The minimum-wage college grad

The Wall Street Journal has been keeping tabs on a troubling statistic: college graduates working in minimum-wage jobs.

According to the Labor Department, there were 284,000 graduates???those with at least a bachelor???s degree???working minimum-wage jobs in 2012, including 37,000 holders of advanced degrees.

That???s down from a peak of 327,000 in 2010, but double the number in 2007 and up 70% from a decade earlier.

While the raw number of college grads stuck in minimum-wage jobs remains elevated, their share of such jobs is at more or less its 10-year average. About 8% of all minimum-wage workers held at least a bachelor???s degree in 2012, a figure that has bounced around over the past decade with no clear trend. Given that the share of the labor force with a college degree has been rising steadily over the same period, the lack of a parallel trend among minimum-wage workers suggests that grads aren???t generally ending up at the absolute bottom of the earnings ladder.

The long-term persistence of this phenomenon, over at least a decade, would seem to challenge some of the conventional wisdom about employment and education.  Pumping out more college degrees, at a correspondingly immense cost in student loan debt, doesn’t appear to drive job creation.  We’re always hearing about the need to import more advanced degree holders into the United States, but we’ve got a huge number of them already languishing in minimum-wage under-employment.

One of the core theories of Obamanomics is that if government drops money into the hands of citizens through benefit programs, including unemployment benefits, the citizens will happily rush out to spend it, causing jobs to blossom across the fruited plain.  The persistent high unemployment rates of the New Normal give the lie to this theory, but even if it was working, it wouldn’t lead to the kind of employment that advanced degree holders are seeking.  How far up does economic activity from basic retail spending have to bubble before it creates a surge of jobs that require a college education, offering attractive compensation in return?

Soaring tuition costs have made these degrees extremely expensive.  It was big news when a few state governors announced they would push universities to offer $10,000 bachelor’s degrees.  From a Fox News report in February:

The bargain baccalaureate could prove popular with students and parents, frustrated with ever-mounting tuition costs that can’t guarantee jobs for graduates. Nationally, student loan debt tops $1 trillion and the price of going to college has risen 440 percent in the last 25 years, according to Sallie Mae.

???The public has come to realize that the degrees that cost far more than $10,000 aren???t delivering,??? said Thomas Lindsay, director of the Texas Public Policy Foundation. ???They???ve come to the realization that you don???t get what you pay for.???

[…] The national average tuition for a four-year private university, according to the National Center for Education Statistics, is nearly $33,000, and the median inflation-adjusted household income dropped 7 percent between 2006 and 2011 as the average tuition at public four-year college skyrocketed 18 percent.

284,000 people spending an average of $33,000 for degrees, but ending up with minimum-wage jobs, seems like a great deal of money spent for little return.  Of course, some of those people will only hold their low-wage job for a short time… but others are advanced degree holders that paid considerably more than $33,000 for their degrees.