Graduating to an Unequal Economy
This is the time of year when thousands of college students receive their hard-won degrees after years of difficult work. What awaits them is commonly referred to as the “real world” where young people are expected to thrive and survive. But between high unemployment rates and the harsh reality of student loan debt, today’s graduate is still facing an uphill battle—especially the graduate of color.
The economy is looking better today than in the dark days of 2009 when the overall unemployment rate reached a staggering 10.2 percent in the month of October. Job prospects for recent college graduates were dismal; the effects of the recession would reverberate through each graduating class for years to come. Today, the unemployment rate is a much lower 5.4 percent and the job market is looking better for college graduates—but only for some.
According to a new report published by the Economic Policy Institute titled The Class of 2015, the labor market has improved for college graduates but still has a long way to go before it reaches pre-recession levels. And once the data are broken down into race and gender, it’s obvious that unemployment is more of a reality for some groups than others.
Even though most college graduates essentially have the same type of degree and are similarly qualified, the unemployment rate for white and black college graduates is starkly different. While whites have a jobless rate of 5.8 percent, the unemployment rate among blacks is nearly double that 11.4 percent—even at its peak, white college graduate unemployment was 8.9 percent, compared to an astonishing 20.7 percent for blacks.
The report credits this inequality to discriminatory hiring practices; studies have shown that those with “black” names are less likely to hear back from potential employers than their peers with “white” names.
While discrimination and an uneven playing field decreases unemployment opportunities for many black college graduates, an even bigger hindrance to success looms on the horizon for the newly conferred: student loans.
While politicians like Senator Elizabeth Warren have rightly championed the student debt issue, the conversation about which students are taking on the most loans is just now coming to light. In a May 19 report titled, The Debt Divide: The Racial and Class Bias Behind the “New Normal” of Student Borrowing, Demos’ Mark Huelsman takes a deep dive into the impact of student debt among students of color and students of little means.
According to the report, borrowing money is now the primary way students pay for their education—unsurprising, considering just how quickly the sticker price for a college education is rising. In 2014, the average in-state price for an undergraduate student to attend a public four-year institution was $18,943. Out-of-state students paid an average of $32,762. For those attending a private institution, the price was a whopping $42,419. The days of working fast food for a summer in order to afford tuition are long gone.
While wealthier and predominantly white households can rely on investment accounts and home equity to lower the amount they borrow for college, poorer families as well as Blacks and Latinos do not have access to these types of funds. Ever since Black and Latino families were routinely kept from buying homes in the heyday of government-sanctioned discrimination their ability to acquire wealth through homeownership—the primary way to become middle class—has long been severely stunted.
Although education is not a cure-all for inequality and poverty, receiving a bachelor’s degree or higher does have its benefits. College graduates with degrees are more likely to be employed, unlike their peers with no college education. However, students who graduate saddled with debt do report lower levels of job satisfaction compared to their debt-free peers. College graduates with debt are also less likely to buy a home compared to their counterparts who are not weighted down by loans.
That is, if they can even afford to finish college. Among students of color, the mostcommonly cited reasons for dropping out of school are financial ones. Around 7-in-10 Black students report financial reasons for dropping out; for their white counterparts the rate is less than half that.
For degree holders and dropouts alike, unemployment and student loans paint a bleak picture for the future of young Black people. Until we reform student loans and heavily invest in good job creation, joining the middle class, owning a home, and receiving a stable income may remain a distant dream.