This month Policymic published several little known facts about recent college graduates. They found two thirds of college graduates graduate with student loans. Student loan debt is generally held by families who have a net worth of less than $8,500. The average student owes $29,400 in 2012. Forty million Americans hold $1 trillion in outstanding student loan debt. Seventy-percent of people with student loan debt are 30 years or older. And 52% percent of college graduates strongly or somewhat agree student loan debt is hindering their career choices. Now, combine those facts with the increasing number of college graduates who now hold minimum wage jobs, and the United States has a real employment problem.
According to a recent report by the Bureau of Labor Statistics, “about 260,000 people who have a college or professional degree make at or below the federal minimum wage of $7.25 per hour last year.” Some consider this good news since the number has actually decreased since 2010 when 327,000 workers were making minimum wage, but the number has more than doubled since 2005, prior to the Great Recession.
Why do so many college graduates work for minimum wage?
Why are so many graduates working low wage jobs? Experts suggest the labor market is expanding, but the greatest increase is for low wage jobs. For instance, according to a 2012 NELP report, most of the jobs created during the recession, an estimated 58%, are in the service industry such as retail and food preparation.
They also note that wages are also declining, although some states such as New Jersey, New York and Connecticut have higher minimum wage floors than the federal minimum wage of $7.25 per hour. The median income for American families also continues to decline with the Census Bureau noting that the average decrease since 2000 is approximately $4,000.
What are workers doing to combat lower wages? Some workers have decided to work together to get higher pay. Others have formed unions to bargain for better wages. At issue, however, is not whether someone at McDonalds should be making more money, it is how to create an economic system which allows for upward mobility for all workers. Retail and food service jobs have traditionally been only a starting place for workers, with the best workers acquiring skills which make them marketable for higher paying jobs.
A college degree is not enough
Gone are the days where having a degree is sufficient to land a nice job. A college degree will no longer buy you entry into the middle class. Students must be much more judicious about their decisions. First, consider how to pay for college without accumulating large debts. Next, consider what type of degree will make you most marketable when you leave college. Finally, consider whether a pricey college degree is necessary for the work you intend to perform. Many fields do not require a college degree, and you might be better served getting the right technical skills outside of a traditional university.
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