March 8, 2016

Will Your Student Be Underemployed After Graduation?

Underemployment may be front page news headlines as students graduate only to find themselves working in a low-wage job after shoveling a lot of blood, sweat, tears (and money) into obtaining their degree. Is there no hope? Should you have your student pull out of college and save the money?

I’m happy to say things aren’t all doom and gloom.

What is Underemployment?

The term “underemployment” refers to a person with a degree working in a job that doesn’t typically require a degree or one that isn’t related to their field. Picture a 20-something barista with a humanities degree.

According to a study by the New York Federal Reserve, underemployment isn’t something new – in fact the underemployment rates in the 1990’s were higher than they were during our most recent recession. Underemployment has dropped significantly in 2015 from a 2014 high of 47% to a 2015 low of 43%. 

The study found that recent underemployment rates were as high as 45%. Certainly not something you want to hear when you have a student in college. However, there are several reasons not to be concerned about underemployment.

The Cycle of Work

Students coming out of college may not always know what kind of place they want to work for. They may seek temporary or low-wage work to get some experience under their belt before job hunting in earnest. Once a student has a good idea of where they want to work they’ll need to apply, take an internship or volunteer to get experience. During this time they may still be employed in a lower-wage job making them technically underemployed.

Got a college grad working as a waiter? Take heart, the situation is often temporary.

The thing to realize about underemployment is that it is a transitory state. The New York Reserve study finds that the likelihood of underemployment drastically drops as students approach age 27. This implies the extra wisdom and experience they gain after graduation are setting them up for future success.

Lessening the Impact of Underemployment

In order to lessen the impact and duration of underemployment, students can do a few things.

Students should come up with some sort of plan for what they want to do after graduation. Jobs requiring special skills will have much lower rates of underemployment than generalist positions. Students with majors that are in demand will be less likely to be underemployed.

As alluded to earlier, students should try to find internships or even temp or volunteer work in their fields prior to graduation. This valuable hands-on experience can make a large difference in the job prospects for students. A study reported in the Wall Street Journal found a 14% increase in the number of interviews offered to students with internship experience over students without. Students with hands on practical experience will be more likely to land the job they want when they want it.

Be sure to talk to your student about their long term plans. Are they choosing the major that will be related and valuable for the type of work they wish to do in the future? Keep a level head, encourage your student to seek out experience and understand that underemployment is typically transitory. Things will be okay!

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