The minimum wage debate may be center stage in Washington as fast food workers nationwide protest and President Obama renews his call for a higher federal minimum wage. More than 3.5 million Americans work at or below the minimum wage, up more than 50 percent from a decade ago, and government data show that the numbers of minimum wage workers have swollen even among those with college and advanced degrees.
The number of college graduates working minimum wage jobs is nearly 71 percent higher than it was a decade ago, according to the Bureau of Labor Statistics' latest figures. As of 2012, 284,000 college graduates were working at or below the minimum wage, up from 167,000 in 2002 and more than two times the pre-recession low of 127,000 in 2006. The cohort includes an estimated 30,000 people with masters' degrees, a figure that is more than twice as high as it was in 2002 and three times as high as in 2006.
A slow recovery has made for a tight job market, and some economists argue that structural factors like improving technology have shifted the natural rate of unemployment upward. Broadly speaking, says one expert, any major or prolonged downturn will hurt even some workers with college diplomas.
"We're in an economy where...when it rains college educated people are going to get wet now," says Anthony Carnevale, director and research professor at the Georgetown Center on Education and the Workforce.
That spells trouble for college graduates with low wages, especially when student debt is climbing. The Institute for College Access and Success reported Wednesday that the average class of 2012 graduate left college with $29,400 in debt, a figure that has climbed an average of 6 percent year over year for the past four years. Meanwhile, the current federal minimum wage is $7.25 an hour, making that the minimum wage in all but the 19 states (plus the District of Columbia) that have enacted higher minimum wages.
High debt levels, especially combined with borrowers who are facing stagnant wages, can have severe economic consequences, says one student debt expert.
"There are growing indications that the growth in student debt could have broader economic effects in the housing market, for instance, and certainly when you talk to borrowers, they raise concerns about when they can start a home or start a family," says Lauren Asher, president of the Institute for College Access and Success, a nonprofit group that tracks student debt levels.
While minimum wage jobs are increasingly a reality for college graduates, a bachelor's degree still gives a graduate a boost far above fellow workers without degrees. The unemployment rate for college graduates was only 3.8 percent as of October, compared to 7.3 percent for high school graduates with no college experience. And as Carnevale and his colleagues found in a recent report, workers with bachelor's degrees can expect to earn 84 percent more than their counterparts without degrees over their lifetime.
"It is true that a college degree isn't worth what it used to be," says Carnevale, but he adds that anyone considering college needs to consider the context. "In the real world if you're deciding whether or not to get a college degree, the question is, 'Compared to what?' And the premium is still sky high."
An improving job market will ultimately pull college graduates out of minimum wage jobs and back into higher-paying work much more quickly than it will for high school graduates, says Carnevale. However, he stresses that it's not enough to get just any college degree anymore. The median annual salary for a graduate with a petroleum engineering degree is $120,000, while graduates in counseling psychology, at the bottom of the spectrum, earn $29,000, according to Georgetown's CEW. The current poor job market is bringing that fact to the fore of college students' minds, he says.
"I think what it will point people toward is paying more attention to field of study," says Carnevale. "What we're saying to people is not all college degrees will be created equal."