Business

Starting salaries for college grads lag behind pay for workers overall

Starting salaries for college grads growing half as fast as the pay of the overall U.S. workforce
Wages for college graduates have stagnated since recession

Starting salaries for recent college graduates have risen far more slowly than the average earnings of all U.S. workers since the recession, an analysis by the Federal Reserve Bank of San Francisco found.

The study, released Monday, found that median earnings for recent college graduates rose only 6% in the seven years between 2006 and 2013, less than half the rise of 15% for the overall U.S. workforce over roughly the same period.

Such disparities in pay growth rates have been seen in previous recessions, but the report says the current one "is substantially larger and has lasted longer than in the past."

"The gap between the two groups of employees appears to be substantially wider and their paths appear more divergent," the report found.

College graduates are particularly susceptible to wage stagnation during weak labor markets because older, experienced employees tend to have more job protections. 

In trying to pinpoint the lackluster wage growth for recent college graduates, researchers at the San Francisco Fed had a key question: Are graduates getting different jobs that pay lower wages, or are salaries in the traditional career fields not growing?

The study concluded that college graduates are going into the same fields as before the recession, but that wage growth has been slow. In the two most popular categories for recent graduates -- professional occupations and management, business & finance -- there was only a 2.6% growth in median earnings since 2007.

"For almost all occupations and skill groups ... we find that recent graduates experienced lower wage growth than other workers," the report said.

Such sluggish growth could dissuade potential college students from enrolling, the report said, but the authors cite ample research showing that the lifetime earnings of college graduates far outpace those of non-graduates.

Entering the job market during an economic downturn, however, is likely to make it more difficult to pay back debt in the near term, the report finds.

"Low growth in starting wages does not mean that going to college is a poor investment," the study concluded. "It just reflects that it will take longer to recoup the cost of the college."

Copyright © 2014, Los Angeles Times
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