Chasing the American Dream: Recent College Graduates and the Great Recession

A new national survey by The John J. Heldrich Center for Workforce Development at Rutgers University found that a large percentage of recent college graduates are far from a secure career path with a full time job and benefits.

The report documents the difficulties young people encountered as they entered a labor market that eventually plunged into a deep recession in 2008. Three in four were able to find at least one full-time job since graduation. But at the time of the survey in April, only 51 percent were working full time, 20 percent were attending graduate or professional school and 12 percent were either unemployed or employed part time and looking for full-time work.

“Students who graduated during the past several years are facing historic obstacles in achieving the foundations of the American dream and express low expectations for their future prosperity,” said Carl Van Horn, Professor and Director of the Heldrich Center and a co-author of the study. “The resilience of this year’s and recent college graduates are being tested as they struggle with student debt, a slow job market that offers few toe-holds in their chosen careers, and nagging fears about a lack of preparation for global labor market competition.”

College graduates who obtained their first job during the recession in 2009-2011 earned 10 percent less in their starting salaries compared to those who entered the workforce in 2006 and 2007 — $27,000 versus $30,000. Men earned an average of $30,000 compared with $28,000 for women graduates.

The report offered some good news for students who completed internships during college. Those graduates earned nearly 15 percent more on average than those who did not. Graduates who completed internships also felt better prepared in certain skills areas, such as leadership, written and verbal communications, and quantitative skills.

Among those who are now employed, the median salary for jobs that require a four-year degree is $37,750 compared to $32,000 for jobs that do not require a four-year degree.

Given their experiences — with 4 in 10 working in jobs that did not require a four-year degree — it is understandable that almost two-thirds either think they will need more education or have already gone back to school.

Young college graduates are also insecure about their preparation for a competitive workforce. Half of them feel they are likely less well prepared for the world of work than was the generation before them.

The graduates’ employment struggles and modest earnings are also affecting both their ability to pay off the debts they incurred to finance their college education — a median of $18,690 at public colleges and $24,460 at private colleges — and influence their personal choices.

More than one in four are living with their parents or family members to save money and significant numbers of recent college graduates are delaying major purchases, putting offer their graduate education, taking extra jobs to supplement their income, and even delaying marriage. Many recent graduates who move out from their parents homes continue receive family support for housing, food, healthcare, college loan repayments, and car payments, the survey found.

“The cream of the crop of America’s youth, graduates of four-year colleges and universities, believe the American dream of upward mobility may have stopped with them,” commented Cliff Zukin, Professor and co-author of the study. “Young, well-educated people, who are typically optimistic about their futures, are expressing doubt in another cornerstone of the American dream — that each generation can enjoy more prosperity than the one that came before it.”

The John J. Heldrich Center for Workforce Development is based at the Edward J. Bloustein School of Planning and Public Policy, at Rutgers University. It is one of the nation’s leading university-based research and policy centers dedicated to raising the effectiveness of the American workplace through improved workforce education, placement, and training. The Center identifies innovative workforce practices and practical policy changes that can help Americans receive the education and training they need to be productive and prosperous in a global knowledge economy.