Volume 20, Number 1 ❖ 2014 ❖ www.newyorkfed.org/research/current_issues

in Economics and Financecurrent issues
FEDERAL RESERVE BANK OF NEW YORKAre Recent College Graduates
Finding Good Jobs?
Jaison R. Abel, Richard Deitz, and Yaqin Su
According to numerous accounts, the Great Recession has
left many recent college graduates struggling to find jobs
that utilize their education. However, a look at the dataon the employment outcomes for recent graduates over the
past two decades suggests that such difficulties are not a
new phenomenon: individuals just beginning their careers
often need time to transition into the labor market. Still, thepercentage who are unemployed or “underemployed”—working
in a job that typically does not require a bachelor’s degree—hasrisen, particularly since the 2001 recession. Moreover, thequality of the jobs held by the underemployed has declined,with today’s recent graduates increasingly accepting low-wagejobs or working part-time.

A

college education is an important investment that helps people build theirskills and prepare for high-skilled jobs. Historically, those who have madethis investment have received a substantial economic benefit that lasts overtheir lifetime. However, with the onset of the Great Recession and the sluggish
labor market recovery that has ensued, there have been widespread reports of
newly minted college graduates who are unsuccessful at finding jobs suited to theirlevel of education. According to many accounts, recent graduates are finding it
increasingly difficult to secure a job, and those who do find work are often
confined to low-wage positions. Stories of this nature raise troubling questions
about whether a college degree still helps people find good jobs.
In this edition of Current Issues, we assess just how difficult the labor market
has become for recent college graduates. In doing so, we move beyond anecdotal
evidence to examine more than two decades of data on the employment outcomesof recent college graduates. This approach allows us to put the experience of thoseentering the labor market during the latest business cycle into historical perspective.
Our analysis reveals that, by historical standards, unemployment rates forrecent college graduates have indeed been quite high since the onset of the GreatRecession. Moreover, underemployment among recent graduates—a condition
defined here as working in jobs that typically do not require a bachelor’s degree—isalso on the rise, part of a trend that began with the 2001 recession. To be sure, ourcomparison of the experience of new graduates today with that of new graduates inearlier periods shows that fairly high unemployment and underemployment are notuncommon for young people just after they obtain their degrees; this pattern arises
because college graduates generally require some time to transition into the labormarket. However, when we delve further to examine the quality of jobs held by theCURRENT ISSUES IN ECONOMICS AND FINANCE ❖ Volume 20, Number 1

underemployed, we find that recent graduates are increasingly
working in low-wage jobs or working part-time. We conclude
that while elevated rates of unemployment and underemployment may be typical for recent college graduates, finding a goodjob has indeed become more difficult.
In the final section of our analysis, we examine whether
recent graduates in some majors are achieving better labormarket outcomes than others. Our results show that unemployment and underemployment rates differ markedly acrossmajors: students majoring in fields that provide technicaltraining, such as engineering or math and computers, or
majoring in fields geared toward growing parts of the economy,such as education and health, have tended to do relatively well,even in today’s challenging labor market.

The Labor Market for Recent College Graduates

For the purposes of our analysis, recent college graduates
are defined as those with at least a bachelor’s degree who aretwenty-two to twenty-seven years old. We select this groupin order to capture college graduates within their first five
years after graduation.1 We exclude those currently enrolled
in school from our analysis, whether full-time or part-time, toavoid any confusion about whether people are unemployed orunderemployed because they are attending school.

Unemployment among Recent College Graduates
To get some perspective on the labor market difficulties ofrecent college graduates, we track the unemployment rate forthis group relative to three other groups: all workers (that is,
those who are sixteen to sixty-five), all college graduates, anda comparable group of young workers, aged twenty-two totwenty-seven, without college degrees (Chart 1). Our sample
period, extending from 1990 through the first part of 2013,
encompasses the 1990-91 and 2001 recessions as well as
the Great Recession of 2007-09. As Chart 1 makes clear, theunemployment rates for all four groups followed common
trends during this period: the rates tended to move with thebusiness cycle, rising during the recessions and dropping
steadily during the subsequent recoveries. In addition, theunemployment rate for all groups rose to particularly highlevels during and after the 2007-09 recession, and then began
to decline in 2010 as the labor market started to improve.
More telling, however, are the differences among the groups.
College graduates as a whole fared the best throughout the
sample period, experiencing unemployment rates that wereabout half the rate all workers experienced. But for recent
college graduates—the group of immediate interest for ourstudy—unemployment was consistently higher than for college
1 Some graduates receive their degrees at ages beyond their early twenties.
Because of data limitations, however, we are not able to identify these older
recent college graduates, so they are not included in our analysis.

