40% of College Grads Are Underemployed

Although a college degree remains valuable in today’s workforce, it might not pay off right away. According to the Federal Reserve Bank of New York, the underemployment rate for recent college grads was 40% at the end of March 2021.

Underemployed college graduates are ones who have earned their degree but are working jobs that don’t require a college degree. In other words, they spent four years or more working hard for their bachelor’s only to end up in a job they could have gotten right out of high school.

What’s worse, the annual median wages for bachelor’s degree holders looked almost identical to those in 1990 — meaning many college grads are underemployed and earning essentially less than their counterparts were 30 years ago when you take inflation into account.

Image: Federal Reserve Bank of New York

How college grads can avoid being underemployed

Economists have various views about what the government can do to help this underemployment problem. But outside of major structural changes, there are steps you can take to boost your “hireability” after college.

Here are four tips on how you can find a job — or a better job — as a new college grad:

1. Make the most of your college career center
2. Choose a major that’s in demand
3. Track and highlight your college achievements
4. Build up your social and professional network

1. Make the most of your college career center

According to McGraw-Hill’s 2018 Future Workforce Survey, just 41% of graduates felt their education was very helpful in preparing them for a career. That number was higher among men (50%) than women (36%).

Whether you’re feeling prepared for the workforce or not, it might help to visit your college’s career center. Even if you’re unclear on your goals, visiting the career center will teach you about your options. Plus, most centers offer services such as interview preparation and resume reviews.

You can’t necessarily control the fact that 10% of young workers and 6% of recent college grads were unemployed at the end of March 2021 (this number came down after spiking in 2020 during the pandemic). But you can educate yourself about where and how to get a job after graduation. By preparing for the job search before (or soon after) you graduate, you’ll be ready to hit the ground running.

Image: Federal Reserve Bank of New York

2. Choose a major that’s in demand

Some college majors have a higher risk of underemployment than others. If you want to boost your chances of employment after graduation, do some research on the prospects of various majors.

Your school might have some data on post-graduation employment rates, or you could use a trusted source such as the National Center for Education Statistics (NCES) or Bureau of Labor Statistics (BLS).

You might also dig up data on the return on investment (ROI) of specific majors. After all, if you’re spending money to attend college — or taking on student loans — it’s useful to think about how you’ll make that investment back after you graduate.

3. Track and highlight your college achievements

You may encounter a frustrating Catch-22 during the post-college job search: You want workplace experience, but many jobs are only hiring people who already have workplace experience. Not everyone can afford to work an unpaid internship to ramp up their resume.

If you’re applying with little-to-no experience, make sure to highlight your college achievements. Consider any activities where you held a leadership role or projects that show off your transferable skills.

Perhaps you overcame a significant challenge or collaborated with a team to create something new. Whatever they are, your college achievements can indicate you have the core competencies to succeed in a job.

So don’t discount your college experiences. Instead, look at them through the eyes of a hiring manager. Pick out the ones that demonstrate professional skills, especially if you don’t have much workplace experience. Put them on your resume and LinkedIn profile, and practice what you’ll say during a job interview.

4. Build up your social and professional network

Many job seekers have lost faith in traditional job search engines such as Monster and CareerBuilder. These databases invite applications on a national level. All too often, you’ll apply for a position and never hear back.

As it turns out, networking may be a far more useful tool in the job search process. Often, companies don’t even post jobs online, preferring to fill them internally or via referral.

If you haven’t graduated yet, keep connecting with people who share your interests and goals. And if you can, take advantage of your alumni network. You may even find a mentor or professional you can shadow for a day. You’ll learn about career development while making a valuable connection that could land you your next job.

Stay positive about the job search after graduation

It’s easy to get down on yourself if you’re struggling to find a job after graduation. But at the very least, this data from the Federal Reserve Bank of New York should reassure you you’re not alone. And by taking these proactive steps, you’ll get much closer to finding the right job after college.

While it might take a few years to find your footing in the professional world, you can eventually find a position that matches your skills and experiences if you keep working toward your goals.

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