Has Underemployment Among College Graduates Gone Up?

Steve Matthews has a piece in Bloomberg arguing that the underemployment rate among young college graduates remains elevated and that this is a sign that the labor market is unhealthy and that labor market slack still remains. I am sympathetic to the idea that the labor market remains unhealthy and that slack still remains, but this particular argument for that conclusion does not seem very compelling.

Here’s Matthews:

The relegation of college graduates to non-degree positions was once seen as a temporary blow for young people unlucky enough to graduate around the time of the deep 2007-2009 recession. Instead, millions of Americans like Reyer continue to face the same struggle.

About 44 percent of recent college grads were employed in jobs not requiring degrees in the final quarter of 2016, not far from the 2013 peak of 46 percent, while the share of that group in low-wage positions has held steady, data from the Federal Reserve Bank of New York showed Wednesday.

That’s a sign that the nation’s labor market isn’t at full health, despite an unemployment rate forecast to remain at 4.7 percent in March, close to the lowest in almost a decade. In fact, the elevated level of college grads in non-college jobs could mean there’s still slack and that the Fed can go slow in raising interest rates, betting that more high-wage jobs will materialize. It could also mark a more permanent shift in employment that the Fed can’t fix and be a tough challenge for President Donald Trump and Congress.

Along with that text, Matthews shares this graph, showing the percent of recent graduates and college graduates overall who are in jobs that do not require a college degree.

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Whenever someone is making an argument about the effect of the Great Recession, I am always curious to see what the data looks like prior to the Great Recession. Starting the trend line in 2007 does not give us a good indication of what normal actually looks like.

Luckily the New York Fed runs this data series back to January 1990 on its website. The graph looks like this:

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The current figure (43.5% in December 2016) is higher than the series low point (37.6% in May 2001), but it is lower than the series high point (47.7% in December 1992). More generally, it seems as if the current figure is within the normal range.

On its face, it is kind of surprising that the figure has not budged much over the last few decades. College attainment has increased significantly over this period and so you might expect that the percentage of graduates who are underemployed would go up.

One reason why this may not have happened in this data series is the way they define what jobs require a college degree and what jobs do not.

The underemployment rate is defined as the share of graduates working in jobs that typically do not require a college degree. A job is classified as a college job if 50 percent or more of the people working in that job indicate that at least a bachelor’s degree is necessary; otherwise, the job is classified as a non-college job.

Because they define a job as requiring a college degree if the majority of people in the job say it does (i.e. it is not based on an objective assessment of the skills required), this means that jobs that used to require a high school degree but now require a college degree are scored as college-degree jobs. Put another way, this particular measure is not able to disentangle the effects of credential inflation. When the credentials for the same job go up, this measure transforms it into a job requiring a college degree and therefore a job that no longer counts as underemployment for a college graduate that fills it.

Cop Unions

Recently, much attention has been paid to cops behaving the way cops often behave: killing blacks, harassing blacks, abusing blacks, and so on. One line of commentary on this newfound interest in long-standing cop abuse is that this abuse is the fault of (or cannot be stopped because of) police unions. While I have no particular interest in police unions per se, I must say that I find this a rather laughable simplification.

For starters, police are unionized basically everywhere in the world. Canada has police unions. The United Kingdom has police unions. Australia has police unions. The Nordics (Finland, Norway, Denmark, Sweden, Iceland) all have police unions, which are then further organized into a broader Nordic police union federation (Nordiska Polisförbundet), which itself is further organized into the broader European police union federation (EuroCOP).

Despite this rampant police unionization all over the world, you don’t see police abuse on anywhere near the scale you see in the US. Why might that be? I speculate that it’s because the issue is really something else entirely, perhaps unique levels of sadism, racism, urban soldier nutcase mentalities, and a political society that is, in fact, heavily supportive of police abuse directed at non-whites.

There is something almost precious about the idea that if you erase the explicit organizational form of the union, while holding everything else in place, you’d see some sort of noticeable improvement. The police unions, I am going to suggest, reflect very well the id and interests of their members. The Blue Wall of Silence is a behavioral code bubbling out of cops themselves, not imposed on them from the police union bosses. The racism and paranoia of cops are also not being imposed on them by the union chiefs. The cancer among the police emanates organically from the police officers themselves and the self-perpetuating norms and codes they seem generally to subscribe to.

