Help wanted: College degree not needed

September 5, 2014: 5:20 PM ET
'It's too expensive to go to school'
NEW YORK (CNNMoney)

It's getting tougher for recent grads to land a job worthy of their college degree.

Though the demand for college graduates rebounded after the Great Recession, it has leveled off over the past 18 months, according to new Federal Reserve Bank of New York research.

This is not to say that recent grads aren't getting jobs. In fact, their unemployment rate has fallen to just over 5%, down from a peak of slightly more than 7% in 2011. And it's less than half the rate of young workers who don't have a bachelor's degree.

But many recent grads are underemployed, working in jobs that don't require degrees. The underemployment rate has been on the rise since 2003 and now stands at 46%.

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"It's not a great time for college grads," said Jaison Abel, an officer with the NY Fed's research and statistics group. "This pattern we've seen of increasing underemployment could continue for some time to come."

demand for college jobs

Fed researchers did not look into why the demand for college-educated workers is stagnating. But they did note that not all of these underemployed grads are working as baristas, waiters and retail clerks. Some are in relatively well-paid, career-oriented positions, such as dental hygienists or electricians.

Related: Colleges with the best bang for your buck

This doesn't mean college isn't worth it, Fed researchers said. The value of a bachelor's degree is $275,000, on average. That's near its all-time peak. And it takes about 10 years to recoup the costs of a bachelor's degree.

But if you take longer than four years to graduate, it will cost you. Staying one extra year will lower your lifetime earnings by $85,000. Taking two additional years will subtract $174,000 in earnings.

The Fed's research, however, doesn't take into account student loan debt. How one pays for college doesn't affect its value, the studies' authors said.

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