The ‘Barista With a B.A.’ Is True, But Not As Common As You’d Think, NY Fed Report Says

By Allie Bidwell, Communications Staff

In recent years, the narrative of the “barista with a bachelor’s degree” has become the poster child for students who graduated in the wake of the Great Recession. But a new report claims that while many recent college graduates are technically underemployed, the vast majority don’t work in these sorts of low-skilled jobs that anecdotal evidence suggest.

“With the Great Recession and the weak labor market that followed in its wake, the prevalence of underemployment among recent college graduates reached highs not seen since the early 1990s,” the report said. “However, contrary to popular opinion, our work reveals that most of these newly underemployed workers were not forced into low-skilled service jobs.”

In a report released this month, researchers at the Federal Reserve Bank of New York track the types of jobs underemployed recent college graduates held, as well as variations by gender and race. While nearly half of recent college graduates are underemployed by definition – meaning they hold jobs that do not require a college degree – relatively few were working low-skilled service jobs, such as a baristas, waitresses, cashiers, bartenders, or cooks. In fact, many are working higher-paying jobs that require some level of technical and cognitive knowledge and skill, such as human resource worker, web developers, paralegals, police officers, real estate brokers, or insurance agents.

The analysis – conducted by Jaison Abel and Richard Deitz – also concludes that for some, underemployment is less likely, and that overall it is a temporary phase for new college graduates before they transition to other jobs.

While it’s important to note that underemployment for college graduates is not a new phenomenon – the rate had been trending upward for several years before the recession, Abel and Deitz write – there were somewhat unique circumstances in recent years that caused the underemployment rate to climb to levels not seen in several decades.

While the unemployment rate for new college grads began to generally decline in early 2011, the underemployment rate continued to climb into 2014, which suggests more graduates were finding jobs, just not ones that matched their level of education. That difference can partly be explained by the fact that the demand for “college jobs” began to decline in 2011, while the demand for “non-college jobs” continued to increase at a steady level, according to the report.

Still, not all recent college graduates who were underemployed were in low-wage, low-skilled jobs. Overall, just 9 percent of all recent graduates, or about one-fifth of the underemployed, started out in low-skilled service jobs, Abel and Deitz found.

Nearly one-quarter of underemployed recent college graduates, they found, held jobs in “Information Processing and Business Support” and managerial fields that on average pay more than $55,000 per year, compared with just 9.8 percent of young workers without a college degree. Another 15.4 percent of underemployed new college graduates held jobs in public safety or sales fields, which on average paid more than $50,000 per year.

The distribution also varied by gender, race, and college major. Abel and Deitz urge caution when interpreting some results, though, as some factors cannot be accounted for, such as a student’s ability to complete required coursework (and therefore choose certain majors), grades, the quality of the institution attended, and innate ability.

Underemployed men were slightly more likely than women to be working in higher-paying non-college jobs in the first and second tiers of pay level. Female workers were more concentrated in the “Office and Administrative Support” field, which Abel and Deitz categorized as a fourth tier job that on average pays about $37,000 annually.

While men were about 3 percent more likely than women overall to be underemployed in general during the early stages of their careers, women were 12 percent more likely to be working in a low-skilled service job, the report found.

African-American and American Indian graduates were also found to be 17 percent more likely to be underemployed than white graduates, and Asian graduates were 5 percent less likely. Non-white graduates were also more likely (but not statistically significant) to be working low-skilled service jobs. Hispanic graduates were 10 percent more likely to be underemployed, and 31 percent more likely to be working in a low-skilled service job than non-Hispanic graduates.

Finally, students who chose majors that provided technical training and quantitative skills – such as science, technology, engineering, and math (STEM) majors, economics, or accounting – were less likely to be underemployed than less quantitative majors, such as English, communications, art history, or anthropology.

Overall, the choice of college major appeared to have a significant influence on a graduate’s likelihood of being underemployed, ranging from 70 percent for those with a criminal justice major, to 9.5 percent for those with a nursing degree. Some of that variation, though, could be accounted for by the fact that some majors offer occupation-specific training for jobs that do not require a college degree.

“These findings raise some interesting questions about the relative supply and demand for specific skill sets obtained in college, and about the value of some majors relative to others in today’s economy,” the report said. “More generally, today’s high level of underemployment is concerning, and raises a number of questions about why it has continued to rise for more than a decade despite ongoing improvement in the labor market.”


Publication Date: 12/16/2015

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