New college graduates earning less than a decade ago
Newly minted college graduates lucky enough to find a job after leaving school are in for a shock: They’ll likely be earning less money than they would have a decade ago.
Since 2000, these young workers have seen inflation-adjusted wages deteriorate, according to research by the Economic Policy Institute.
Here’s the math: In 2011, fresh college grads earned an average of $16.81 an hour, or about $35,000 a year. That’s down 5.4% from 2000. Women fared worse than men. Their wages declined 8.5% to $15.74 an hour over the same period while those of men dipped 1.6% to $18.29 an hour.
The decline means real money: roughly a $2,000 drop in annual earnings, according to EPI.
So why are real wages declining for new college grads? Economists point to a variety of factors, including two recessions in the last decade, the continued loss of jobs offshore and automation that has affected even white-collar fields such as law and technology. Some contend that colleges are churning out too many liberal arts majors and not enough scientists.
Meanwhile, college debt is soaring. Last year, students took out $117 billion in new federal loans, pushing the total outstanding to above $1 trillion, according to the Consumer Financial Protection Bureau.
The average graduate is on the hook for $25,250. And unlike other forms of debt, student loans are virtually impossible to discharge through bankruptcy. Uncle Sam frequently garnishes paychecks, tax refunds, even Social Security payments from people who haven’t paid their government-backed loans.
Here’s wishing the best of luck to this year’s grads. They’ll need it.
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