Sunday 16 March 2014

Low-wage work: College grads elbowing out the less educated

US high school leavers left with fewer job options as competition heats up
By Katherine Peralta, Published The Straits Times, 15 Mar 2014

MS JEANINA Jenkins, a 20-year- old high-school graduate from St Louis, is stuck in a US$7.82 (S$9.90)-an-hour part-time job at McDonald's that she calls a "last resort" because nobody would offer her anything better.

Mr Stephen O'Malley, 26, a West Virginia University graduate, wants to put his history degree to use by teaching in high school. What he has found instead is a bartender's job in his hometown of Manasquan, New Jersey.

Ms Jenkins and Mr O'Malley are at opposite ends of a dynamic that is pushing those with college degrees down into competition with high-school graduates for low-wage jobs that do not require a college education. As this competition has intensified during and after the recession, it has meant relatively higher unemployment, declining labour market participation and lower wages for those with less education.

The jobless rate of Americans aged 25 to 34 who have completed only high school grew by 4.3 percentage points to 10.6 per cent last year from 2007, according to data from the Bureau of Labour Statistics. Unemployment for those in that age group with a college degree rose by 1.5 percentage points to 3.7 per cent in the same period.

"The underemployment of college graduates affects lesser educated parts of the labour force," said economist Richard Vedder, director of the Centre for College Affordability and Productivity, a not-for-profit research organisation in Washington.

"Those with high-school diplomas who normally would have no problem getting jobs as bartenders or taxi drivers are sometimes kept from getting the jobs by people with college diplomas," said Mr Vedder.

Recent college graduates are ending up in low-wage and part-time positions as it has become harder to find education- level-appropriate jobs, according to a January study by the Federal Reserve Bank of New York.

The share of Americans aged 22 to 27 with at least a bachelor's degree in jobs that do not require that level of education was 44 per cent in 2012, up from 34 per cent in 2001, the study found.

Competition can leave less-educated - yet still qualified - individuals with few employment options, said Ms Heidi Shierholz, an economist at the Economic Policy Institute in Washington.

"College graduates might not be in a job that requires a college degree, but they're more likely to have a job," she said.

Less-educated young adults are then more likely to drop out of the labour market, said Dr Paul Beaudry, an economics professor at the University of British Columbia in Vancouver who studies United States employment trends.

The labour participation rate for those aged 25 to 34 with just a high school diploma fell by four percentage points to 77.7 per cent last year from 2007. For those with a college degree and above, the rate dropped by less than 1 percentage point, to 87.7 per cent.

"At the complete bottom, we see people picking up the worst types of jobs or completely dropping out," Dr Beaudry said.

The share of young adults between 20 and 24 years old neither in school nor working climbed to 19.4 per cent in 2010 from 17.2 per cent in 2006. For those aged 25 to 29, it rose to 21.3 per cent from 20 per cent in that period, according to a Federal Reserve Bank of Boston report in December.

Those with the least education have trouble securing even the lowest-paid jobs. Ms Isabelle Samain looked for work in Washington from April until September of last year. As prospective employers continually passed over her applications, the 20-year-old mother of two from Cameroon realised she was missing out because she lacked a US high school diploma.

"I don't even remember how many places I applied," Ms Samain said of the "frustrating and discouraging" search.

Ms Samain passed the General Educational Development test in December and recently started working at Au Bon Pain in Washington for US$8.50 an hour for 36 hours a week.

A year-long survey ending in July 2012 of 500,000 Americans aged 19 to 29 showed that 63 per cent of those fully employed had a bachelor's degree, and their most common jobs were merchandise displayers, and clothing-store and cellular phone sales representatives, according to Seattle-based PayScale Inc, which provides compensation information.

The share of recent college graduates in "good non-college jobs", those with higher wage-growth potential, such as dental hygienists, has declined since 2000, according to the New York Fed study. Meanwhile, the portion has grown for those in low-wage jobs paying an average annual wage of below US$25,000, including food servers and bartenders.

Yet those with college degrees have more opportunity to advance even in lower-paying fields.

Ms Kimberly Galban, 34, vice- president of operations at the One Off Hospitality Group in Chicago, cited her own career as an example. She got a job as a hostess at Blackbird, a One Off restaurant, while pursuing a bachelor's degree in Germanic studies and communications at the University of Illinois in Chicago in 1999.

"The formality of classes, papers and grades did lend a hand in where I am today because I had a broader sense of cultures, interactions and interpersonal skills," said Ms Galban, who is now also a partner at the restaurant Nico Osteria, one of seven Chicago restaurants managed by One Off.

Of the company's more than 700 employees, more than 60 per cent hold college degrees or higher, yet fewer than 10 positions require a degree, Ms Galban said.

"We would rather have somebody who is passionate, knowledgeable about their craft and really hospitable than somebody who walks in and says 'hey, I have a master's degree'," Ms Galban said. "But the funny thing is, the majority of our servers, bartenders and people who work in the corporate office do have either a master's or a PhD."

Mr O'Malley, the bartender from New Jersey, has a master's in history, and he says the degree has its drawbacks as he applies for teaching positions.

"The master's is cool and I went to school longer, but on the other side of the coin, they have to pay me more," Mr O'Malley said. Teachers with higher degrees in New Jersey receive more compensation, pricing him out of some jobs, he said.

As the number of college graduates outweighs the availability of education-appropriate jobs and they take whatever they can get, everyone else is pushed down the ladder, said Ms Katie Bardaro, PayScale's lead economist and analytics manager.

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