2

Chart 1

Unemployment Rates for Recent College Graduatesand Other Groups
Percent
16

Young workers
All workers
Recent college graduates
College graduates

14
12
10
8
6
4
2
0
1990

92

94

96

98

00

02

04

06

08

10

12

Sources: U.S. Census Bureau and U.S. Bureau of Labor Statistics, Current
Population Survey.
Notes: Rates are calculated as a twelve-month moving average. All workers are those
aged 16 to 65; college graduates are those aged 22 to 65 with a bachelor’s degree
or higher; recent college graduates are those aged 22 to 27 with a bachelor’s degree
or higher; young workers are those aged 22 to 27 without a bachelor’s degree orhigher. All figures exclude those currently enrolled in school. Shaded areas indicate
periods designated recessions by the National Bureau of Economic Research.

graduates as a whole. After the Great Recession, for example,
the unemployment rate for college graduates as a whole
peaked at around 5 percent in 2010, while the unemployment
rate for recent college graduates peaked at around 7 percent.
For the period 1990 through the first quarter of 2013, theunemployment rate averaged 4.3 percent for recent college
graduates compared with 2.9 percent for all college graduates.
These results suggest that finding a job tends to be moredifficult for those just out of school than for those who havebeen out of school longer; moreover, this disparity exists at all
points in the business cycle.
To get a clearer picture about the transition to employmentthat occurs upon graduation, we examine the unemployment
rate for college graduates of different ages. Using data fromthe U.S. Census Bureau covering the decennial census
years 1990 and 2000, as well as a parallel three-year pooled
dataset for 2009-11, we plot an age-unemployment rate
profile for college graduates at each point in time up to age
thirty-five (Chart 2). In all cases, an inverse relationshipexists, indicating that the unemployment rate tends to decline
as college graduates transition from school into the labormarket. During 2009-11—a period that encompasses the endof the Great Recession and the beginning of the recovery—
the unemployment rate was about 10 percent for those
aged twenty-two, dropping to about 8 percent for twentythree-year-olds. By the time college graduates reached theirlate twenties, the unemployment rate had fallen to around
4 percent, and held fairly steady at this rate thereafter. ThisChart 2

Chart 3

College Graduates’ Unemployment Rate, by Age

Underemployment Rates for College Graduates

Percent
12

Percent
60

10

50

8

40

6

College graduates30
2009-11

4

1990

2
0

Recent college graduates

2000
22

23

24

25

26

27

28 28 30 29 32 31 34 35
Age
Sources: U.S. Census Bureau, Decennial Census and American Community Survey.
Notes: College graduates are those with a bachelor’s degree or higher. All figures
exclude those currently enrolled in school.

same inverse relationship between age and the unemployment
rate is also apparent in 1990 and 2000, though unemployment
rates were decidedly lower for all ages in these time periods
than in 2009-11.
The inverse relationship between age and the unemployment rate appears to hold across time, and occurs even during
peaks in the business cycle, as was the case in 1990 and 2000.
This pattern suggests that it is typical for young college graduates to have relatively high unemployment rates, and that these
rates can be expected to decline as the graduates continue onin the labor force. It takes time for recent college graduates tosettle into the labor market and find a job, and this has historically tended to be the case.
Note, however, that the relatively high unemployment
experienced by recent college graduates should not prompt us
to dismiss the value of a college education in helping young
workers find jobs. As Chart 1 showed, the unemployment rate
for young workers without a college degree was significantly
higher than the rate for recent college graduates. The unemployment rate climbed to nearly 16 percent in 2010 for young
workers without degrees, more than double the peak unemployment rate of 7 percent for new college graduates.

