Nearly 43 percent of recent college graduates are underemployed — that is, working in jobs that don’t require a college degree.
Since graduating from college last month, Gabriel Villagomez has been polishing his resume, updating his LinkedIn profile — and worrying.
Sure, the job market looks promising for new grads. And Villagomez, who plans to apply to medical school, just needs a job to hold him over for a year or so.
But with student loan bills looming, Villagomez can sense how the need for a paycheck — any paycheck — could suck him into a job that doesn’t take advantage of his education. He has seen cousins and friends abandon ambitions and fall into the rut of low-wage work when life gets in the way.
“I’m worried about not following through on my plans,” said Villagomez, 27, who spent five years in the Marine Corps before enrolling at University of Illinois at Chicago, where he majored in economics and minored in biology. “Sometimes it’s easier to get stuck in these other fields.”
While the nation’s sunny jobs reports show low unemployment and growing payrolls, the jobs available aren’t necessarily good ones, and many new college graduates find themselves settling for less than what they bargained for. Nearly 43 percent of recent college graduates are underemployed — that is, working in jobs that don’t require a college degree, according to March numbers from the Federal Reserve Bank of New York.
While making lattes or staffing a cash register is often considered a youthful rite of passage during that bumpy transition from campus to the workforce, new research suggests that settling for a subpar job out of the gate can harm career prospects for years to come.
Two-thirds of new grads who were underemployed in their first job out of college were still underemployed five years later, while only 13 percent of new grads who landed college-level jobs right away were underemployed five years in, according a study released last month by Burning Glass Technologies, a labor market analytics company, and the nonprofit Strada Institute for the Future of Work.
The cycle gets harder to escape as time goes on. Three-quarters of those who were underemployed five years after college continued to be so at the 10-year mark, according to the report.
The skills and professional connections gained in the first job help lead to the next and then the next, and those who missed the early boat have a hard time catching up. Their earnings fall behind. Recent college graduates who are underemployed earn, on average, $10,000 less per year than their counterparts doing college-level work, the report found.
Women are disproportionately affected. Forty-seven percent of women were underemployed in their first post-college job, versus 37 percent of men, the report found. The researchers didn’t examine the reasons for the gender divide, but it could be linked to the growing specificity of job descriptions, as research has shown that women are less likely than men to apply for a job if they don’t believe they meet all of the listed requirements, said Burning Glass CEO Matt Sigelman.
“That first job is so critical because so many who do start out behind stay behind, and the financial implications are substantial as well,” said Michelle Weise, chief innovation officer for the Strada Institute. The research was based on 4 million resumes of people who graduated after 2000, and, to account for rising employer standards, it defined college-level jobs as those for which more than half of current job postings require a college degree.
In decades past, wandering aimlessly for a while after college was an accepted part of the transition to adulthood. Today’s new grads face a very different labor landscape that favors the focused, the researchers said.
For one, ballooning student debt – approaching $1.5 trillion nationally, with Illinois graduates on average facing nearly $30,000 each — makes it unwise to cut short earning potential.
In addition, employers no longer expect new hires to stay with the same company for the long haul, so many don’t invest in entry-level training, yet they also have high expectations that people come in with a specific skill set, Sigelman said.
Meanwhile, the population of college graduates has risen markedly — more than a third of people over 25 now have at least a bachelor’s degree, compared to about a fifth 20 years ago — which has made it harder to stand out and has allowed employers to make college a prerequisite for jobs that traditionally didn’t require it. And new graduates face competition from older peers still recovering from the misfortune of graduating during the Great Recession.
As a result, Sigelman said, college students can’t wait until the second semester of their senior year to visit the career services office, and should start thinking strategically about career paths closer to freshman year.
“It’s incumbent on students to have a plan,” he said.
Not all underemployment is created equal. In a study published last year, sociologist Kody Steffy, director of student research at Indiana University, conducted in-depth interviews with three dozen underemployed college graduates from a large Midwestern university, and found a stark class divide between those who were in that position intentionally versus not.
The voluntarily underemployed tended to come from families with money, and many did not consider the decision to be a temporary exploratory detour but, rather, a permanent path. They spoke of rejecting capitalism or prioritizing other facets of life besides career ambition, or they had found meaningful work that simply didn’t require a college degree, Steffy said.
More worrisome were the new grads in his study who were involuntarily underemployed. They tended to come from working-class backgrounds and often were the first in their families to go to college, which can make it harder to secure that first post-college job because they lack family friends who can put a good word in at a desired employer. Those grads felt highly stressed about not finding work commensurate with their education, which their families had believed would be the ticket to upward mobility, and several cried during their interviews, Steffy said.
The distinction is important, he said, to properly frame the problem and direct resources to the people who need it most.
