Yes, it sounds terrible. But in a subtle way, this is actually good news.
Reports like the Fed's have helped fuel a good deal of post-recession soul searching about the value of a college degree, with lots of writers asking some version of the question former White House budget director Peter Orszag posed in a Bloomberg column this week: "Why are so many college graduates driving taxis?" Sub in bartender, barista, or whatever other low-paid service job you like, and you've captured the concern that's on a lot of people's minds.
Unfortunately, these conversations lack historical context. The lot of young college graduates has obviously deteriorated in the past few years. But it's less clear whether that's because the value proposition of college has fundamentally changed, or if it's because the economy got fed through a wood chipper during the recession and we still haven't picked up all the pieces.
The Fed report gives us a little insight on that front. First, as it shows in the graph below, the unemployment rate among recent college graduates tends to move more or less in step with unemployment among all working age adults. Their suffering is not particularly unique. They're having trouble finding work because everybody is.
Something similar seems to be going on with underemployment, which has also risen and fallen with the health of the economy. As New York Fed President William Dudley noted yesterday, college graduates during the 80s and early 90s were just as likely to be overqualified for their jobs as the young BA's of today. And then, as now, most grads eventually made it into jobs appropriate for their skills. Our memory of the tech boom makes the problems facing contemporary college grads seem particularly painful. But they're not entirely without precedent. And it's not clear they're a product of anything other than a bad jobs cycle. That's a double relief.
As it turns out, this is all pretty much in keeping with the study that inspired Orszag's column. In March, Canadian economists Paul Beaudry, David Green, and Benjamin Sand released a working paper arguing that demand for high-tech skills, which fueled the college graduate hiring spree of the 90s, had tailed off. As a result, they argued, underemployment had grown...back to where it was 30 years ago. As Beaudry put it to me in an interview: "This isn't saying all of a sudden it isn't worth going to college. It's saying it's, at worst, as good as it was in the eighties."
From a jobs perspective, at least. I've spent this post focusing on the good news about the Fed's report, but I'd be remiss not to mention the bad. The obvious difference between higher education today and in 1990 is the cost of a degree, and the amount of debt students take on to finance it. So while failing to land a college-level job straight out of school might have been tolerable in the past, today it might mean severe financial hardship, especially if students aren't savvy about how to handle their student debt (three words: Income. Based. Repayment).
So here's the upshot: A college diploma is still plenty valuable on the job market by historical standards, but it's gotten expensive. Let's focus on the latter problem, instead of panicking about English majors driving town cars.
This post originally appeared on The Atlantic.