Underemployment hurts graduates, economy ECONOMY

Michael Baum took every substitute teaching job he found and has sent out hundreds of resumes since graduating from college two years ago. He never got a full-time offer and works as a waiter in a pizza parlor in Chicago, earning $650 on a busy week.

"It's discouraging," said Baum, 25, who is certified to teach in Texas and North Carolina as well as his native Michigan. His pay is just enough to cover basic living expenses.

Baum has joined the growing number of underemployed graduates in the United States, in an election year when both President Obama and Republican challenger Mitt Romney are vying for young voters with promises to restore jobs. Underemployment isn't debilitating only for individuals whose career and income opportunities are stunted. It threatens economic expansion, as college-educated young adults have traditionally fueled consumer spending on clothes, technology, entertainment and cars.

"If you have a stumbling entry into the labor market, you risk getting stuck in jobs for which you're overqualified and poorly paid for the rest of your life," said Katherine Newman, a sociologist and dean of the school of arts and sciences at Johns Hopkins University who has studied the long-term effects of underemployment. "There's a scarring effect, with employers you want marking you as undesirable. The economic toll is enormous."

Rising jobless rate

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The underemployed include those of all ages who are working part-time but want full-time positions. There were 8.2 million people working part time for economic reasons in June, according to the Bureau of Labor Statistics. In the last quarter of 2009, that number had doubled to 9.1 million from 4.5 million in the same period of 2007.

Unemployment for Americans ages 20 to 24, which has topped 10 percent for four years, was 13.7 percent in June, up from 12.9 percent the previous month, according to the Labor Department. Employers added 80,000 jobs in June, fewer than forecast, and the overall rate stayed at 8.2 percent, the data showed Friday.

There were 1.9 million jobless people ages 20 to 24 who weren't in school in June, a gain of 312,000 from May and the biggest increase since record keeping began on the topic in 1985, according to nonseasonally adjusted statistics. The age group's labor-force participation is the lowest since 1985, and the percentage working part time and not in school is the highest since then, data show.

The outlook is brighter for recent graduates with degrees in computer science, engineering and accounting, with skills that are in high demand, according to the National Association of Colleges and Employers. While the group's latest survey of companies shows a 10.2 percent increase in hiring plans from 2011, the improvement isn't benefiting all majors the same way, said Edwin Koc, the group's lead researcher. Those "with certain skill sets are doing quite well," while things are tougher for others, such as liberal arts, humanities and education majors, he said.

Instead of indulging at the start of their career, many young people with degrees now are scrimping. Compared with five years ago, Generation Y - people born from 1981 to 2001 - is shopping more at discounters and value stores such as T.J. Maxx, Marshall's and Dollar General Corp., and less at premium-priced retailers such as Victoria's Secret, Macy's Inc. and Nordstrom Inc., according to Kantar Media. The research company analyzed shopping habits from January to May this year and in 2007.

"Retailers used to be able to count on young adults to be the first to buy whatever was new and to purchase the bigger brands at better stores," said Candace Corlett, president of WSL/Strategic Retail. "Now they can't afford that, and they're so comfortable with mobile technology, they've become the savviest at getting the best prices. We're smothering aspiration at a very early age."

Falling behind

Baum, who can't afford a new laptop or a tablet, uses a computer he inherited from his father. When he lived with his parents after finishing his degree at Oakland University in Rochester, Mich., he went out a few times a week, spending $60 to $80 each time. Now it's once or twice a month. He and his two roommates have Internet service in their $900-a-month apartment but no cable. He still plans to try to get a teaching position in Illinois.

Jeffrey Joerres, chief executive officer of staffing company ManpowerGroup, said there may be a "lost generation" of educated young adults in today's workforce.

"If they don't have very specific skills that are in high demand, like engineering or computer science, young B.A.s are vulnerable and often aren't building any skills in jobs they can find," he said. "Within a year or two, they're competing with a newly minted group of B.A.s, so fall behind further."

In the end, underemployed youth will rob the United States of economic and intellectual firepower, said Johns Hopkins' Newman.

"Underemployment can't be tracked as closely as unemployment, but we know from studies of what happened in the Great Depression there's a chronic impact," Newman said. "Young people working jobs they're overqualified for don't get trained or encouraged to advance and become successful, and both they and employers lose out."