“I think there’s both a positive story here and a disturbing story,” Steffy said. “It’s great that there is a set of college graduates thinking very seriously about what the good life is and not just following the path of least resistance, but that same sort of exploration isn’t available for our first-generation college graduates.”
Villagomez, who lives with two roommates in Humboldt Park, is the first in his family to go to college, and he feels anxious as he contemplates his next step. He was born in Chicago but raised in Mexico, where he spent long days juggling school and helping run the family’s produce store. When he realized his family wouldn’t be able to afford to send him to college, he saved enough money for a bus ticket and, at 16, returned to Chicago to live with relatives and aspire for more.
As he studies for the MCAT, Villagomez is working in a paid internship with a real estate broker and consultant, to see if that’s another path to pursue. But the $13-an-hour wage won’t be enough to make ends meet when student loans start to come due in a few months, he said.
He applied for a few jobs through his fraternity’s alumni network, but is concerned employers won’t want to hire a short-timer intending to return to school. As financial pressures mount, he worries more immediate options could lead him to abandon his expensive medical school goal altogether.
“I think I’d do either driving or private security, and that’s where I’d be stuck,” said Villagomez, who qualifies for numerous military veterans employment programs, including some that would help him get a commercial driver’s license.
Jaime Velasquez, associate director for employer relations at UIC Career Services, said now is not the time to settle for a subpar job, as opportunities are plentiful and new grads should strike while the iron is hot. The school’s March job fair drew 156 employers trying to fill more than 2,600 open positions, a return to pre-recession levels.
Hiring outcomes have been good for new grads, said Velasquez, who advises students to do extensive research on the companies they are interested in so that their enthusiasm and preparation sets them apart in interviews.
But, he said, “I worry about the students who have never been to our office.”
National Louis University, located in the Loop, has initiatives to ensure students start exploring career options early. Starting this fall, all new undergraduates will have to complete an internship, or comparable faculty-led capstone project, in order to graduate, said Smret Smith, executive director of the school’s career services office.
A key tool in helping students build their professional resumes has been “microinternships,” she said. Those are paid projects that companies hire students to do, typically remotely, allowing students to try out different kinds of work while employers test them out as potential hires without making a big upfront investment.
Jeffrey Moss, CEO of Parker Dewey, a Chicago-based company that connects students and recent graduates with microinternships, said the projects get students on the radar of employers who otherwise might not consider them.
The projects also help students figure out what they like to do, reducing the risk that they will become job hoppers after graduation, Moss said. The projects, which typically take one to three weeks, involve professional-level work, such as drafting a white paper or doing a competitive analysis, he said.
“We have a ton of students on our platform who are graduated and underemployed, and this helps them get out of it,” Moss said.
A risk of underemployment is that it could discourage students from seeking a four-year degree. But most good-paying jobs do require college, so a better solution is for colleges to improve their career planning offerings, said David Attis, managing director of strategic research at EAB, an education consulting firm based in Washington, D.C. For example, he said, Queens University in Ontario has created a “major map” that that outlines the courses to take, the clubs to join, the internships and study abroad opportunities to pursue, and students sit down in their first or second year to look at the occupations that could be relevant.
Students who are drawn to majors that have poor employment outcomes should also be encouraged to develop skills that the job market values, according to the Burning Glass report.
The firm’s research has shown that liberal arts students, more than half of whom are underemployed in their first jobs, can significantly boost their employment and earnings prospects by acquiring additional skills, such as data analysis, graphic design and social media.
“The world needs more liberal arts majors, not fewer,” Burning Glass’ Sigelman said, “but their success depends upon their ability to complement their traditional program with the last-mile skills that drive employability.”
To avoid, or escape, the underemployment trap, new grads struggling to find a good job should try to be underemployed in a field where there is a room to move up into college-level positions, Strada’s Weise said. Recent graduates who take jobs as help desk technicians or community health workers, which don’t require college degrees, are more likely to get back on track than those who wait tables, the report said.
Corey Hardiman, 27, lucked into such a situation.
Hardiman said he was frustrated initially when his first full-time job out of college was as a teaching assistant at his own elementary school in Chicago’s Roseland neighborhood, working with third-graders. The political science major, newly graduated from Morehouse College in Atlanta, had recently dropped out of the race for 9th ward alderman, and never imagined working in a classroom.
“I thought I had failed myself,” he said.
A Gates Millennium Scholar, Hardiman did not to have any student debt pressuring him to take a job he didn’t want. But he wasn’t sure what path to take, so he accepted the offer from his old elementary school principal.
Hardiman discovered it was deeply fulfilling, and soon got a job as a college and career counselor in Englewood. Last year he became a re-engagement specialist for Chicago Public Schools, where he is tasked with finding and motivating 150 truants across 15 high schools, and he plans to continue working in education.
The experience taught Hardiman the importance of cultivating relationships, and of a good steppingstone.
“When people know you, job opportunities will come,” he said.