Every summer, hundreds of thousands of new college graduates enter the workforce, causing the unemployment rate to climb about one percent before settling again in the fall. But despite the temporary setback, workers with a college degree still have better job prospects than their less educated peers, according to new research.
The pattern of summer unemployment for new college graduates is cyclical, according to a new report from Georgetown University's Center on Education and the Workforce. Though the cycle happens every year, regardless of overall economic conditions, the temporary bump in unemployment sparks a debate over the value of a college degree.
"A closer look shows that recent college graduates still continue to benefit from their degrees, even in the exceedingly challenging labor market of the past several years," writes lead author Anthony Carnevale.
Unemployment for new bachelor's degree-holders between the ages of 22 and 26 ticks up each summer, when almost all new graduates enter the workforce at the same time upon completing their degrees in May or June. The unemployment rate peaks around August before new workers find jobs in the following months, and the rate reaches a low by April.
The influx of new workers increases the labor supply for college-educated workers in that age group by about 17 percent. And each year, there is a seasonal surge in unemployment of 0.8 to 1.2 percent.
The cycle took place even in 2006, when national unemployment was below 5 percent. Unemployment rates peaked for new graduates at slightly more than 4 percent that August. But by April 2007 that number was down to below 3 percent. During recessions, like in 2008, the unemployment spike is higher, while the recovery takes longer and is less noticeable.
There is no doubt that the job hunt has been challenging for new college graduates – the unemployment rate nearly doubled from 3.8 percent to 7.5 percent between 2007 and 2010, before falling to 6 percent in 2012.
But as the economy continues to recover, new graduates entering the workforce this summer can be more hopeful about their job prospects. Carnevale estimates that over the next decade there will be 19.4 million job openings for people with bachelor's degrees.
Additionally, recent college graduates face lower levels of unemployment than the workforce overall, and the gap between the two has nearly doubled since 2007, according to the report.
When the recession peaked in 2010, for example, unemployment for new college graduates with a four-year degree was 7.5 percent. By comparison, the rate for those with an associate's degree or some college experience was 11.1 percent, and only 16.8 percent for those with only a high school degree.
"While public concern over the plight of recent college graduates is understandable and justified, the summer unemployment surge among recent college graduates is a recurring trend," Carnevale writes. "Misinterpreting the numbers makes the situation seem worse than it really is, and may misleadingly color the public's perception of the value of a college degree."
Still, Carnevale told U.S. News that even when new graduates do find jobs, about 20 percent are underemployed, meaning they are in low-paying jobs, or jobs that do not meet their skills and education. Carnevale says this disparity is largely due to a lack of social capital and networking among some students.
"We're so heavily invested in the transition from high school to college, but there's really no such thing at the other end of the game," Carnevale says. "In a way, it is a period of wandering around, although some people are much more equipped to wander than others."
Carnevale says that there is still a noticeable difference in the earnings and occupations even between students with similar majors and test scores.
"This is sort of an odd business," Carnevale says. "We focus so much on getting in, and we don't focus at all on getting out."