Underemployment among Recent College Graduates
While high unemployment among recent college graduates
has attracted considerable attention from policymakers andthe public alike, there is also growing concern that recent
graduates are finding themselves underemployed—that is,
working in jobs that do not require a college degree.2 This
2 See, for example, Fogg and Harrington (2011) and Vedder, Denhart, andRobe (2013).

20
10
0

1990

92

94

96

98

00

02

04

06

08

10

12

Sources: U.S. Census Bureau and U.S. Bureau of Labor Statistics, Current
Population Survey, March Supplement; U.S. Department of Labor, O*NET.
Notes: College graduates are those aged 22 to 65 with a bachelor’s degree or higher;
recent college graduates are those aged 22 to 27 with a bachelor’s degree or higher.
All figures exclude those currently enrolled in school. Shaded areas indicate periods
designated recessions by the National Bureau of Economic Research.

phenomenon is exemplified by news stories of recent college
graduates who, unable to find employment that fits theireducation level, take jobs as baristas, bartenders, or retailclerks. But just how widespread is underemployment forrecent college graduates?
To measure underemployment, we utilize data from the
U.S. Department of Labor’s Occupational Information Network(O*NET). O*NET contains information on job-related
requirements for hundreds of occupations, collected frominterviews of incumbent workers and with input from professional occupational analysts. We use the following question
from the O*NET Education and Training Questionnaire to
determine whether an occupation requires a college degree:“If someone were being hired to perform this job, indicate
the level of education that would be required.” We consider acollege education to be a requirement for a given occupation if
at least 50 percent of the respondents working in that occupation indicated that a bachelor’s degree is necessary to performthe job. We then merged these data on the educational requirements for each occupation with data from the decennial Census,
American Community Survey, and Current Population Survey
on individual workers and their occupations. A college graduate is considered underemployed if he or she is working in an
occupation that does not typically require a bachelor’s degree.
We calculate the underemployment rate as the numberof graduates underemployed divided by total graduates
employed. In Chart 3, we report the underemployment ratefrom 1990 to 2012 for two different groups: all college graduates and recent college graduates. For college graduates as awhole, the underemployment rate has held steady at aroundwww.newyorkfed.org/research/current_issues

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CURRENT ISSUES IN ECONOMICS AND FINANCE ❖ Volume 20, Number 1

33 percent over the past two decades—meaning that about one
in three college-educated workers typically holds a job that
does not require a degree. The fact that the rate has remained
fairly uniform at different points in the business cycle suggeststhat it is not unusual for a significant share of college graduates
to work in jobs that do not require a degree.
For recent college graduates, the picture looks quite
different. First, in all years, the underemployment rate ishigher for recent college graduates than for college graduates
as a whole, indicating that underemployment is consistently
more widespread for this group. Second, the underemployment rate for new college graduates has not held steady. The
rate rose to 46 percent during the 1990-91 recession, then fellsignificantly during the economic expansion of the 1990s.
By 2001, the rate had dropped to 34 percent. During the first
decade of the 2000s, the underemployment rate rose somewhat
sharply after both the 2001 and 2007-09 recessions, and ineach case, only partially retreated, resulting in an increase toroughly 44 percent by 2012. Thus, it appears that the underemployment rate has, in fact, been rising for recent college
graduates since 2001. Nevertheless, the high rate over the past
few years is not unprecedented; rather, it represents a return to
the level that prevailed in the early 1990s.3
To what extent does this high rate of underemployment
among recent graduates simply reflect a natural transition
into the labor market? As we did for unemployment, weconstruct age-underemployment rate profiles for college
graduates for 1990, 2000, and 2009-11 to address this question(Chart 4). And as was the case for the unemployment rate,
we find an inverse relationship between age and the underemployment rate for all time periods. Focusing first on the
2009-11 period, we see that the underemployment rate fortwenty-two-year-olds is about 56 percent, indicating that morethan half of the people just graduating end up working in jobs
that do not require a degree. This rate drops to 40 percent
by age twenty-seven, and reaches the average historical levelof about thirty-three percent by the time people reach theirthirties. This pattern suggests that recent graduates do, in
fact, tend to have relatively high levels of underemployment
upon graduation, but that underemployment declines asthese graduates spend time in the labor market. However, theage-underemployment profile we estimate for 2009-2011 issomewhat higher than the profile for 1990, and significantly
higher than the profile seen in 2000.
Overall, the trends described in this section imply thathigh underemployment among recent college graduates
is not unusual. Recent graduates tend to take some timeafter they graduate to find jobs that fit their education. But
3 It is probably no coincidence that the early 1990s also saw much discussion about
the underemployment of recent graduates and the value of a college degree. See, forexample, Hecker (1992) and Tyler, Murnane, and Levy (1995).

