Last graduation season, the college class of 2020 entered one of the most hostile labor markets in recent history. Now as the class of 2021 graduates, research is just beginning to capture how difficult conditions are for young workers.
According to new analysis of Bureau of Labor Statistics data from January 2020 to October 2020 by Pew Research Center, 2020 college graduates saw a bigger decrease in labor force participation than those who graduated during the Great Recession.
To make matters worse, college graduates today also owe more in student debt. Adjusted for inflation, 2008 college graduates owed $24,012 in student loans, on average. In 2020, that total was closer to $36,665.
Pew estimates that among all Americans ages 16 and older, the employment rate declined from 61% in October 2019 to 58% in October 2020.
And the pandemic hit employment among recent college graduates particularly hard. The employment rate among recent college graduates ages 20 to 29 decreased from 78% in October 2019 to 69% in October 2020 and the labor force participation rate decreased from 86% to 79%.
"We're really starting to see the impact the pandemic has had on the last two graduating classes," Scott Blumsack, Monster's SVP of research and insights, tells CNBC Make It.
In a recent survey, college graduates told Monster that they believe the pandemic has set back their career goals by an average of six months. Unfortunately, this may be an underestimation.
According to the National Bureau of Economic Research, individuals experience 70% of their overall wage growth during the first 10 years of entering the workforce, and individuals who graduate into recessions earn 9% less during the initial stages of their careers — significantly impacting future earnings.
Graduating into a recession, "has scarring effects on people that last for a majority of their career," says David Deming, a professor of public policy at the Harvard Kennedy School. "People who graduate into recessions never really catch up."