Schafer: College grads aren't immune to stagnant wages

Monday is the deadline to apply to the University of Minnesota for admission next fall. That's also the day early applicants should hear whether they got in to such highly selective colleges as Carleton and Macalester.

That makes this week the most anxious week of the year in a lot of houses with a college-bound high school senior.

But getting into their first choice college isn't the only thing to be anxious about.

Even with a college degree, young adults are struggling to establish themselves in today's economy. A blog post from the U.S. Census Bureau last week summed it up: "Better educated, but poorer."

A typical 18- to 34-year-old today earns about $2,000 less annually than young people did in 1980, adjusted for inflation. What's more concerning is that wages went backward even though the percentage of today's young adults with at least a bachelor's degree is up since 1980 by about 40 percent.

That wasn't the deal young people were offered by their parents. It was study hard and get ahead.

In most of the country, the biggest drop in median real wages for young adults came since 2000. In the Twin Cities, it fell from nearly $43,655 in 2000 to $39,963, based on 2009 through 2013 census surveys.

On the other hand, the much longer look back compared recent wages with 1980, and no one could call that a boom year. It was still the era of "stagflation," a memorable term that summed up an economy that was not growing but still featured rampant price inflation. Unemployment in the spring of that year got to 7.5 percent.

As bad as that was, today fewer young adults have a job here than in 1980 and the percentage living in poverty has increased, as did the percentage still living with a parent. Marriage rates have tumbled.

In other places, the trends are even worse. In ­Indianapolis, wages fell further since 2000 than they did here. What sticks out about greater Milwaukee is the big change since 1980; there the median wage for young adults fell from about $42,000 in 1980 to just $33,500 now.

The only real bright spot is education. Back in 1980, about 20.5 percent of 18- to 34-year-olds in the Twin Cities had at least a college degree. More recently that number has surged to 32.5 percent.

Yet more education hasn't been paying off in economic gains. And while this phenomenon has been fertile ground for analysts and researchers, there isn't just one tidy ­explanation for it.

And not all of those with a college degree have fared much better. The Federal Reserve Bank of New York this year put out a series of blog posts on the value of going to college. One observed that for the bottom quarter of wage earners with a college degree — if landing in a higher-paying job was the point of going to college — they could've skipped it.

A common story told about the disappointing wages of young college grads is that the Great Recession delayed the real start of their careers. They took jobs in lower-wage service industries that had typically been held by younger people or those without a degree.

With a little distance from the depths of the recession, the real median wage for 25- to 34-year-olds ticked up in 2012, reversing a long slide, as the overall labor market got healthier. But in the data that came out this fall from 2013, wages for 25- to 34-year-old college graduates slipped again.

At Macalester, Ferderer said recent grads with an economics major are doing "fantastic" but certainly not all recent ­college grads are.

He shares with his students the salary information for different occupations and fields of study from such online sources as PayScale. Breaking apart the wage data like that, he said, can be eye-opening.

So for those high school seniors applying to our state's flagship university in a few days or are hoping to hear great news from Carleton or Macalester, I wish you good luck. What to study and where are not easy things to figure out, to say nothing of how to pay for it.

You may think your adult lives start when you graduate from college, but really they've already started. And some luck could certainly help.