4

Chart 4

College Graduates’ Underemployment Rate, by Age
Percent
60
2009-11
50
40

1990
2000

30
20
10
0

22

23

24

25

26

27

28 29 30 31 32 33 34 35
Age
Sources: U.S. Census Bureau, Decennial Census and American Community Survey,
U.S. Department of Labor, O*NET.
Notes: College graduates are those with a bachelor’s degree or higher. All figures
exclude those currently enrolled in school.

the fact that the underemployment rate in recent years has
been higher than in the early 2000s does suggest that it has
become more difficult over the past decade for recent college
graduates to find jobs that utilize their degrees. While there
appears to be a cyclical component to underemployment
among recent college graduates, the broader V-shaped
pattern in the underemployment rate over the past two
decades is also consistent with new research arguing that
there has been a reversal in the demand for cognitive skills
since 2000.4 According to this research, businesses ramped
up their hiring of college-educated workers in an effort toadapt to the technological changes occurring during the
1980s and 1990s. However, as the information technology
revolution reached maturity, demand for cognitive skill
fell accordingly. As a result, during the first decade of the
2000s, many college graduates were forced to move down theoccupational hierarchy to take jobs typically performed bylower-skilled workers. From this perspective, the relatively low
underemployment rates among recent college graduates at thepeak of the technology boom around 2000 may in fact be an
outlier, while the recent rise in underemployment represents areturn to more typical conditions.

Job Quality among the Underemployed
While the underemployment rate appears to have reverted
to levels that existed in the early 1990s, it is possible that thequality of the jobs taken by the underemployed has changed
over time. To examine this possibility, we analyze the qualityof jobs held by those college graduates who are working in
non-college jobs (that is, underemployed college graduates).
4 See Beaudry, Green, and Sand (2013).

Chart 5

Chart 6

Share of Underemployed Graduates in Good
Non-College and Low-Wage Jobs

Share of Underemployed Graduates Working Part-Time

Percent
60
50

30

Recent college graduates

20
15

Low-wage jobs:
Recent college graduates

20

College graduates

10
5

Low-wage jobs:
College graduates

10
0

25

Good non-college jobs:
College graduates

Good non-college jobs:
Recent college graduates

40

Percent
30

1990

92

94

96

98

00

02

04

06

0

08

10

12

Sources: U.S. Census Bureau and U.S. Bureau of Labor Statistics, Current
Population Survey, March Supplement; U.S. Department of Labor, O*NET.
Notes: College graduates are those aged 22 to 65 with a bachelor’s degree or higher;
recent college graduates are those aged 22 to 27 with a bachelor‘s degree or higher.
All figures exclude those currently enrolled in school. Shaded areas indicate periods
designated recessions by the National Bureau of Economic Research.

We single out two dimensions of job quality for this group: thetype of job and the prevalence of part-time work.
Although stories of recent college graduates working as lowpaid baristas, waiters, and retail clerks abound in the media,
few commentators consider whether recent graduates might
have found good jobs that do not require a college degree—for
example, in fields such as health care and the skilled trades. To
address this possibility, we construct two groups of non-college
jobs: what we refer to as good non-college jobs and low-wage
jobs. Good non-college jobs consist of those occupations—for
example, electrician, dental hygienist, or mechanic—that paid
an average wage of around $45,000 per year in 2012. Whilethese jobs do not require a bachelor’s degree, they tend to becareer oriented, relatively skilled, and fairly well compensated.
At the other end of the spectrum, low-wage jobs paid anaverage wage below $25,000 per year in 2012, and include
occupations such as bartender, food server, and cashier.
Analyzing the percentage of underemployed college
graduates who fall into the two job groups, we find a clear
trend: the share of underemployed college graduates in good
non-college jobs has fallen sharply, while the share working in
low-wage jobs has risen, with most of these changes occurring
since 2000 (Chart 5). The share of underemployed college
graduates in good non-college jobs was lower for recent college
graduates than for college graduates as a whole, and it fell
more steeply over time. About half of underemployed recent
college graduates were in good non-college jobs in the 1990s,
and that share fell to about 36 percent by 2009. As for low-wagejobs, the share of workers in this group was similar for recent

