- The first job is critical: 43 percent of workers are underemployed in their first job.
- Most who start out underemployed, stay underemployed: Workers initially underemployed are five times more likely to remain so after five years than those who were not underemployed in their first job. And 74 percent of those underemployed at the five-year mark are still underemployed 10 years after their first job.
- The financial costs of underemployment are substantial: Underemployed recent graduates, on average, earn $10,000 less annually than graduates working in college-level jobs.
- Those who start out well employed rarely slide into underemployment. Conversely, an overwhelming number of college graduates appropriately employed in their first job continued to hold college-level jobs five years later (87 percent). Nearly all (91 percent) of those appropriately employed at the five-year mark were still appropriately employed 10 years later.
- Major matters: STEM majors are less likely to be underemployed. For example, only 30 percent of engineering and computer science majors are underemployed.
- Women are more likely to be underemployed: Nearly half of women (47 percent) are underemployed compared to 37 percent of men. This is true for women regardless of major – among mathematics majors, for instance, 32 percent of women are underemployed compared to 25 percent of men.
It’s a well-known stereotype. Your barista has a bachelor’s degree. The rental-car clerk graduated with honors. That guy tending bar successfully defended his thesis. Holding a menial or low-skilled first job right out of college, one that makes little use of a bachelor’s degree, seems practically a rite of passage for recent graduates. For many, this job is little more than a placeholder paycheck that—supplemented, perhaps,by Mom and Dad—covers the bills for a year or two before young adults figure out a direction and settle into a long-term career.
Stories of underemployed college graduates are nothing new. Many parents and their children regard lackluster jobs right after graduation as a detour that will be corrected in a few months—or in the worst case—in a few years. But the long-running narrative is more prominent now in an evolving economy, where entire occupations are expanding and contracting at an alarming speed and rising college tuition prices have resulted in record levels of student debt among recent graduates.
New evidence uncovered in our study on underemployment, however, suggests that young adults,parents, and college officials shouldn’t be so quick to dismiss the job choices new graduates make out of college. Many academics often say they prepare students for their fifth job, not their first. Well, the first job matters more than we previously suspected for getting that fifth job. We found that early-career underemployment is not a mere diversion but rather a potential derailment with lingering instability that can lead to problems down the road. The choice of a first job can reverberate years into the future. This is especially true for women, as well as those in fields outside most STEM (science, technology, engineering, and mathematics) fields.