In a breathlessly giddy post today, Bloomberg columnist Victoria Stilwell tries to connect the dots between the low unemployment rate for college grads (2.8% versus 5.7% for the populace as a whole) and a pending shortage of college educated workers:
That could mean the U.S. isn’t far from a position that would have been crazy-talk not too long ago — running out of those types of people to employ, according to Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.
That also has good implications for the wages of those workers. As those laborers become scarcer, companies will be forced to bid up their pay in order to attract the best and brightest.
I propose that an alternative force at work driving down unemployment for college grads- underemployment. The Washington Post explains it:
Why the poor showing for business majors? PayScale notes that in many cases, a simple bachelor’s degree in business might not get you very far – a more advanced degree like an MBA might be necessary “in order to set up recipients for jobs in their fields.”
Could it be that many college graduates are having enough difficulty finding jobs in their major that they are absorbing the lower paying jobs that other workers used to compete for?
To be fair, technical skills like programming and engineering are where demand and higher pay meet:
At the other end of the spectrum, STEM fields produced graduates with the least likelihood of underemployment. Engineering degrees accounted for six of the ten least underemployed majors. Law, physics, geology and mathematics made up the remaining four. washingpost.com
Unfortunately, Silicon Valley and Washington are conspiring to open the immigration floodgates to fill these desirable openings.
Today’s unemployment report shows that while wages in January increased nicely, workers have only earned an average of 2.2% more in the past twelve months.
Jim Clifton at Gallup summarized the problem with Headline unemployment:
Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.
North Carolina calculates that their unemployment rate is over 12% when they add in the underemployed.
You might expect the UK or an African country like Rwanda to be grappling with underemployment, but it’s odd that a search of Bloomberg.com turns up nothing on the issue.
It looks like the Middle Class Recession is alive and well.