Though the economy is showing signs of life, the job market for new college graduates is still extremely tough. A daunting figure – three million new grads competing for one million jobs – has been widely reported, as has the fact that more than half of recent grads are unemployed or under-employed. It's also been widely and incorrectly reported that 85 percent of grads are moving back in with mom and dad. The correct figure is actually 40 percent, according to the Pew Research Center. That's nothing new, really. The period immediately after college has always been one of flux.
Before all you grads get too down, remember that the economic prospects look considerably better over the long run. Americans with a college degree face a substantially smaller risk of being and staying unemployed than those without diplomas. A college degree returns 15.2 percent a year, more than double the return to stock market investments since the 1950s, and five times more than the return to bonds, gold, or government bonds, according to a Brookings Institution study. Straight out of college, the average 22-year-old college grad can expect about 70 percent more in wages and salary than a peer with just a high-school degree. And the job market for graduates seems to be improving, albeit slowly, according to recent accounts.
A good way to improve your economic prospects is to pick the right place to live. Choosing the right location is one of the most important, if not the single most important, decisions you will ever make. It will influence your job and career opportunities, not to mention your ability to make friends, develop personal and professional networks, and find a potential life partner.
To help you with your choice, my Martin Prosperity Institute colleague Charlotta Mellander and I ranked U.S. metropolitan areas on a variety of key criteria that are important to new grads. First and foremost are economic factors like the unemployment rate, salary levels, the fraction of high-paying/high-quality job markets, and the amount of money people have left over after paying for housing. Many recent grads can’t afford to buy a house or car, so we included the percentage of rental housing in a metro and the fraction of commuters who use public transit. To capture places that are open to smart 20-somethings, where you can not only build friendships and look for mates but create the personal and professional networks that are so crucial to both career and happiness, we added the share of adults who are college graduates along with the percentage of the population that has never been married. The eight variables we based our rankings on are:
- Unemployment rate, via the Bureau of Labor Statistics (BLS)
- Share of jobs in professional, technical, and creative occupations (BLS)
- Percent of adults with a BA and above, via the American Community Survey (ACS)
- Average salaries and wages for professional, technical, and creative occupations (BLS)
- Rental share of housing (ACS)
- Money left over after paying for housing (ACS)
- Share of adults that have never been married (ACS)
- Share of commuters who use public transit (ACS)
The slideshow below, from Cities fellow Tyler Falk, shows the top 25 metro regions for college grads in 2012.
The San Francisco Bay Area tops the list of this year’s best places for college graduates. Greater San Francisco takes the top spot, followed closely by Silicon Valley (the San Jose-Sunnyvale-Santa Clara metro).
Greater New York, which consistently attracts the largest number of new grads, is third. The metros that make up the Bos-Wash corridor do well overall, with Trenton-Ewing in ninth place, Boston tenth, New Haven 13th, Greater Washington, D.C. at 18th, Philadelphia 20th, the Hartford area 21st, and Baltimore 22nd.
California has five metros in the top 25 with Sacramento 15th, Los Angeles 17th, and San Diego 19th. The Northwest is also well represented, with Seattle 11th and Corvallis, Oregon, at 12th.
The best places for college grads have a bi-coastal flair. Fifteen of the top 25 metros are located either along the Bos-Wash corridor or on the West Coast.
Big metros in other parts of the country have long attracted regional grads. They remain good choices this year. Chicago ranks 16th, Atlanta 23rd, and Denver 24th.
And for those who want to avoid big cities, smaller college towns remain a great alternative. Champaign-Urbana, Illinois, is fourth; Durham, North Carolina, fifth; Gainesville, Florida, sixth; Ithaca, New York, seventh; Ann Arbor, Michigan eighth; Boulder, Colorado, 14th; and Ames, Iowa, 25th. College towns like these have highly-skilled, resilient economies. And they are great hold-over places for new grads thinking about their next move, whether it's the job market or on to grad school.
That said, there is no one perfect place – or even a small set of places – that are right for all college grads. The key thing is to pick the place that is right for you.