The Wall Street Journal.

It's just that the relative benefit of a college degree, which has been growing and growing faster for the last few decades, has begun to slow. Too many high school graduates, it seems, got the memo that a college degree was worth the dime.



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Claire Gordon

Staff Writer

Claire Gordon has contributed to Slate's DoubleX, the Huffington Post, and the book Prisons: Current Controversies. While an undergraduate at Yale University and a research fellow at Yale graduate school, she spoke on panels at Yale and Cornell, and reported from Cairo, Tokyo, and Berlin.

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some1do

Existing salaries and prices cannot be sustained during a deflationary crash. Money supply is deflating. Google for "deflationary crash" to understand how and why deflation occurs. As the money supply shrinks, it will become harder and harder to earn enough money to pay debt. Do not go into heavy college debt in this economic environment.

September 26 2011 at 11:53 PM Report abuse rate up rate down Reply

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