1990

92

94

96

98

00

02

04

06

08

10

12

Sources: U.S. Census Bureau and U.S. Bureau of Labor Statistics, Current
Population Survey, March Supplement; U.S. Department of Labor, O*NET.
Notes: College graduates are those aged 22 to 65 with a bachelor’s degree or higher;
recent college graduates are those aged 22 to 27 with a bachelor’s degree or higher.
All figures exclude those currently enrolled in school. Shaded areas indicate periods
designated recessions by the National Bureau of Economic Research. Shaded areas
indicate periods designated recessions by the National Bureau of Economic Research.

college graduates and all college graduates in the 1990s, but
beginning in 2000, the shares for the two series diverged. The
share of recent college graduates in low-wage jobs rose fromabout 15 percent in 1990 to more than 20 percent by 2009, while
the corresponding share of all college graduates increased only
modestly, from 13 percent to 15 percent. Together, these trends
suggest that the quality of jobs for underemployed recent college
graduates has been on the decline, particularly since 2000.
The second dimension of job quality that we consider is theextent to which underemployed college graduates are working
part-time. Using the U.S. Bureau of Labor Statistics’ definitionof part-time workers as those who usually work fewer than
35 hours per week, we track the extent to which underemployedcollege graduates—all graduates as well as recent graduates—
have worked part-time between 1990 and 2012 (Chart 6). The
two series are somewhat volatile, but beginning with the 2001
recession, an upward trend in part-time work is evident in
both. Significantly, however, the increase is much steeper forrecent graduates than for college graduates as a whole. About
14 percent of all underemployed college graduates worked
part-time during the 1990s, with this share drifting up toaround 16 percent during the 2000s. By contrast, the share ofrecent college graduates working part-time rose from around
15 percent in 2000 to 23 percent by 2011, with particularly
sharp increases directly following the last two recessions.5
5 Workers without a college degree were about as likely as underemployedcollege graduates to be working part-time, and experienced a similar increasein part-time work during the 2000s. By contrast, the share of college graduateswith a job requiring a bachelor’s degree who were working part-time changed
little, remaining at around 10 percent for all college graduates and 12 percent
for recent graduates over the entire 1990-2012 period.

www.newyorkfed.org/research/current_issues

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CURRENT ISSUES IN ECONOMICS AND FINANCE ❖ Volume 20, Number 1

Taken as a whole, these trends provide evidence that the job
prospects for recent college graduates have indeed worsened,even though the high rate of underemployment over the past
few years is comparable to the level seen in the early 1990s.
Among those recent college graduates who are underemployed, more are working part-time or in low-wage jobs since
2000, while fewer are working in good non-college jobs. This
downward trend in the quality of jobs for underemployedrecent college graduates compounds the increase in the level ofthe group’s underemployment over the past decade.6

Labor Market Outcomes by College Major

In the wake of the Great Recession, recent college graduates areclearly facing significant labor market challenges. But are thoserecent graduates who major in certain subjects experiencing
relatively better labor market outcomes than others? To address
this question, we use newly available census data identifying
college graduates’ undergraduate majors to analyze differencesin employment outcomes across majors. Beginning in 2009, theAmerican Community Survey asked those with a college degree
to identify their undergraduate major. We classify recent college
graduates as belonging to one of thirteen different undergraduate majors, and utilize this information to look at unemployment and underemployment by major for the 2009-11 period.
Care must be taken when interpreting our findings on
the labor market outcomes of recent college graduates acrossmajors. Because students sort into their chosen field ofstudy based in part on their ability to complete the required
coursework, not all majors are feasible for every college
student.7 Moreover, graduates with different majors likely differ
in other important ways, such as intelligence, perseverance, or
motivation. Indeed, recent research has shown that graduatingwith a math or science major is more difficult than pursuingother fields of study.8 In addition, the results we present below
represent average outcomes for people within each of the thirteen majors we analyze. Thus, by definition, some individuals
within each major will have better or worse experiences thanour results would indicate. Nonetheless, examining the typicalexperience provides useful insight into the variation in labormarket outcomes that exists for recent college graduates withdifferent majors.

