First jobs matter: Avoiding the underemployment trap

We all have heard stories of newly minted college graduates working as baristas or selling clothes at Gap. It’s what economists call underemployment: people doing jobs for which they are overqualified. Generally, however, we dismiss the phenomenon as a relic of the recession or a short-term problem affecting a small number of graduates who will find their footing soon.

But underemployment may be far more widespread than we have imagined — affecting up to 43 percent of recent graduates, according to a report. This unprecedented analysis of 4 million unique résumés examines the scope and impact of underemployment on graduates in the years that follow college. It turns out that underemployment can mark the first steps to a permanent professional detour — more than a speed bump on the journey to a prosperous career.

The results are troubling, if instructive: With the exception of a few disciplines, such as computer science, engineering and communications, grads who start off underemployed have a higher likelihood of remaining underemployed five and 10 years out. For women, the odds are even worse.

Underemployment, we’re learning, is not a short-term challenge. It is a long-term problem with serious financial implications. So how can recent graduates avoid the underemployment trap? Three things matter most: first job, college major and gender.

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At the 10-year mark, three-quarters of workers who were underemployed as new graduates remained underemployed.

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The data are clear: If graduates start off underemployed, there is incredible inertia that prevents them from getting out of that rut. The 43 percent of workers who were underemployed in their first job were five times as likely to be underemployed five years later as those who were not underemployed in their first job.

The cycle of underemployment is difficult to escape. At the 10-year mark, three-quarters of workers who were underemployed as new graduates remained underemployed. In contrast, individuals who held out for a first job aligned with their academic credentials had a far higher likelihood of staying that way: An overwhelming number of workers who were employed in a college-level job had positions that matched their levels of education five years (87 percent) and 10 years (91 percent) later.

First jobs matter. Graduates who avoided the underemployment trap rarely slid into underemployment.

At the same time, not all majors are created equal. The risk of underemployment is lowest among most graduates in engineering and computer science, mathematics, and the physical sciences. They are less likely to be underemployed in the first place and, when they are, find it easier to escape the underemployment trap than those majoring in other disciplines.

Grads with degrees in security and law enforcement (65 percent); parks and recreation, leisure, and fitness studies (63 percent); and consumer and family sciences psychology (57 percent) have the highest levels of underemployment in their first jobs and are most at risk of being trapped in long-term underemployment.

But the most troubling finding was that women are especially vulnerable to underemployment, even women in STEM — science, technology, engineering and math. Women today are more likely to go to college than men, and they graduate at higher rates, but women are also far more likely to start off behind the career curve.

Nearly half of all female graduates are in jobs for which they are overqualified, compared with 37 percent of male graduates. And more women are caught in this web five and 10 years out from their first job. These data are especially alarming in an era when women’s wages remain a fraction of men’s (82 percent at last count), when women fill almost half of all jobs but make up just under of a quarter of STEM workers, and when there are fewer female Fortune 500 CEOs than men named James.

There is no more pivotal moment in an individual’s career than the handoff between education and work. Recent graduates who are underemployed earn, on average, $10,000 less per year than recent graduates who are appropriately employed. Compounded over time, this financial difference is significant. A wrong move into a first job can sell a graduate short not just for a few years, but for potentially an entire career. The first job is a high-stakes decision, and one that graduates, parents and educators should treat accordingly.

Michelle Weise is senior vice president for workforce strategies at Strada Education Network (stradaeducation.org) and chief innovation officer at Strada Institute for the Future of Work, a research and development lab working on solutions to strengthen education-to-employment pathways and build the learning ecosystem of the future.