The person fingering police unions may admit all this, but insist that police unions are at least marginally the issue because they make it to where you can’t get rid of the bad cops. But this supposes that sans union there is actually interest in doing any such thing. Police management (from the chief on down) are themselves sourced almost entirely from the Blue Brotherhood. There is no reason to believe that they are especially different from rank-and-file police in their beliefs concerning appropriate behavior and such. I find it hard to believe therefore that changing the organizational form of labor relations is going to increase day-to-day scrutiny of police behavior.

Of course, the police management is in some way answerable to elected governments, and so maybe through that channel pressure could be placed on them in the unionless world to fight the cop cancer. But the problem here is, as I mentioned above, there is little reason to believe that the public at large is interested in rooting out police abuse towards blacks. Every time one of these big stories hit, you see this in pretty significant degree. The whites (especially conservative whites) come out in big time support of police.

The nature of police unions in the US is much more an effect of the way police and policing in the US are than it is the cause of those things. That doesn’t mean that you may not want to battle them in some way. It just means that doing so won’t get you nearly as far as some seem to think.

“Force” arguments continue to be the rhetorical backwater of idiots

Elizabeth Stoker Bruenig has a post about Erick Erickson saying what conservatives in general believe about low-income workers. Here is Erickson, version one:

“What’s going on here — by the way, more than 90% of Americans make more than minimum wage. The minimum wage is mostly people who have failed at life, and high school kids. I don’t mean to be ugly with you people, but…If you’re a thirty-something-year-old person, and you’re making minimum wage, you’ve probably failed at life. It is not that life has dealt you a bad hand. Life does not deal you cards. It is that you’ve failed at life.”

In respectable circles, conservatives can usually keep their discipline together and ensure that they only heap disdain on the lazy, non-working poor. But sometimes they slip up and tell you what they really think. It’s not idleness that they think makes you a garbage failure of a person. Working a hard job preparing food for people to eat, a rather important social function, does not save you from their scorn. All low-income people, whether they are working or not, are regarded as inferior trash people.

It turns out that saying food service workers who are trying to pull down some of that sacred market income are categorical failures at life is generally regarded as quite heinous. So Erickson, version two, was forced to pretend that this is not what he meant:

“If you are working your tail off and doing the best you can and, perhaps you have to rely on family, friends, charity, or government to get by, as I said on Rush’s show, that’s not failing. That’s working. And work is rewarding. But if you are in your thirties, making minimum wage in a career, and standing on the street demanding the government do something about it, yes, yes you have failed at life…In fact, the people most upset with me missed the part about me specifically saying more than once that I was referring to 30 year old minimum wage workers who are blocking traffic demanding the government force their employers to pay them more. Those people have failed at life.”

For starters, surely nobody believes Erickson had any such distinction in his mind initially. The first quote is unmistakably clear. By the time people are 30, they should have gotten into a better job than food service. If they haven’t, that means they are failures. They are not failures because they are protesting. They are failures because they are not doing as well economically as they should be.

But have no fear, bullshit arguments about “force” are here. As is evident with the libertarians (who are the most intoxicated by such stupidity), this is always the great fallback of anyone who has nothing smart to say.

However, in the case of fast food worker protests, nobody is “demanding the government force their employers to pay them more,” not in any meaningful sense of the word.

If you (correctly) interpret the protesters’ actions as a way of bargaining with their employer for a raise, then there is no demand for government force. Whether it’s through a union contract or individual employment contracts, the employers will ultimately have to decide whether to agree to the workers’ demands or not. There is no law that would ever force them to do so.

Even if you (incorrectly) interpret the protesters’ actions as a way of trying to get the government to increase the minimum wage, there is still no demand that the government force their employers to pay more. As the right-wing is usually pretty eager to point out, payment of the minimum wage is voluntary insofar as employers don’t have to employ anyone if they don’t want to. There are no laws requiring businesses to hire people. They choose to do so.

In this sense, the minimum wage has always struck me as something that conservatives, in theory, should be pretty receptive to. It doesn’t violate just deserts. It pushes money through the holiest of income distribution channels, the paycheck. It’s totally voluntary: if employers don’t want to pay it, they sure as hell don’t have to. But those are considerations that only really matter to conservatives in theory. In reality, anti-poor animus of the sort typified in Erickson version one motivates the right-wing angst towards fast food workers, with “force” and other considerations just a rhetorical sheen placed on otherwise unconscionable views.