6 During bad economic times, young people who wish to avoid being
unemployed or underemployed may choose to delay their entrance to thejob market, either by taking more time to complete a degree or by entering
graduate school. Given the incentives to remain in school, the labor market
difficulties for recent college graduates during the 2000s may in fact be more
pronounced than our findings suggest.
7 See, for example, Arcidiacono (2004) and Zafar (2011) for research on thedeterminants of and returns to college majors.
8 See Stinebrickner and Stinebrickner (2013).

6

Chart 7

Employment Outcomes for Recent College Graduatesby Major, 2009-11
Percentage unemployed
Percentage in jobs where a bachelor's degree is required
Percentage in jobs where a bachelor's degree is not required
Engineering 575

20

Education 4

75

22

Health 3

75

22

65

29

60

32

Sciences 65143Social sciences 7

45

48

Business 6

44

50

Liberal arts 8

40

52Communications 6

40

54

Technologies 6

38

55

38

57

33

63

Math andcomputers 6
Architecture andconstruction 8

Agriculture andnatural resources 5
Leisure andhospitality 4

Sources: U.S. Census Bureau, American Community Survey; U.S. Department ofLabor, O*NET.
Notes: Recent college graduates are those aged 22 to 27 with a bachelor’s degree orhigher. All figures exclude those currently enrolled in school. Because of rounding,figures in each bar may not sum to 100.

We characterize the labor market situation for recent college
graduates by looking at three possible labor market outcomesfor each graduate: unemployed, employed in a job where abachelor’s degree is required, and employed in a job where abachelor’s degree is not required. We then identify the shareof recent college graduates in each of the thirteen majors thathas experienced each of these outcomes (Chart 7). We findthat unemployment rates across majors range from 3 percent
to 8 percent. The two majors with the lowest unemployment
rates are health majors, at 3 percent, and education majors, atjust under 4 percent. Relatively low unemployment rates forthese majors likely reflect the stability of the education andhealth sectors, which grew before, during, and after the GreatRecession and thus have tended to provide a growing numberof jobs during this period. At the other end of the spectrum, theunemployment rate for architecture and construction majors
was 8 percent—a finding consistent with the lack of jobs inhousing-related sectors of the economy following the housingbust. Liberal arts and social sciences majors also tended to haverelatively high unemployment rates, at 7 to 8 percent.

Perce

Perce

Perce

Chart 7 also identifies the share of recent college graduates working in jobs where a bachelor’s degree is required
and the share working in jobs where a bachelor’s degree is not
required. For example, 75 percent of those with an engineering
degree worked in a job that required a college degree.9 We findthat majors providing technical training—that is, training that
focuses on quantitative and analytical skills—had the highest
shares of graduates working in jobs that require a degree; engineering and math and computers majors are cases in point. In
addition, education and health majors also had high shares ofworkers employed in jobs that require a college degree, again
likely reflecting the growth of these sectors in recent years.
At the other end of the spectrum, leisure and hospitality
was the major with the lowest share of graduates working ina job that required a degree. Although degree holders withthis major experienced relatively low unemployment, only
33 percent were working in jobs that required a bachelor’s
degree, while 63 percent worked in jobs that did not require
this degree. It is likely that many of the jobs such graduates
took were in the leisure and hospitality industry, and thesejobs often do not require a bachelor’s degree. Similarly, only
38 percent of recent graduates with a technologies major—
which provides practical training in fields such as electricaland mechanical repairs, radiology, and biological technologies—were working in a job that required a bachelor’s degree.
This finding may stem in part from the fact that many of thejobs for people with this type of training often require only an
associate’s degree. In addition, many of the majors that provide
general training—that is, training that is not occupationspecific or highly technical in nature—also ranked relatively
low on this dimension. In particular, only 40 to 45 percent ofrecent college graduates majoring in communications, liberal
arts, business, and social sciences were working in jobs that
required a degree.

