Underemployment’s Long-Term Effects on the Careers of College Grads

Posted by Strada Education Network on May 28, 2018

New Study Finds Most College Graduates Who Start Out Underemployed, Stay There

Women are more likely than men to be underemployed in first job with lasting consequences

College graduates who are underemployed in their first job are likely to still be underemployed up to 10 years later, and women are more likely to be caught in this trap than men, according to new research released today by Burning Glass Technologies and Strada Institute for the Future of Work.

The report, The Permanent Detour: Underemployment’s Long-Term Effects on the Careers of College Grads, found that the first job is critical in setting the pace for careers. More than four in 10 college graduates (43 percent) in the sample were underemployed in their first job, and two-thirds of workers who were underemployed as new graduates were still underemployed five years later.

The report also found that women are significantly more likely to be underemployed than men: almost one out of every two (47 percent) female college graduates are initially underemployed, compared to more than one out of every three (37 percent) male graduates. Because initial underemployment can be so difficult to escape, this gender gap persists over time and holds true across every major except for engineering.

“The first job out of college is a high-stakes decision with major long-term implications, particularly for women,” said Michelle Weise, Ph.D., chief innovation officer for Strada Institute for the Future of Work and senior vice president, workforce strategies for Strada Education Network. “Men and women escape underemployment at similar rates, but this research points to the need to understand better why significantly higher percentages of women find themselves underemployed right out of the gate. Overall, this report highlights just how important it is to position graduates well in that first job, so they can make a successful transition to the world of work.”

The research draws on Burning Glass Technologies’ analysis of four million unique resumes, illuminating the actual career progression of American workers. The analysis also drew from federal data sets relating to degree completion, majors, and workers’ earnings.

“This research shows that underemployment can’t be treated as just a passing phase in a young person’s career,” said Matthew Sigelman, CEO of Burning Glass Technologies. “The study also shows how vital the transition from education to employment is for graduates, with real, long-term consequences in lost individual career potential and income as well as national economic growth.”

Key findings:

The first job is critical: 43 percent of workers are underemployed in their first job.

Most who start out underemployed, stay underemployed: Workers initially underemployed are five times more likely to remain so after five years than those who were not underemployed in their first job. And 74 percent of those underemployed at the five-year mark are still underemployed 10 years after their first job.

The financial costs of underemployment are substantial: Underemployed recent graduates, on average, earn $10,000 less annually than graduates working in college-level jobs.

Those who start out well employed rarely slide into underemployment. Conversely, an overwhelming number of college graduates appropriately employed in their first job continued to hold college-level jobs five years later (87 percent). Nearly all (91 percent) of those appropriately employed at the five-year mark were still appropriately employed 10 years later.

Major matters: STEM majors are less likely to be underemployed. For example, only 30 percent of engineering and computer science majors are underemployed.

Women are more likely to be underemployed: Nearly half of women (47 percent) are underemployed compared to 37 percent of men. This is true for women regardless of major – among mathematics majors, for instance, 32 percent of women are underemployed compared to 25 percent of of men.

“These findings contradict the popular narrative that underemployment and drift are built into the early phases of career discovery–like some sort of rite of passage for graduates,” said Weise. “We as educators, parents, and students can’t just assume a trajectory of success from the moment of graduation. The future of work is evolving. A key takeaway here is intentionality. Underemployment isn’t inevitable, but avoiding it and achieving positive outcomes will require more deliberate planning by both colleges and students.”

https://www.burning-glass.com/research-project/underemployment/