Conclusion

While stories about recent college graduates’ struggles to find agood job have become increasingly common over the past few
years, we show that this experience is not a new phenomenon,
nor one that can be ascribed simply to the Great Recession
and the ensuing weakness in the labor market. Our analysis
demonstrates that new college graduates typically take sometime to transition into the labor market and find jobs thatutilize their education. In fact, during both good and bad
economic times, relatively high rates of unemployment andunderemployment are not uncommon among college graduates
just beginning their careers, and those rates can be expected
to drop considerably by the time the graduates reach their late
9 These jobs are not necessarily engineering jobs, but are any jobs that requirea bachelor’s degree. For example, if someone with an engineering major
were working as an electrical engineer or a financial manager, each would becounted as working in a job that requires a bachelor’s degree.

twenties. Moreover, while it appears that the labor market has
become more challenging for recent college graduates, it ismuch worse for young people who do not have a college degree.
That said, both unemployment and underemployment havefollowed a clear upward trend for recent college graduates overthe past two decades, and particularly since the 2001 recession.
In addition, it has become more common for underemployedcollege graduates to find themselves in low-wage jobs or to
be working part-time. It is not clear whether these trends
represent a structural change in the labor market, or if they
are a consequence of the two recessions and jobless recoveries
in the first decade of the 2000s. Either way, young college
graduates entering the labor market since the 2001 recession
face more challenges in finding a good job. While many of thesegraduates will eventually find employment or transition intohigher-skilled jobs as they gain experience and as the labormarket normalizes, recent research suggests that those who
begin their careers during such a weak labor market recovery
may see permanent negative effects on their wages.10
What can students do to increase their chances of finding
a good job upon graduation? It does appear that one’s college
major matters: unemployment and underemployment rates
differ markedly across majors. In particular, those who choose
majors that provide technical training, such as engineering ormath and computers, or majors that are geared toward growing
parts of the economy, such as education and health, havetended to do relatively well. At the other end of the spectrum,
those with majors that provide less technical and more generaltraining, such as leisure and hospitality, communications, theliberal arts, and even the social sciences and business, have nottended to fare particularly well in recent years. An importantcaveat about this interpretation is that the links we show
between college major, unemployment, and underemployment
are not necessarily causal. That is, the data may in part reflect
the fact that people can sort into majors based on their skill
level, such that those with higher innate skills and abilities
select majors that tend to have better labor market outcomes.
Nonetheless, with this caveat in mind, it appears that college
major plays a role in determining whether a college graduate
will find a good job.
There may be other ways to foster better outcomes forcollege graduates as well. Timely information on the fields
in which jobs are available, what different jobs pay, and thecareer paths new workers can expect over their lifetime would
be helpful to the parents and students investing in a college
education. One means of generating such information would
be for higher education institutions to establish or expand
their partnerships with businesses. In this way, colleges anduniversities could develop a fuller understanding of therelationship between their own curriculum, the needs of
10 See Kahn (2010).

www.newyorkfed.org/research/current_issues

7employers, and the majors selected by their students. Further,close ties between employers and higher education institutions
would help ensure that the information given to students onjobs and careers was current. Providing such information early
and often could help students make more educated decisions
about their major, and ultimately, about the most valuable
skills to build while in school. While securing that first job outof college may continue to be a challenge for many, having abetter grasp of the landscape of the labor market could help
more college graduates find good jobs upon graduation.

References

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About the Authors
Jaison R. Abel is a senior economist and Richard Deitz an assistant vice president in the Regional Analysis Function of the Federal
Reserve Bank of New York’s Research and Statistics Group. Yaqin Su was a Ph.D. intern in the Regional Analysis Function at thetime this article was written.
The content co-editor of this article is Basit Zafar.
Current Issues in Economics and Finance is published by the Research and Statistics Group of the Federal Reserve Bank of New York.
Michael Fleming and Thomas Klitgaard are the editors of the series.
Editorial Staff: Valerie LaPorte, Mike De Mott, Michelle Bailer, Karen Carter, Anna Snider
Production: Jane Urry, Jessica Iannuzzi, David Rosenberg

The views expressed in this article are those of the authors and do not necessarily reflect the positionof the Federal Reserve Bank of New York or the Federal Reserve System.

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